Climate risk information for financial sector decision-makers in Africa: gaps and opportunities

The paper identifies a critical lack of robust climate risk data and analysis in Africa, which may lead to incorrect asset valuations and increased financial stability and sovereign risks. It proposes a six-category framework for climate risk information—data, analysis, disclosure and reporting, targets, risk management, and capacity-building—to help financial decision-makers close these gaps. While all four studied countries have initiatives for disclosure and reporting, South Africa shows the most comprehensive approach, covering five of the six categories. The author recommends that countries integrate financial sector transformation into their Nationally Determined Contributions (NDCs) and expand climate risk mapping to include public financial institutions.

• Financial sector decision-makers in Ethiopia, Ghana, Kenya, and South Africa have all implemented initiatives or policies regarding climate risk disclosure and reporting, though this is the only category consistently addressed across all four countries.
• South Africa possesses the most comprehensive set of climate risk information policies among the studied nations, addressing five of the six identified categories, excluding targets.
• A significant gap in climate risk information may result in financial risks not being fully integrated into asset valuations, which increases the risk to overall financial stability and sovereign risk.
• African governments often act as 'insurers of first resort' and 'investors of first resort' due to high climate vulnerability, low readiness, and shallow financial markets that limit private sector insurance and investment.
• Ethiopia faces specific challenges in climate risk information due to a lack of ground-level data, such as insufficient rain gauging stations, forcing insurance companies to rely on less accurate satellite data.
• Ghana has focused on climate-informed expenditure analysis and is exploring a carbon tax to provide the financial sector with information on transition risks through GHG emission disclosures.
• Kenya's initiatives include a green bond programme and the development of a policy on green fiscal incentives to accelerate the transition to low-emissions development.
• South Africa's National Treasury is developing a benchmark climate scenario to stress-test regulated financial institutions and has instituted a carbon tax as of the 2020 fiscal year.
• Five primary challenges hinder the generation of climate risk information in Africa: low insurance penetration, unreliable data (especially Scope 3 emissions), evolving assessment methodologies, unclear policy signals, and anti-competitive barriers to information sharing.

APA

Mughogho, M. (2022). Climate risk information for financial sector decision-makers in Africa: gaps and opportunities. Climate and Development Knowledge Network. https://cdkn.org/sites/default/files/2022-09/Working%20paper_Climate%20Risk_web.pdf

Chicago

Mughogho, Malango. Climate risk information for financial sector decision-makers in Africa: gaps and opportunities. Climate and Development Knowledge Network, 2022. https://cdkn.org/sites/default/files/2022-09/Working%20paper_Climate%20Risk_web.pdf.

Wikipedia

{{cite report |last1=Mughogho |first1=Malango |title=Climate risk information for financial sector decision-makers in Africa: gaps and opportunities |publisher=Climate and Development Knowledge Network |date=September 2022 |url=https://cdkn.org/sites/default/files/2022-09/Working%20paper_Climate%20Risk_web.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mughogho2022climate, author = {Mughogho, Malango}, title = {{Climate risk information for financial sector decision-makers in Africa: gaps and opportunities}}, institution = {Climate and Development Knowledge Network}, year = {2022}, month = sep, url = {https://cdkn.org/sites/default/files/2022-09/Working%20paper_Climate%20Risk_web.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }