Financing Africa’s Climate Action

Africa has contributed the least to global warming, yet millions of African people are facing the most severe impacts of the climate crisis. To combat these challenges – stopping floodwaters, feeding starving people, and increasing the resilience of the public sector – African governments need more finance.

Yet Africa loses around $89 billion each year due to illicit financial flows, according to estimates. The enabling nations of tax abuse are the richest countries in the world. Ironically, they are also largely responsible for the climate crisis.

Climate finance and tax abuse

Over a decade ago, rich nations pledged an annual US$100 billion for climate finance – a promise that has been unfulfilled. And even if they honoured their promise, this amount falls far short of addressing the world’s escalating needs. By 2030, the economic cost of loss and damage in poorer countries could be as high as US$1.8 trillion.

To effectively manage climate change’s adverse effects, Africa needs at least $140 billion annually from 2020 to 2030. However, in 2020, Africa received only three per cent of global climate finance to support adaptation and mitigation efforts.  

Fixing the international tax system could help plug this gap. The Tax Justice Network’s State of Tax Justice 2023 estimates that the world loses US$480 billion per year to corporate tax abuse and wealth tax evasion. This is nearly five times more than the unmet climate finance commitment. This stark discrepancy is why Africa is leading the charge for a UN framework convention on tax. A majority of the world is advocating for international rules that should have been in place years ago, had it not been for the influence of the richest nations within the OECD.

Fostering continental conversations on tax and climate

In 2022, Tax Justice Network Africa set out to deepen the discourse on climate and tax justice, in collaboration with campaigners and policymakers across the continent, alongside partners at the Tax Justice Network, Mozambique’s Centro para Democracia e Direitos Humanos and Tanzania’s Policy Forum, and with support from the African Climate Foundation. The organisations committed to devising joint tax and climate solutions.

In the same year, the Special Rapporteur on the promotion and protection of human rights in the context of climate change urged the UN General Assembly to “Explore legal options to close down tax havens as a means of freeing up taxation revenue for loss and damage”. 

Alongside this, many civic groups, researchers, and policymakers are making a concerted effort to explore the nexus between tax and the climate crisis.

The principles of tax justice for climate action

We are now sharing insights from two roundtables and studies conducted in Mozambique and Tanzania. Drawing from these collaborative efforts, we adopted a framework of tax justice principles to direct future advocacy for climate action. This is known as the ‘5Rs of tax justice’, which include:

• raising revenue,
• redistributing wealth to create a more equal society,
• repricing through higher costs to discourage activities that infringe on the rights of others,
• improving representation to strengthen the social contract between citizens and their elected officials, and
• supporting reparations to address harms from historical injustices and colonial legacies.

The briefing, accompanied by a pocket guide, includes a series of probing questions for each of the principles to enhance collaboration between tax and climate justice movements. You can download the briefing and the pocket guide from Tax Justice Network Africa.