Journal of Environmental Science Current Research Category: Environmental science Type: Research Article

Increasing the Resilience of Africa’s Food Systems to Climate Change through an Alignment of Microfinance and Renewable Energy Services: Policy Prospects and Challenges

Dumisani Chirambo1*
1 Department Of Civil And Public Law With References To Law Of Europe And The Environment, Brandenburg University Of Technology Cottbus- Senftenberg, Cottbus, Germany

*Corresponding Author(s):
Dumisani Chirambo
Department Of Civil And Public Law With References To Law Of Europe And The Environment, Brandenburg University Of Technology Cottbus- Senftenberg, Cottbus, Germany
Tel:+49 174 6033672,
Email:sofopportunity@gmail.com

Received Date: Apr 07, 2020
Accepted Date: Jul 14, 2020
Published Date: Jul 21, 2020

Abstract

Climate change might be considered as the greatest threat to the attainment of the Sustainable Development Goals (SDGs) in Africa as it has potential to perpetuate poverty, migration, and disrupt agriculture productivity and food systems. Moreover, climate change vulnerability on the continent has arguably been increasing as many African countries have failed to integrate their climate change programmes and strategies with national economic and development planning. Through an inductive analysis based on research articles, case studies, policy briefs, and academic literature reviews, this paper seeks to highlight the policies and innovations that can potentially increase the resilience of Africa’s food systems to climate change whilst simultaneously facilitating improved electricity access and financial inclusion in Sub-Saharan Africa. The paper identified that agriculture resilience and rural development is mainly constrained by ineffective rural electrification programmes and a lack of microfinance services to improve financial inclusion in rural areas. Consequently, the successful implementation of SDG 2 (no hunger) in Sub-Saharan Africa may be enhanced by implementing socio-economic policies and strategies that can build human and institutional capacity of various local stakeholders to increase investments in Africa’s agriculture sector by leveraging private investments with climate finance.

Keywords

Agribusiness; Climate finance; Entrepreneurship; Green revolution; Innovation; Sustainable Development Goals (SDGs)

INTRODUCTION

Some estimates point out that a failure to mitigate climate change will lead to developing countries to bear approximately four-fifths of the costs caused by a 2°C increase in average global temperatures [1]. Consequently, communities in developing countries are anticipated to bear the heaviest burdens from climate change regardless of them having contributed the least to global greenhouse gas emissions that contribute to global warming, with Africa being the continent that has contributed the least to global greenhouse gas emissions yet being the continent that will likely be the most affected by climate change impacts [2]. Poor people in developing countries, especially the ones involved in agricultural activities, and the institutions interacting with them, are the most exposed to the detrimental impacts of climate change [2,3]. Globally, in addition to ensuring food security, the agriculture sector also provides livelihoods for almost two-thirds of the world’s extremely poor, or some 750 million people [4] and agriculture is the economic and social mainstay of some 500 million smallholder farmers in developing countries, making the sector to be the largest source of incomes, jobs and food security [5]. Additionally, ensuring sustainable food production systems and implementing resilient agricultural practices that strengthen capacity for adaptation to climate change, droughts and floods is therefore not only imperative to facilitate food security, but can also reduce the influence that climate change and extreme weather events have on exacerbating social conflicts and forced migrations [6]. There is therefore an urgent need to ensure that the agricultural systems in developing nations are made resilient to the impacts of climate change lest such nations fail to achieve the Sustainable Development Goal (SDG) target 8.1 of sustaining per capita economic growth in accordance with national circumstances and, in particular, at least 7% Gross Domestic Product (GDP) growth per annum in the least developed countries [7]; and lest such communities in developing countries fail to achieve SDG 2 (no hunger).

The global achievement of the SDGs is closely hinged upon how Sub-Saharan Africa (SSA) manages to ensure food security in the face of concerns about population growth, climate change, changing patterns of resource consumption, food price volatility, and malnutrition [8] since these issues are interlinked with governance structures and socio-economic outcomes of natural resource use and environmental exploitation. Unfortunately, some researchers have pointed out that aid and investments to Africa’s education and agriculture sectors are decreasing hence this might perpetuate inequality and also affect the achievement of the SDGs in the region. For example, aid to agriculture accounted for 22.5% of total aid to all sectors in 1979-1981 but this reduced to 6.0% in 2006-2008 [9] and investment in African agriculture remains well below average global levels meaning that current agriculture investment efforts fall short of achieving the SDGs [10]. On the other hand, donor support to African education systems has been inadequate and unreliable. For example, Official Development Assistance (ODA) to Africa declined 0.5% in real terms between 2013 and 2014 with ODA to least developed countries, landlocked developing countries, and small island developing states declining 16% in real terms compared to 2013 [11]. Consequently, Africa is projected to become home to 50% of the world’s illiterate population [12] and this might make reducing poverty and enhancing climate change resilience very problematic since illiteracy serves as a barrier to facilitating the understanding of the complex nature of climatic hazards and appropriate responses to them [13].

Notwithstanding the current and projected impacts of climate change on SDG 2 implementation in Africa, Africa is a continent that is already food insecure as Africa’s low agricultural productivity results to food importation that costs up to US$35 billion annually [14]. With climate change anticipated to bring about unpredictable rainfall patterns resulting in prolonged droughts and devastating floods in some localities, it might be expected that such changes will trigger shifts in agricultural processes and reduce productivity, and this, in turn, could lead to food shortages and malnutrition-thus, worsening poverty and increasing vulnerability [15]. Whilst other developing regions such as Asia have a history of being able to avert food insecurity through agricultural innovations and by initiating a Green Revolution, the case for Africa is that despite numerous interventions by donors and governments, the continent is still prone to food insecurity and poverty since despite decades of attempts, both land and labour productivity in SSA have hardly increased [16]. Consequently, annual cereal imports into Africa have steadily increased from 2.5 million tonnes in the 1960s to more than 15 million tonnes in 2000 and 2001, and these imports are expected to increase by a factor of 5 during 2000–2050 [16]. Therefore, without innovative mechanisms and policies to enhance climate change resilience in Africa, or if the continent fails to initiate an “African Climate Resilient Green Revolution” the prices, costs and value for food imports can be expected to substantially increase thereby thwarting efforts to achieve sustainable development in the region.

Since Africa’s agricultural systems and development prospects are still vulnerable to the adverse impacts of climate change, many researchers and policymakers have therefore attempted to explore which innovations and policies can foster enhanced climate change resilience and sustainable development in the context of SSA. For example, Van Wesenbeeck et al. [17], looked at the localisation and characterisation of populations vulnerable to climate change in SSA. Van Wesenbeeck et al. [17], highlighted that some West African and East African communities have varying degrees of vulnerability hence poverty reducing strategies for climate change affected areas should differ from generic poverty reduction strategies and policies. Christiaensen [18] analysed African agricultural systems in order to determine agriculture myths from the facts. According to Christiaensen [18] stylised facts drive research agendas and policy debates, yet robust stylised facts are hard to come by, and when available, they are often out-dated, hence practitioners and policymakers need to pay more attention to checking and updating common wisdom. Freitas [19] assessed how market based instruments such as the Clean Development Mechanism (CDM) was promoting the diffusion of renewable energy technologies. Freitas [19] concluded that market based instruments merely encouraged increased installed capacity of existing technologies hence were likely to reinforce traditional technology trajectories, which would make it more difficult to develop more environmentally sustainable growth paths. However, despite the knowledge that inadequate power supply is a major contributor to Africa’s constrained development [20, 21] and that a lack of finance in Africa is a major factor constraining agricultural innovation and economic development [22-24], knowledge gaps still exist in determining the strategies that can enhance food security and climate change resilience whilst also simultaneously promoting the deployment of renewable energy and enhancing financial inclusion in SSA. To address this knowledge gap, an inductive analysis based on research articles, case studies, policy briefs, and academic literature reviews was undertaken in order to highlight the policies and innovations that can improve the implementation of SDG 2 (no hunger) whilst simultaneously facilitating improved electricity access and financial inclusion in SSA.

The paper is structured as follows: Section 2 follows with an analysis of how innovations in small-scale commercial farming and climate finance can promote sustainable development. Section 3 provides suggestions of how agribusinesses can be used to improve the mobilisation of private sector funds for climate change adaptation. In Section 4, the roles of microfinance and climate finance in facilitating rural development are provided by expounding on how microfinance improves climate change adaptation and how remittances can aid climate change adaptation. Insights into some renewable energy sector and agriculture sector policy design considerations that can improve climate change management and SDG 2 implementation in SSA are provided in Section 5. The discussion in Section 6 focuses on the importance of prioritising capacity development and institutional coordination in agriculture resilience policy design and delivery. Lastly, the conclusion in Section 7 highlights that Africa can be near to achieving an “African Climate Resilient Green Revolution” by leveraging climate finance with private finance to enhance rural electrification, strengthen rural financial systems and support the development of small-scale commercial farmers.

CLIMATE FINANCE AND SMALL-SCALE COMMERCIAL FARMING INNOVATIONS FOR AUGMENTING SUSTAINABLE DEVELOPMENT

Since the increased frequency and severity of weather shocks inSSA is exacerbating poverty and increasing conflicts [6,13], it might be argued that enhancing the resilience of SSAs agriculture sector will require undertaking operations beyond the agriculture sector. In many SSA countries, farmers are vulnerable to risks in agriculture (both climate and non-climate related), including pest and disease outbreaks, extreme weather events, and market shocks, among others, making it difficult to eradicate poverty and compromising the ability to achieve food security [25]. Consequently, it has been suggested that government priorities and interventions should not only be given to immediate disaster recovery needs after weather shocks (i.e. droughts and floods), but that the underlying vulnerabilities of communities and countries are addressed so that weather shocks should not lead to disasters [17,26,27]. However, reducing climate risks and reducing community vulnerability to environmental and socio-economic shocks in order to promote climate change resilience and sustainable development faces many challenges. For example, of the US$148 billion in public financing dedicated to combating climate change as of 2014, only US$6 billion (4%) went to efforts in the agricultural sector [28]. This is despite knowledge that (i) the agriculture sector accounts for almost a quarter of annual global greenhouse gas emissions [29], (ii) the agriculture sector contributes more than 50% to GDP in most African countries, and (iii) GDP growth generated by agriculture is eleven times more effective in reducing poverty than GDP growth in other sectors [30,31]. On the other hand, whilst conventional climate finance modalities such as funding through the Green Climate Fund and Adaptation Fund can be used to initiate climate change programmes that can complement rural development and agriculture development initiatives, it has been reported that the levels of climate finance to Africa to facilitate climate change mitigation, adaptation and capacity building are far from satisfactory in terms of the size, source and distribution [32]. Additionally, there is a financing imbalance between climate finance for mitigation activities and climate finance for adaptation activities with more resources being invested in mitigation activities such as renewable energy deployment as opposed to adaptation activities such as improving water resource management (including flood risk and drought control) and developing more efficient irrigation techniques [33,34]. To substantiate this assertion, Climate Policy Initiative estimated that the proportion of climate finance annually invested in adaptation to be only between 3.8% and 6.4% of the total amounts of climate finance, and the International Development Finance Club estimated that the proportion of climate finance invested in adaptation to be between 6.7% and 18.4% annually [34]. Regardless of the divergence in the estimates, what is more apparent and acknowledged is that a significant proportion of climate finance is invested in mitigation programmes whilst Africa arguably requires more funding and investments for adaptation [34,35,67].

Another factor that constrains sustainable development and SDG 2 implementation in SSA is that the region is characterised by inadequate institutional, financial or technological capacity to foster effective climate change adaptation [36,37]. For example, there is widespread knowledge that the use of modern practices such as the use of nitrogen-efficient and heat-tolerant crop varieties, zero-tillage and integrated soil fertility management can boost productivity and farmers’ incomes (and potentially reduce the number of people at risk of undernourishment in developing countries in 2050 by more than 120 million) [4,18]. However, despite such knowledge being available, most SSA rural households have a limited use of and adoption of improved agricultural practices and technologies. It has therefore been estimated that the average nitrogen fertiliser applied in cereal crop production is 155 kg/ha in East Asia in comparison to 9 kg/ha for SSA leading to an average cereal crop yield of 4.8 tonnes/ha in East Asia in comparison to 1.1 tonnes/ha in SSA [4]. Additionally, when climate change considerations are included, some of the factors that are commonly cited as factors that can enhance or hinder adaptation, and influence choice of an adaptation strategy for farmers include age, gender, access to information, access to extension services and credit, social capital, level of education, and  agro-ecological settings [25]. It is with these above considerations in mind that some recent literature is now proposing that rural development, agricultural innovation and agriculture development might be enhanced by improving the capacities of small commercial farms and agribusinesses rather than focusing on smallholder farmers’ development [10,38,39]. This follows that small commercial farms outperform large-scale farms in terms of monetary return, food security, employment generation, local prosperity and avoiding land conflicts [39], and that the targeting of smallholder farmers for agricultural development has not achieved clear results in agricultural technology extension for many years since SSA smallholder farmers have low tolerance for risk and have a conservative attitude towards adopting new technology [10].

With the above considerations in mind, it might therefore be argued that in order for SSA to be on a good trajectory of achieving SDG 2 (no hunger) despite the threat of climate change, climate change policies and strategies should focus more on directing climate financing towards enhancing the capacities of small-scale commercial farmers. As it stands, investments in small-scale commercial farming by national governments is minimal in many SSA countries [39] and small-scale commercial farmers in SSA face various risks and challenges such as high interest rates from banks, high cost of procurement for machinery, limited access to extension services, etc. [38,40]. These two issues consequently affect the general levels of agricultural productivity and development, and the levels of involvement of the youth in agribusinesses. However, since climate finance may be considered as “additional” resources, SDG 2 implementation may be enhanced by implementing policies that utilise climate finance to address the financial and non-financial issues that constrain the development of small-scale commercial farmers whilst public finance mechanisms are utilised for financing  smallholder focused capacity building initiatives and establishing social protection measures (i.e. fertiliser subsidy schemes for poor villagers, cash transfer schemes, etc.). Such an approach can arguably initiate an “African Climate Resilient Green Revolution” since it would foster more innovation, investments and entrepreneurship in SSA’s archaic agricultural systems. By initiating such policies and strategies it can also be envisaged that governments will be able to divert more resources and investments into commercial and semi-commercial agriculture and simultaneously be reducing the vulnerabilities of Africa’s small-scale commercial farms, smallholder farmers and rural dwellers to market uncertainties, climate risks and other socio-economic shocks.

Commercial agricultural success in various SSA countries is currently as good as, or better than, they were in Brazil and Thailand during the period when these two countries were going through their agricultural revolutions [41]. It might therefore be argued that a strategy focussing on simultaneously enhancing the capacities of small-scale commercial farms, smallholder farmers and rural dwellers will not only enable SSA food systems to produce enough food to ensure food security, but it will also more importantly enable people and institutions in SSA to commercialise and fully exploit the regional and international food markets. As it stands, some estimates point out that harnessing SSA’s agribusiness opportunities can enable SSA to feed its fast-growing urban population, potentially resulting in a trillion dollar food market by the year 2030 [38]. More importantly, Africa’s producers are favourably positioned to serve regional markets relative to the non-African countries that dominate international trade, hence a full realisation of SSA’s agribusiness opportunities and supporting SSA exporters to expand trade not only by exploiting growth in overall demand but also by displacing imports from outside the region, which currently are considerable [41], may enable SSA to be in a better position to significantly increase incomes for rural populations and achieve sustainable development.

IMPROVING THE MOBILISATION OF PRIVATE SECTOR FUNDS FOR CLIMATE CHANGE ADAPTATION THROUGH AGRIBUSINESSES

The private sector is noted to be by far the largest source of finance for climate change adaptation and mitigation efforts, contributing approximately 62% of the US$391 billion invested in addressing climate change in 2014 [4,42]. From this estimation, multilateral funding for climate finance in the agriculture sector was heavily dominated by mitigation whereby mitigation accounted for up to approximately 70% of funding in the agriculture, forestry and fisheries sectors [4]. However, since the Nationally Determined Contributions (NDCs) from developed and developing countries have failed to reach any of the goals in the Paris Agreement and the global goal to limit temperature increase to 2°C [43,44], it is plausible that atmospheric greenhouse gas emission concentrations will not only increase to dangerous levels, but it will also mean that the costs for climate change adaptation will continue rising [34]. This scenario may arguably impede efforts to enhance agriculture resilience since there is currently more funding going towards agriculture mitigation programmes and activities rather than agriculture adaptation programmes and activities. 

Notwithstanding the aforementioned factors, in addition to existing funding as provided by the Global North, South-South Climate Finance (SSCF) modalities are increasing in value and significance. SSCF is financing that is instituted by developing countries (the Global South) to promote and support low-carbon, resilient development within and between developing countries [45]. Since private sector investments in sectors such as renewable energy to scale-up financial resources for climate change mitigation and other trade and investment activities that facilitate pro-poor inclusive growth may also be considered as a form of SSCF, there is significant potential for SSCF to be used to augment the implementation of SDGs programmes. Some reports point out that trade and investments from emerging economies (Brazil, China, Russia, India, etc.) to SSA has substantially increased from less than US$1 billion per year before 2004 to US$8 billion in 2006, and by 2012 this had exceeded US$20 billion [46]. Additionally, technical assistance and trade relations between China and Africa have significantly increased to the extent that Foreign Direct Investment (FDI) from China to Africa increased thirty-fold, from US$491 million to US$14.7 billion [46] and as of end-2013, China had more Outward Direct Investment (ODI) in Africa (US$26 billion) than in the United States of America (US$22 billion) [47]. Moreover, there are also various Chinese policies and strategic collaborations such as the Forum on China-Africa Cooperation Johannesburg Action Plan that make provisions for China to provide financing and assistance averaging US$60 billion in the form of grants, loans, export credits, development funds, and scholarships and training for Africans [48,49]. Within the framework of the Forum on China-Africa Cooperation Johannesburg Action Plan (2016-2018), it can also be seen that agricultural development and food security have been prioritised as the Plan stipulates measures to strengthen cooperation in the fields of agricultural policy consultation, planning and design; and facilitate joint research on breeding and the production of seeds as well as plant protection [48]. Moreover, as part of its SSCF commitments, China will provide US$3.1 billion (CNY20 billion) to establish the China South-South Climate Cooperation Fund for Climate Change and increase its financial support towards climate change South-South Cooperation from approximately US$40-50 million (CNY254-318 million) prior to 2015 to approximately four or three times more during the 2015-2030 period [50,51]. However, for such technical assistance, investments, aid and trade through SSCF modalities and private sector investments to have sustained and meaningful impact on the development of Africa (more especially in Africa’s agriculture sector), African policy makers will have to improve on developing robust strategic-development plans, establishing appropriate legal and institutional frameworks that would attract private (international and local) finance into climate change activities, and developing adequate institutional frameworks and regulations when strategising for development and engaging with foreign countries [32,46,52].

Despite these breakthroughs in Africa finding additional sources of finance that can promote its investments in the agriculture sector especially with regard to climate change activities, some reports indicate that there will be a high probability that private sector investments in climate change programmes will mostly be focused on climate change mitigation programmes. This could be because most private investors are risk averse hence would more likely focus on scaling-up and replicating existing climate finance interventions in developing countries, of which the majority have been for climate change mitigation rather than adaptation [53,54]. Arguably, in order to reduce this mitigation bias and balance the funding between climate change mitigation and climate change adaptation, there might be a need for policy makers to put in place quotas, stipulations and procedures for some types of climate finance to go towards supporting capacity building initiatives and climate change adaptation initiatives that support the development of new agriculture business models that can incentivise investors to invest in the agriculture sector and agribusinesses. According to Abadie et al. [55], the private sector is more attracted to investing in climate change mitigation programmes because they have established business models that offer stronger incentives and co-benefits such carbon credits and renewable energy services. On the other hand, climate change adaptation programmes are not attractive to private sector investors as they are considered a public good and need to be provided through public sector accounts, and there is a lack of adaptation finance credits whereby in contrast to international mitigation markets where the commodity ‘emission reduction credits’ can be traded, there exists no such standardised ‘commodity’ in the adaptation spheres [55].

However, it is plausible that some agriculture and agribusiness business models can be adapted in order to enhance climate change adaptation whilst providing monetary incentives to the private sector. With this consideration in mind, it might be argued that the main barriers to financing adaptation programmes do not necessarily apply to agriculture based adaptation programmes; hence there is a need for rural development strategies to link social investors with agribusinesses and projects that demonstrate both profitability, and enhanced resilience and socio-economic welfare for surrounding communities. As a case point, agribusiness profit-sharing models and schemes such as In Grower - even though not directly aimed at enhancing climate change resilience, can arguably be adapted and utilised to enhance community resilience to climate change impacts and facilitate  sustainable development [56,57]. For example, in the In Grower programmes, young entrepreneurs (that use pooled resources in order to achieve economies of scale for production, market access, financial support and technical support) are financed by local and international financiers that provide equity investments, loans and grants to the In Grower programmes in various countries in return for financial profit and social impact. To this effect, the In Grower programme in Mozambique provided its entrepreneurs with an average yearly gross profit of US$6,600.00 giving them a high income of about US$3,300.00 per year, in comparison to alternative job possibilities such as US$1,500.00 per year for a field worker in Mozambique [57]. So whilst investing in agribusiness schemes that promote climate change adaptation might not necessarily provide adaptation credits or tradeable valuable commodities, they can still provide discernible income streams and financial returns which can incentivise private sector investments in climate change adaptation programmes whilst enhancing the livelihoods for local communities.

RURAL DEVELOPMENT OPPORTUNITIES THROUGH MICROFINANCE AND CLIMATE FINANCE

Climate Change Adaptation for Microfinance

The presence of a robust financial system and greater financial inclusion in a developing country can improve the socioeconomic development prospects of that country and reduce inequality. This follows that, with greater financial inclusion, many communities, farmers and enterprises will have improved access to savings, credit and risk mitigation products which can reduce poverty traps and improve household asset building [58]. This can also allow individuals and companies to engage more actively in the economy [59]. Additionally, greater access of firms and households to various banking services, as well as increasing women users of these services leads to higher economic growth [60]. In instances where countries receive significant amounts of FDI, in the absence of sufficiently developed local financial markets, the potential for FDI to facilitate technology transfers and introduce new processes to the domestic markets is diminished [61,62]. Unfortunately, an average of only 24% of the population of SSA has an account with a formal financial institution (in contrast to 55% of adults in East Asia, 35% in Eastern Europe, 39% in Latin America, and 33% in South Asia) [63] and most Africans have limited access to commercial banks with an average of just 6.8 commercial bank branches per 100,000 adults [23]. Consequently, limited financial services continue to be identified as a major constraint for agriculture development [23] and arguably an aspect that can hinder FDI in the agriculture sector to lead to substantial economic development. It is therefore not surprising that SDG 1.4 considers increasing access to microfinance services for all men and women as a catalyst for reducing poverty/ensuring sustainable development and SDG 2.3 considers secure and equal access to financial services and non-farm employment as a catalyst to double agricultural productivity and incomes of smallholder farmers. 

Climate change adaptation has many definitions depending on context and sector. For example, de Oliveira [64] defines climate change adaptation as the development of initiatives and measures to reduce the vulnerability of natural and human systems against actual or expected climate change effects. Similarly, Eriksen et al. [65], defines climate change adaptation as various behavioural adjustments that households and institutions make (including practices, processes, legislation, regulations and incentives) to mandate or facilitate changes in socio-economic systems, aimed at reducing vulnerability to climatic variability and change. It can therefore be argued that African financial systems, more importantly microfinance institutions, also need to adapt their practices and business models in order to ensure that they support various communities and sectors in their efforts to attain sustainable development.  Accordingly, the various issues that can promote or constrain the integration of microfinance in the implementation of climate change policies and rural development policies need to be analysed. For example, in the climate change policy domain, it was noted that the disbursements of climate finance to developing countries was insufficient even though climate finance is a prominent financial instrument/mechanism that can provide “additional” technical and financial resources to state and non-state actors to assist them in their transitions towards climate resilient economies and adaptation in agricultural systems. Following on from this, the post-2015 development arena has seen developed countries increasing their efforts and commitments to improve the mobilisation of climate finance for developing countries. In this regard, it is now anticipated that developing countries will now have access to US$100 billion or more annually through the post-2015 global climate finance architecture [66]. Whilst this is a positive development for many developing countries, caution has to be taken since some developing countries in Africa have peculiar challenges in accessing climate finance. For example, Least Developed Countries (LDCs) are not in a position to ‘compete’ with other, more capable developing countries for climate finance hence the United Nations Framework Convention on Climate Change (UNFCCC) established the Least Developed Countries Fund (LDCF) as a climate finance mechanism that is exclusive to LDCs [67]. Similarly, many climate finance modalities have challenges in ensuring that climate funds are successfully channelled to local level actors and beneficiaries, thereby making climate finance to be inaccessible to poor people that are also often the most vulnerable to the impacts of climate change [68,69]. With these considerations in mind, it can be argued that an increase in the amount of climate finance devoted towards developing countries might not necessarily lead to reduced climate change vulnerability for some communities or agriculture sub-sectors unless there are commensurate efforts aimed at enhancing the capacity of marginalised countries to access international climate finance and enhancing the capacity of financial services providers in SSA countries to disburse climate finance to the otherwise marginalised communities and sub-sectors. These issues arguably demonstrate that one of the ways to which microfinance institutions can demonstrate adaptation to climate change is by changing their practices, processes and incentives so that they can successfully realigning themselves to be in a position to access climate funds from various climate finance modalities and they can use their extensive rural outreach to provide finance, financial literacy lessons and business training in order to enable communities to increase their agricultural productivity and enhance their climate change resilience.

Remittances for Climate Change Adaptation

It has been noted that that most African farmers would easily adapt to climate change if they had unfettered access to markets, new technologies, extension services and credit services [70]. Additionally, it has been argued that development interventions to support financial inclusion have the potential to reinforce people's ability to manage climate risks as they facilitate savings, borrowing and remittances to be used as strategies for managing exposure to climatic and economic shocks [1]. Some of the established roles of microfinance in rural development and agriculture development settings include facilitating climate change adaptation by (1) improving ex-post risk recovery by enhancing coping capacity and (2) improving ex-ante risk reduction by enhancing adaptive capacity [71]. Moreover, microfinance processes are also generally faster and less prone to bureaucratic delays and competing interests between central and local government that are prevalent with public sector resources hence making the transfer of funds between donors or investors with beneficiaries time­ly, efficient and effective [72]. Due to the increased focus on remittance as a source of finance in developing countries, there could be merit in exploring how microfinance can augment the impact of remittances in the agriculture sector. For example, Castello and Boike [73] stated that remittances have increased ten-fold over a period of ten years and small developing countries received over 18% of the total remittances in that time, with remittances growing to nearly 50% of GDP within certain countries. Furthermore, SDG 10.c has an objective to reduce to less than 3% the transaction costs of migrant remittances and eliminate remittance corridors with costshigherthan5%. As it stands, remittance charges to and within Africa are almost double the global average, consequently if money transfer operators, banks, and other intermediaries reduced remittance charges to reach 5%, remittance transfers would increase by US$1.8 billion annually [74]. With any success in reducing remittance charges, it might be anticipated that remittances will continue to be a major source of capital inflows for developing small countries [73] and a reliable source of capital inflows for countries with significant diaspora. With this in mind, another aspect that can possibly enable microfinance to have a greater bearing on promoting equity and sustainable development at local level could be for microfinance institutions to have improved capacities in facilitating remittances. Arguably, a microfinance climate change adaptation through a change in practice and process that could be imperative to help SSA’s rural communities could be the incorporation of remittance services (sending and receiving remittances, providing savings accounts for remittances received, etc.) since the utilisation of remittances at local level can be enhanced with the proliferation of agents and access points in local communities.

POLICY TRANSITIONS FOR CLIMATE CHANGE AND SDG 2 IMPLEMENTATION IN SSA

Renewable Energy Development 

Climate change is a major  threat to the attainment of sustainable development as some estimates have pointed out that climate change can bring 43 million people in Africa (of 122 million in the whole world) below the extreme poverty line by 2030 [75]. Unfortunately, as it stands, regardless of the presence of many global initiatives and plans to facilitate sustainable development, progress has been sluggard in many sectors in developing countries. For example, in Africa’s agriculture sector, effective agricultural strategies to support rural development and poverty alleviation are scarce; and there is inadequate support in rural communities to facilitate market-oriented farming that contributes to local value chains at many levels [39]. To make matters worse, Africa will need to develop its own novel development trajectory to simultaneously address its climate change and food insecurity challenges, since existing strategies and investments in the sector have been inadequate to ensure that the SDGs may be attained in SSA. Some of the aspects that make food insecurity to persist in SSA include the impacts of poverty, institutional weakness, conflicts, inequality, market failures, and policy failures which magnify environmental and weather shocks into natural disasters [76]. However, since the majority of studies on climate change impacts on agriculture in SSA are commonly performed at large spatial scales, the data generated leads to generalised and broad conclusions about the impact of climate change on agriculture which are not reflective of impacts at farm or community level and they run the risk of missing out on local peculiarities, where impacts vary considerably in both space and time [77]. Effectively enhancing climate change adaptation will therefore call for policymakers to switch from a high dependence on data generated at high spatial scales to data and information collected by communities and local farms on how climate change is impacting their livelihoods.

On the other hand, climate change adaptation has to be undertaken concurrently with rural development hence due to the underdevelopment of Africa’s rural regions, there could be substantial advantages in enhancing rural electrification and focusing on improving the productivity of small-scale commercial farming as a means for ensuring food security and sustainable development. Currently, SSA is one of the least electrified regions in the world at 32%-35% in comparison to the World at 82%; Developing Asia at 83%; North Africa at 99%; Africa at 43%; and Developing countries at 76% [78,79]. The under-investment in the energy sector and low rates of electrification in SSA have therefore engendered poverty in the region and constrained innovations in the agriculture sector.

The impacts of climate change on future economic growth and development are uncertain and not well understood and appreciated by many policymakers [80,81]. Consequently, the effectiveness and successful implementation of climate and environmental policies in Africa is constrained by bureaucratic delays in adopting and implementing climate change policies and strategies and a lack of integration between climate change programmes and strategies with national economic and development planning [80]. There is therefore a threat that even with the promising signs of new energy sector investments and financial flows arising from international and domestic initiatives, and the decreasing costs of renewable energy technologies, there might not necessarily be phenomenal renewable energy sector investments in SSA to facilitate enhanced climate change mitigation. This could be attributed to the likelihood of there being poor coordination between different implementing agencies, and poor climate change policy and local development policy integration at local level. However, it might be argued that by linking or creating synergies between renewable energy deployment and agriculture development, climate change resilience and food security can be enhanced as apportioning responsibilities to different agencies would be simplified, and such a direct link would foster improved rates of rural electrification and enable the provision of energy services in rural areas. For example, by renewable energy technologies being used to reduce post-harvest losses, Africa’s rural livelihoods can potentially be made more resilient to socio-economic and climatic shocks.

On the other hand, some reports have shown that between 2010-2012 the electricity access in SSA rose from 32% to 35% with the increases being concentrated in urban areas where energy access growth exceeded population increase by 25 million, while in rural areas it fell short by 23 million [79]. This arguably means that there is a tendency for energy access projects to have a bias towards electrifying urban areas regardless of SSA’s rural areas being the regions that arguably have the greatest potential to foster sustainable development by creating mass jobs for unemployed youths. In this case, SSA as a whole can benefit the most from greater energy investment and improved energy access in rural areas to among others improve the storage and processing of agricultural produce to reduce post-harvest losses. Some estimates have pointed out that up to 37% or 120-170 kg/year per capita of food produced in SSA is lost or wasted [82], meaning that the value of post-harvest losses for grains alone is estimated at US$ 4 billion, and that the magnitude of food loss in SSA exceeds the value of total food aid received in SSA over the last decade, and further equates to the annual value of cereal imports to SSA [83]. Consequently, reducing post-harvest losses along food chains can, in certain cases, provide a more cost-effective and environmentally sustainable means of promoting food and nutrition security than investments focusing on intensifying food production since reducing post-harvest losses translates into reducing the wastage of scarce production resources (land, water, inputs, etc.) thus ensuring more sustainable food supplies [84]. For example, increasing the deployment of renewable energy in rural areas to support the refrigeration and storage of agricultural produce can significantly reduce post-harvest losses for fresh fruits and vegetables which are currently estimated at 20% to 50% [85,86]. 

Nonetheless, there are some good prospects that the targeted integration of agriculture development and rural electrification projects can facilitate sustainable development. For example, in the case of Vietnam, the country managed to facilitate inclusive development through the prioritisation of rural electrification. In this instance, the government of Vietnam’s electrification programme prioritised rural electrification rather than urban electrification and this is noted to have accelerated the pace of electrification in the whole country since rural energy services led to higher agricultural productivity and higher rural incomes which ultimately led to increased government revenues from rural enterprises [87]. It may therefore be argued that by SSA government’s equally prioritising rural electrification over urban electrification, SSA could witness unprecedented levels of acceleration and progress towards both the attainment of SDG 2 (no hunger) and SDG 7 (universal energy access) in addition to augmenting SDG 12 (sustainable production and consumption) through reductions in post-harvest losses and its associated wastage of food, water and other resources. 

Enhancing SSA’s Agriculture Policies 

Various SSA countries need to develop and implement new polices in order to address contemporary challenges such as climate change and food insecurity. For example, policies implemented to facilitate the implementation of the Green Revolution in Asia are credited to have ensured the protection of forests, wildlife habitats and woodlands by doubling agricultural yields [88]. Unfortunately, many African countries are characterised by food scarcity and seasonal food insecurity as they have been unable to significantly increase their yields regardless of the implementation of a myriad of policies over the decades. With this in mind, policy innovation is arguably an integral component of ensuring that Africa’s agriculture sector will be on a positive trajectory to achieve the simultaneous roles of promoting climate change mitigation and adaptation, and higher productivity. Similarly, it might therefore also be argued that there is now a need for agricultural policies in SSA countries to explicitly differentiate between the needs and vulnerabilities of smallholder farmers, small-scale (commercial) farmers and (large-scale) commercial farmers. For example, Wilk et al. [89], highlighted that commercial and non-commercial farmers have both common challenges and specific challenges for dealing with the effects of climate change and other stressors hence require different adaptive strategies. For example, both groups have challenges related to exposure to climate variability and change, weak agricultural policies, limited governmental support, and theft. However, non-commercial farmers were more vulnerable to these issues due to difficulties to finance the high input costs of improved seed varieties and implements, limited access to knowledge and agricultural techniques for water and soil conservation and limited customs of long-term planning, challenges for which the commercial farmers already had efficient adaptation strategies in place. On the other hand, a major constraint for commercial farmers was the lack of clear directives from the government, for example, with regard to issuing of water licences, which hindered future planning [89]. It can therefore be argued that without the implementation agriculture policies that incorporate climate change resilience building interventions that separately address challenges to adaptive capacity for commercial farmers and non-commercial farmers, food security and enhanced agricultural productivity will be compromised in SSA.

An inductive analysis of agriculture policies for seven of the 15 member states of the Southern African Development Community (SADC) (i.e. Malawi, Mozambique, Namibia, Tanzania, South Africa, Zambia, Zimbabwe), highlights that whilst most of the policies acknowledge that climate change can constrain agricultural production, there is generally a lack of separation between how and which climate change adaptation strategies should be delivered to commercial farmers and non-commercial farmers. As shown in table 1, five of the seven countries have policy statements related to climate change. However, only the South African Agricultural Policy Action Plan (2015-2019) (APAP) [90] makes special consideration to stipulate the need for different approaches to increase the adoption of Climate Smart Agriculture (CSA) between large-scale commercial farmers and smallholder farmers. Quite interestingly, the Mozambican National Agriculture Investment Plan (2014-2018) [91] and South African Agricultural Policy Action Plan (2015-2019) (APAP) [90] in addition to stipulating various policy measures that will be implemented to address factors hindering agricultural productivity in the countries such as farmer’s constraints to accessing finance and markets, as the case was in all the seven policies reviewed, go further to stipulate additional sub-programmes and sub-sectoral interventions for areas and sub-sectors requiring prioritisation (i.e. Poultry/Soya beans/Maize integrated value chain, wheat value chain, cashew production, etc.). Arguably, such an approach for agricultural policies providing comprehensive sectoral or value chain specific interventions shows how various crops also require complex and specific interventions if they are to successfully adapt to the climatic and socio-economic shocks. Similarly, such comprehensive analyses can also be adopted in future agriculture policies of other SSA countries where they can incorporate various sub-programmes and policy intervention areas for enhancing climate change resilience for commercial farmers and non-commercial farmers separately since these groups have divergent sets of vulnerabilities and capabilities when fostering sustainable development.

Country

Agriculture Policy Document

Main Climate Change Policy Statement

Explicit Separation of Commercial and Non-commercial Measures for Farmers

Explicit Separation of Climate Change Measures for Commercial and Non-commercial Farmers

Malawi

National Agriculture Policy [92]

Establish a diversified portfolio of agricultural production risk management instruments and technologies

Generally no

Generally no

Mozambique

National Agriculture Investment Plan [91]

The Sub-programme to Support Sustainable Land and Water Management and Reduction of Climate Change Vulnerability

Generally no

Generally no

Namibia

Namibia Agriculture Policy [93]

No policy statement but general acknowledge-ment that the Policy will be implemented under the full realisation that climate change will impact negatively on agricultural production and productivity

Generally no. However, there are provisions for the need to design and implement support programmes for various categories of crop farmers

Generally no

Tanzania

National Agriculture Policy [94]

Strive to improve adaptation measures to climate change effects and deal with all the risks involved

Generally no

Generally no

South Africa

Agricultural Policy Action Plan [90]

Promote Climate-Smart Agriculture (CSA)

Generally no

Generally no. However, the policy acknowledges the  need to develop CSA capacity building programmes

for large-scale commercial farmers, and provide incentives for CSA practices with special focus on smallholder farmers

Zambia

Second National Agricultural Policy [95]

Mainstream environment and Climate Change in the agriculture sector

Generally no

Generally no

Zimbabwe

Comprehensive Agricultural Policy Framework [96]

None

Generally no

Generally no

Table 1: SADC Agriculture Climate Change Policy Statements.

Source: Author Compilation

DISCUSSION

Sustainable Development Goal (SDG) target 8.1 points out that governments should sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries. This therefore means that most countries in SSA need to achieve consistent GDP growth rates of at least 7% per annum for them to stand a good chance of attaining the SDGs. However, climate change impacts are and will continue to impede economic growth in the region as well as erode progress made to achieve sustainable development. For example, in the case of Malawi, studies have indicated that climatic shocks coupled with fluctuating market prices resulted in increasing annual humanitarian responses, from 8% of the country requiring assistance during the 2014/15 lean season, increasing to 18% in 2015/16, culminating with approximately 40% of the population in need of emergency assistance to survive the 2016/17 lean season [97]. Additionally, floods in Malawi in 2015 led to suppressed economic productivity and GDP growth projections for the country to be revised downwards from 5% to 2.8% [97]. The development of policies and innovations that can facilitate climate change adaptation and increase the resilience of Africa’s food systems to climate change in SSA is therefore imperative to improve the chances of SSA countries to attain GDP growth rate of more or less7% per annum.

Activities in SSA’s agriculture sector have a significant role to play in influencing how national commitments and aspirations for climate change, poverty and environmental management are achieved. On one hand, the global population will increase from 7 billion in 2011 to 9.2 billion in 2050 [98], hence food production will need to double by 2050 and counter the decrease in arable land through environmental degradation, urban encroachment and climate change [99]. On the other hand, the greenhouse gas emissions from agriculture in Africa are among the fastest growing emissions in the world hence without significant mitigation actions, increases in greenhouse gas emissions from the agriculture sector can adversely influence the future cost and efforts for climate change adaptation. Accordingly, efforts aiming to create climate resilient food systems and economies cover the interaction of the agriculture sector and other sectors such as microfinance, renewable energy, urbanisation, etc. This therefore means that human capital development and institutional coordination are amongst the most vital pillars to achieve agriculture transformations. In this regard, when reference is made to Rwanda’s Green Growth and Climate Resilience National Strategy for Climate Change and Low Carbon Development [100], it was argued climate change policies should shift their focus from improving climate change adaptation to facilitating climate change resilience and low carbon development as this addresses both adaptation and mitigation, whilst focusing on sustainable economic growth and poverty reduction. On the other hand, Malawi’s National Resilience Strategy [97] classifies climate change resilience interventions as (i) those delivered by the national government, (ii) those delivered by sub-national authorities, (iii) those delivered by  department partners,  the private  sector,  and non-governmental organisations, and (iv) those delivered by communities. Since climate change resilience programmes or interventions can be undertaken jointly or independently by different actors, the success of such interventions can then rest on mechanisms that are in place for effective programme implementation and monitoring, and available skills and management levels across sectors (human resources) and management levels. Accordingly, the attributes that can help in the delivery of effective climate resilient agriculture policies are not necessarily strong agriculture sector institutions and agriculture experts, but rather agriculture sector institutions and agriculture experts that are able to create synergies with other sectors and leverage the resources from other sectors as this can reduce maladaptations and reduce the likelihood of agriculture resilience being achieved at the expense of other sectors.

Historically, countries in Africa have various challenges in accessing climate finance and implementing climate change programmes. Nonetheless, the post-2015 climate change architecture and Paris Agreement are focused on increasing the mobilisation of climate finance for African countries through North-South Cooperation Modalities and South-South Cooperation Modalities. This therefore means that there are now numerous climate finance modalities that can provide “additional” financial and technical resources to African governments and non-state actors to help them with the implementation of new climate change resilience programmes. However, with the international community having taken heed of Africa’s plight in accessing climate finance, there is now a need for African stakeholders to also demonstrate commensurate efforts by improving the efficiency to which climate change projects are implemented and developing new strategies to increase or leverage private capital from domestic and international actors to facilitate climate resilient low carbon development. Domestic reforms for improving the utilisation of climate finance are important for two main reasons: (i) international climate finance flows are unpredictable as for example the United States of America’s climate change policy stance reversal and the associated plan to  withdrawal from the Paris Agreement could lead to a fall of $2 billion, or 20% of pledged finance to the Green Climate Fund [101]; and (ii) Africa’s total public spending on agriculture as a share of public spending is falling far short of the Com­prehensive Africa Agricultural Development Pro­gramme (CAADP) target of 10% [102]. Consequently, investment in African agriculture remains well below average global levels meaning that current efforts fall short of achieving the SDGs [10]. On the other hand, at global level, the private sector contributes more climate funds than public sources as the global allocation of climate funds in 2015 and 2016 stood at around US$409 billion/year whereby public finance actors and intermediaries committed an average of US$139 billion/year or 34% of total climate finance flows and private climate finance averaged US$270 billion/year [101]. Cumulatively, these issues mean that Africa’s efforts in the climate finance and climate resilience domain should also have an emphasis on creating investable climate change projects and creating business environments that can attract local and international investments in local private low carbon initiatives and businesses with an impact of sustainable development and climate change such as microfinance, renewable energy and agriculture. In this regard, some of the incentives and reforms that can lead to improved climate change resilience by encouraging investments in low carbon initiatives include (i) environmental ?scal reforms (taxes to make environmentally damaging behaviour more expensive and tax exemptions and subsidies to make environmentally bene?cial behaviour more attractive), (ii) tax exemptions and import duty exemptions on renewable energy technologies, (iii) establishing green investment indices to attract climate-friendly foreign direct investment by ranking local companies’ environmental and ?nancial performance, and (iv) supporting low carbon projects to seek funding from carbon markets, which allow projects that abate GHG emissions to raise funds by selling ‘carbon credits’ [97,100,102-122].

CONCLUSION

As the global population grows, the amount of productive agricultural land per capita will reduce. Coupled with this climate change is anticipated to also affect access to water and food in some regions thereby increasing the threats that failures to improve the resilience of the agriculture sector to climate change could cause social and political unrest in some cases.  In order to address there challenges, there are now numerous national and global imperatives aimed at ensuring that state and non-state actors embark on development trajectories that lead to low carbon climate resilient development. Even though many people in Africa directly depend on the agriculture sector for food and income, the agriculture sector in the region is still very vulnerable to the impacts of climate change. Unfortunately, the existence of climate change vulnerabilities in the agriculture sector and food systems also means that the attainment of SDG 2 (no hunger) and SDG target 8.1 of sustaining per capita economic growth at 7% GDP might not be attainable. In this paper, an analysis was undertaken to determine how microfinance and renewable energy services could be utilised to facilitate climate resilient inclusive growth and resilient food systems. Some of the conclusions that can be drawn from this analysis include:

  1. Business as usual approaches in the agriculture sector might not suffice to address the impacts of climate change on agriculture hence policymakers need to improve the institutional coordination of the agriculture sector with auxiliary sectors such as microfinance and renewable energy services as this approach can increase investments and technologies to rural areas.
  2. Climate finance modalities can provide new funding sources to support climate change adaptation in the agriculture sector. However, in the context of SSA, an urgent intervention in the climate finance domain to facilitate agriculture sector adaptation would be the development of specialised funding channels to act as support mechanisms to enable microfinance institutions to transition from their business as usual approaches to the provision of services related to supporting climate change policies and programmes, and financial inclusion.
  3. National governments might not be able to mobilise sufficient finances to invest in smallholder farmers and rural development hence development policies in SSA should also have a focus on building the expertise and institutional capacity of various local stakeholders to crowd-in investments from the private sector and stimulate investments in small-commercial farms/small-scale commercial farming.

This paper has argued that, with SSA having such a large population that depends on the agriculture sector for jobs and food security directly and indirectly, sustainable development in SSA is unlikely to be unattainable in the absence of policies that can foster an “African Climate Resilient Green Revolution”. The paper therefore hypothesised than an “African Climate Resilient Green Revolution” may be possible through the implementation of synergistic policies based on reducing agricultural market uncertainties, climate risks and other socio-economic shocks; improving renewable energy based rural electrification; and enhancing access to credit, savings and insurance products for rural populations. The findings of this paper are therefore similar to the findings of other authors such as Otekunrin et al., who narrated that SDG 2 policies in some African countries required modification in order to enable them to actualise the target of zero hunger by 2030 and Mason-D'Croz who narrated that increased agricultural investments alone will not achieve SDG2 in Africa hence complementary non-agriculture investments are required to accelerate progress the zero hunger target. Therefore even though achieving all the SDGs by 2030 might be an unattainable aspiration for many SSA countries, there is still a chance that policies for SDG 2 and SDG 13 implementation in SSA can foster new paradigms for leveraging private investments in rural SSA to drastically accelerate the pace to which sustainable development can be attained.

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Citation: Chirambo D (2020) Increasing the Resilience of Africa’s Food Systems to Climate Change through an Alignment of Microfinance and Renewable Energy Services: Policy Prospects and Challenges. J Environ Sci Curr Res 3: 024.

Copyright: © 2020  Dumisani Chirambo, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

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