saiia_op_361_financingafricasclimategoals-afc2a0ff1ebc5c50.pdf

This research paper analyzes the potential for African countries to finance climate mitigation and adaptation by redirecting explicit fossil fuel subsidies (EFFS) and increasing environmental taxes. While these domestic fiscal tools can contribute approximately 1.7% and 1.1% of Africa's GDP respectively, the author concludes they are insufficient to close the continent's overall climate finance gap of 5–10% of GDP. The paper recommends establishing independent fuel reserve authorities to stabilize prices and adopting gradual subsidy withdrawal strategies to avoid social unrest and inflation.

• Africa faces a significant climate finance gap, estimated between 5% and 10% of GDP. The demand for this finance varies significantly depending on the estimation method: Nationally Determined Contributions (NDCs) often show higher demands than the International Monetary Fund's (IMF) implicit fossil fuel subsidies (IFFS) model, except in North and South Africa.
• Climate finance in Africa is characterized by a heavy reliance on foreign sources, public sector funding, and a higher proportion of spending on adaptation compared to the global average. In 2020, foreign sources provided over 87% of climate finance, and 44% was devoted to adaptation, whereas globally only 15% was foreign-sourced and 7% went to adaptation.
• Explicit fossil fuel subsidies (EFFS) and environmental taxes represent potential domestic funding sources, but their impact is limited. In Africa, EFFS are more than three times the global average, largely due to petroleum and natural gas subsidies in North Africa and coal-fired electricity subsidies in South Africa. Combined, these tools could contribute roughly 1.7% and 1.1% of Africa's GDP, respectively.
• Even under the optimistic assumption that all EFFS and environmental tax revenues are redirected to climate goals, financing gaps for mitigation and total climate needs would persist globally and across Africa. However, the mitigation gap could be nearly eliminated in West and North Africa due to their higher levels of EFFS.
• Sudden removal of fuel subsidies has historically led to economic instability and social unrest in African nations. For example, 'big-bang' approaches in Kenya in 2022 and Nigeria in 2023 caused inflationary surges, forcing governments to temporarily reinstate subsidies.
• The author proposes replacing explicit subsidies with independent, self-financing fuel and energy reserve authorities to smooth price cycles. Additionally, a gradual withdrawal of subsidies is recommended: a 10–20 year target for leading economies like South Africa, Nigeria, and Egypt, and potentially over 50 years for lower-income countries.

APA

-1, & VAN GASS, C. (2025). saiia_op_361_financingafricasclimategoals-afc2a0ff1ebc5c50.pdf. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2026/02/SAIIA_OP_361_FinancingAfricasClimateGoals.pdf

Chicago

-1, and CONRAD VAN GASS. saiia_op_361_financingafricasclimategoals-afc2a0ff1ebc5c50.pdf. South African Institute of International Affairs, 2025. https://saiia.org.za/wp-content/uploads/2026/02/SAIIA_OP_361_FinancingAfricasClimateGoals.pdf.

Wikipedia

{{cite report |last1=-1 |last2=VAN GASS |first2=CONRAD |title=saiia_op_361_financingafricasclimategoals-afc2a0ff1ebc5c50.pdf |publisher=South African Institute of International Affairs |date=December 2025 |url=https://saiia.org.za/wp-content/uploads/2026/02/SAIIA_OP_361_FinancingAfricasClimateGoals.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{12025saiiaop361financingafricasclimategoalsafc2a0ff1ebc5c50pdf, author = {-1 and VAN GASS, CONRAD}, title = {{saiia\_op\_361\_financingafricasclimategoals-afc2a0ff1ebc5c50.pdf}}, institution = {South African Institute of International Affairs}, year = {2025}, month = dec, url = {https://saiia.org.za/wp-content/uploads/2026/02/SAIIA_OP_361_FinancingAfricasClimateGoals.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }