00:11Welcome to this edition of Business Africa. I'm your host, Afolake Oyn Lui, the top series this week.
00:17From washed-out bridges to lost harvest, Africa is waiting for real financing from the Global Loss and Damage Fund,
00:24designed to help countries cope with climate-related destruction.
00:31From the Strait of Homo to African markets, global oil tensions are driving fuel costs and food prices on the
00:39continent.
00:43Namibia's informal economy employs over half of the workforce but lacks protection.
00:48The government has announced a 2026 formalization plan.
00:56Africa is losing nearly $200 billion a year to climate-related destruction from damaged infrastructure to lost harvests.
01:05As the Loss and Damage Fund agreed at COP27, the challenge now is whether it can mobilize enough financing to
01:12protect the continent's economies.
01:15Across the African continent, the cost of climate-induced loss and damage is now estimated at nearly $200 billion a
01:23year.
01:24While global summits often focus on mitigation to stop the problem from getting worse,
01:29and adaptation to help us live with a changing climate,
01:32for millions of Africans, the crisis has already arrived.
01:37It's seen in washed-out bridges, destroyed harvests, and the irreversible loss of ancestral lands.
01:44This is the realm of loss and damage, the third pillar of climate action.
01:50It's the financial safety net designed to address the destruction that happens anyway.
01:57Since the historic breakthrough at COP27 in Egypt,
02:01the global community has transitioned from debating this concept to building its reality.
02:08With the World Bank acting as trustee and a board dominated by developing nations,
02:13the infrastructure of global climate justice is finally being built.
02:18But as the fund transitions from inception to implementation, critical questions remain.
02:25With less than a billion dollars currently pledged against a trillion-dollar need,
02:30how can this money be accessed quickly?
02:33And more importantly, can it be scaled fast enough to protect Africa's economic stability?
02:41To discuss the progress of the fund, we are joined by the Executive Director of the fund
02:46for responding to loss and damage, Mr. Ibrahim Ashek-Diang.
02:49Thank you for joining us on the show.
02:51Now tell us, where does the loss and damage fund stand today in terms of governance,
02:55funding and delivery?
02:57Now, three years down the road, major progress have been made in many fundamental areas of the fund.
03:04The one that was extremely important is the governance,
03:07because the fund's decision-making platform is indeed the board.
03:11So now we have a board of 26 board members from developing countries,
03:15and together they make decisions and consensus.
03:19The two other fundamentals was the pledges.
03:22Without money, obviously, the fund cannot commit to countries.
03:25As of today, we stand at $822 million of pledges,
03:30and half of the money has been released, making it possible for us to support the countries.
03:35And I think last thing that's important is just delivery,
03:37because eventually we have to be able to honor our mandate,
03:40which is to really support the countries in response to loss and damage.
03:44And today we're very much focused on delivery to make sure the funds are actually relevant
03:48to the countries we are supporting.
03:50What do the Barbados implementation modalities mean for Africa and other vulnerable countries?
03:57We, as of today, our pledge stands at $820 million.
04:02$440 million have already been released, meaning that funding is available from which we can make commitment.
04:08So I have a board decided, while we are mobilizing the billions,
04:14hopefully in the coming years, we should begin to make some commitment
04:17and support the countries out of what we have so far.
04:20And that's why I have a board decided in Barbados, where we had our fifth board meeting,
04:24to launch a startup phase of $250 million, providing grant-only to countries,
04:31not concessionary loan, not other type of funding,
04:34$5 to $20 million per initiative, focusing on two areas that are extremely important,
04:40and that is the extreme weather condition we talked about earlier,
04:43the flood, the tropical cyclone, and the drought,
04:45but also what we call the slow-onset event.
04:48These are events that happen gradually, meaning the sea rise,
04:51that could actually have a huge impact in most of the countries.
04:54So as we speak, we are in the middle of basically welcoming funding requests
05:00from the developing countries, Africa included.
05:03And our intention is to take those funding requests to our board in Africa in April,
05:10and eventually the board will make a decision which one to fund sometime in July and so on.
05:15Is the fund's current capitalization enough,
05:18and how can sustainable funding be achieved in the long term?
05:21Well, depending who you put and who you talk to,
05:25the needs are estimated in to the billions.
05:28Some will even mention $150 billion or $200 billion annually.
05:32So obviously, in today's global landscape,
05:35it's quite challenging to mobilize the kind of amount,
05:38but we're taking it actually in two phases,
05:41and that is you want to accelerate what we call the voluntary contributions.
05:45I mentioned earlier that when the decision was made at COP28 in Dubai,
05:51to represent the fund, countries began to pledge to the fund,
05:55and that's then at $820 million as of today.
05:59And out of that, about 440 have been released, as I mentioned earlier,
06:03making it possible for us to be able to make commitment and support the countries.
06:07So that voluntary contribution will continue,
06:09which hopefully will be accelerated so we can get more contribution coming in.
06:13Now, the long-term resource mobilization,
06:16and that is something our board is very fully committed to,
06:19and that entails basically diversifying the source of funding
06:22from public sector to philanthropy to private sector to innovative financing.
06:27But that is the responsibility of the board to really look at the different options
06:31and be able to go to what we call the replenishment,
06:34which hopefully will take place next year in 2027.
06:37So the idea is really to mobilize in the billions
06:40and be able to really spend less time mobilizing resources,
06:44but more time delivering for the countries.
06:46Well, thank you so much for those insights.
06:48Thank you very much. I appreciate it. See you again.
06:53A conflict thousands of kilometers away can reshape the cost of living in Africa.
06:58Tensions around the Strait of Hormuz, a key global oil route,
07:02often drive crude prices higher.
07:04For import-dependent economies like Ghana and Zambia,
07:07that quickly means higher fuel costs and rising market prices.
07:12Nearly a fifth of the world's oil passes through the Strait of Hormuz.
07:16When geopolitical tensions threaten the route,
07:19global benchmarks such as Brent crude oil typically surge.
07:23For many African countries that import fuel,
07:25the impact travels fast, from national fuel pumps to market stalls.
07:36Some of the goods we sell are imported from there,
07:39so when the situation changes, we feel it almost immediately.
07:44Because of the fighting, several borders have been closed.
07:47As a result, those products can no longer reach Ghana as easily as before.
07:53At Mekola Market, traders say rising transport and import costs
07:58are directly affecting their businesses.
08:00First of all, I've heard what I saw due to the importation.
08:05Because if I'm getting it, let me say, if I'm getting it in Nigeria,
08:09bringing it here, it would be expensive if I'm taking it with a car.
08:12The charges they have to take from Nigeria can be this place.
08:16Further south, the impact is also felt in landlocked Zambia,
08:20where transport costs play a crucial role in the price of everyday goods.
08:24If the cost of transportation goes up,
08:26definitely your goods and your services will go up.
08:29For someone that is in rural Zambia, the price of goods,
08:33the price of fertilizer goes up.
08:35For them to come to town to come and buy,
08:38even other stuff, it will affect you and I,
08:42even if we are a thousand miles away from where the war is being waged.
08:48From global oil routes in the Gulf to traders and farmers across Africa,
08:53distant geopolitical tensions can quietly shape the price of everyday life.
09:00Namibia's informal sector employs more than half of the workforce
09:03and drives a significant share of the economy.
09:06Now the government plans to start formalizing the sector in 2026,
09:11but for many small traders, the transition may not be easy.
09:15Across markets in towns like Katima, Mulilo in Namibia,
09:20small traders form the backbone of the local economy.
09:23Many have ambitions to grow,
09:25but say they lack the tools to take the next step.
09:29Access to financing remains one of the biggest barriers for informal entrepreneurs.
09:34Without formal registration,
09:36many cannot open business bank accounts or apply for loans.
09:40I've heard about it, so I haven't yet gone in too deep
09:45for me to know how I can register my business.
09:49I would like to register my business,
09:52whereby maybe I can get some fund to increase my business.
09:58According to analysts,
10:00lack of information, not just fear of taxes,
10:03is one of the biggest obstacles.
10:05Most times people are discouraged to formalize their businesses
10:09because they think about the tax impacts
10:11and also filing their returns
10:14just because they don't have the information
10:17and a lot of people don't know.
10:19There is not that much growth
10:20if the government is not involved
10:22and the informal sector is not formalized
10:24because they do not pay taxes
10:26and they also don't benefit from government funding,
10:30they don't benefit from the laws
10:32that protect small businesses or their employers
10:35or themselves as a whole.
10:36For Namibia, the challenge is clear.
10:39Turn the country's vast informal economy
10:41into formal engine of growth.
10:43Experts argue the key lies in the education and outreach,
10:47especially in smaller towns
10:49where informal trade dominates.
10:55That brings us to the end of this edition of Business Africa.
10:59For more business stories and the latest updates,
11:02stay tuned to African News
11:03or visit us online at africanews.com.
11:06See you soon.
11:15Business Africa was presented by Turkish Airlines.
11:18End of points.
11:18All right.
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