Policy approaches to guide finance flows for more effective climate action in South Africa
Finance is essential in order to implement effective climate action. This year the SNAPFI research team at the University of Cape Town seeks to contribute to a better understanding of ways to increase the quantity of international and domestic finance for more effective and equitable climate action and to shift the direction of investment in South Africa.
Their study finds that in the context of finance provided by developed countries, there is a significant gap in the climate finance landscape in South Africa – funding of adaptation falls drastically short of levels for mitigation. It identifies possible reasons for the gap, including donor priorities and lack of clear signals from national policymakers, and the authors argue for better analysis and understanding of finance needs as a basis to guide international funding, and suggest ways to enhance capacity needed to attract and secure funding.
They identify that broader policy as well as financial and fiscal policies play a significant role; energy, industrial and transport policy are found to be especially important for mitigation, and virtually every government department would be involved in responses to adaptation. Finance tool-kit levers available and relevant to government in South Africa include a climate budget tracking system under development for the public sector, a Draft National Green Finance Taxonomy for the finance sector, and a National Climate Finance Strategy, among others.
Finally, the authors suggest a framework that could tackle three main challenges to implement a broad and coherent mix of policies for coordination across Ministries and national departments: setting coherent strategy, building consensus by mediation of interests and coordinating implementation. They identify the Presidential Climate Commission as an important new national institution to lead collaborative development of vision and pathways to a just transition, and that private sector and international actors have important roles to play, through processes that shift parameters of public debates, set norms or establish guidelines for finance.