The Kenyan government’s current climate financing will only partially address climate challenges. By pointing up crucial gaps and out of place priorities in government spending, research can assist the nation in better achieving its climate goals.
Kenya’s climate change adaptation strategy integrates climate activities into development planning, budgeting, and execution. It has been in place since 2013 and consists of two 5-year plans (2013-2017 and 2018-2022). This strategy offers the idea that Kenya’s climate change interventions are competent since it has been backed by a national climate change mitigation policy. The Climate Change Act 2016 also describes the institutional structures and supervisory responsibilities for administering and directing the nation’s climate change action programs. An in-depth examination reveals that Kenya’s present expenditure strategy will not enable it to achieve the environmental objectives set forth in Vision 2030, the nation’s long-term economic strategy for prosperity.
The National Treasury-commissioned paper examines the current strategy and identifies three significant obstacles to Kenya’s objectives for climate change mitigation and adaptation. Although not the only ones, a greater comprehension of them will pave the path for more government funding that supports the nation’s efforts to combat climate change.
Spending on adaptation is insufficient
Other development partners have reiterated that Kenya’s large expenditure on climate mitigation presents the country with the primary obstacle to achieving its climate targets. This strategy runs counter to the nation’s major emphasis on adaptation. Spending on regions with the most effect is essential given Kenya’s present high debt levels and the country’s limited fiscal space, which does not permit much budget flexibility.
The country’s adaptation plan is expected to cost Ksh. 6,775 billion (USD 48 billion) to achieve between 2020 and 2030. Additionally, according to the data that is currently available, just a third of the funding needed for investments connected to climate change adaptation was realized in 2018 (Ksh. 243.3 billion, or USD 1.7 billion). This equates to a Ksh 486.6 billion(USD 3.5 billion) annual resource shortfall.
According to budget projections for the fiscal year 2023–2024, the nation will spend 49% more on repaying its debts, debt servicing, and pensions than it did the year before. Only 51% (Ksh. 1.93 trillion) of the expected Ksh. 3.79 trillion will be left for the national and county program budgets to be implemented.
Counties require greater funding for climate change.
The second problem, according to the World Bank, is the underinvestment in local efforts to combat climate change.A commitment to combating climate change is demonstrated by the executive order creating a State Department for Environment and Climate Change within the Ministry of the Environment. Nevertheless, since counties bring the provision of services closer to citizens, this concentration should also be at the county level.
The central government still has a larger proportion of fiscal resources, even in areas where responsibilities have been devolved, hence the counties’ percentage of the total expenditures of the government has decreased. Due to insufficient unbundling activities, there is overlap in responsibilities, indicating that fiscal relations between governments systems have not been implemented effectively.
As a result, a sizeable portion of the national shared funds remains in custody at the national level. The recently launched Financing Locally-Led Climate Action Program, financed by the World Bank, targets funding towards rural areas and improves county governments’ capacity to manage climate risks in an effort to solve this challenge. Locally driven efforts to increase climate resilience are a terrific concept, however the Budget Policy Statement 2023 falls short because the majority of the suggested initiatives are focused at the national level.
An excessive emphasis on renewable energy
The third issue raised by the study is that Kenya’s climate finance policy unfairly favors the renewable energy industry while underfunding other crucial industries such as agriculture, forestry and land use, transportation, and water management. The negative consequences of climate change on the agricultural industry could undo the progress made over the previous ten years because agriculture is essential for economic growth, employment, and the reduction of poverty.
In addition, because fewer than 5% of Kenyan agriculture is irrigated and depends on rainfall, the industry has been negatively impacted by the rising variability in rainfall. Through its effects on water availability, the occurrence and severity of animal and plant pests and illnesses, and agricultural production and food security, climate change provides an additional challenge to the sector’s prospects. The National Treasury reiterates that major efforts will be required to align all sectors and that existing financing unfairly favors some industries, which will only partially solve climate challenges.
Governments and politicians must take a comprehensive approach to solving the complex problems brought on by climate change and natural disasters. This necessitates a comprehensive approach that considers the interconnectedness of various sectors.
Funding for the development and research of new technologies that can aid in adaptation to changing climatic patterns must also be given top priority. This will necessitate a dramatic shift in the budget’s emphasis away from quick fixes and toward long-term solutions.
Private sources account for over 41% of the total climate finance tracked in Kenya, with the majority of this funding going toward the advancement of energy sources that are renewable. To establish an enabling climate for investors across all sectors, subsidies and incentives can be given to the private sector. According to estimates, private climate financing will increase from its present level of 10% to 15% as a result of policy certainty and better public infrastructure. For the ten-year period (2020-2030), this will provide Ksh. 196.5 billion (USD 1.4 billion).
A cost-benefit analysis shows that investing in climate funding is worthwhile despite the hefty expense. Four dollars’ worth of economic gain are obtained for every dollar spent. Reversing the effects of climate change will lessen the economic loss, which is now estimated to be 2.6% of GDP, even if data on Kenya’s estimated gains are not yet available.By 2030, it is anticipated that global climate change actions will generate a direct economic gain of US$26 trillion.