Ethiopia: Experts Outline Driving Instruments for Ethiopia’s Green Economy
– Aligning innovative policy, sector-based frameworks, and stabilizing the macroeconomics are imperative for advancing Ethiopia’s climate financing and economic growth, according to the Genesis Analytics Experts.
Approached by The Ethiopian Herald, Ethiopian Financial Market Expert Wanbua Mutua said that due to its diversified governance structures, Ethiopia should intensify funding sources, employ effective regulatory bodies for climate finance, and promote carbon market development and investment to ensure long-term sustainability.
Strengthening interventions in the existing policy framework is vital in this regard, he outlined, emphasizing the need to reinforce capacity building, raise awareness on both the demand and supply side, and enhance institutional collaboration for its sound implementation, which will contribute 7% to the country’s GDP.
Since 2011, the Climate Resilience Green Economy (CRGE) strategy has brought significant outcomes in various sectors, including transport, energy, and other initiatives, he noted.
Noting the gaps in the CRGE strategy that align with climate goals and national development plans, Wanbua recommended enhancing stakeholder engagement, developing innovative financial instruments, and improving institutional capacity for effective climate finance mobilization.
He also raised concerns that weak cross-sector coordination, institutional silos, and resource allocation inefficiency are impacting climate resilience and economic sustainability.
Moreover, the Ethiopian Capital Market Authority, along with other government institutions, should take the lead in advocating for green bonds and carbon credits and strengthening advocacy efforts and infrastructural development for credit profiles.
“Ethiopia aims to limit greenhouse gas emissions to 150 Mt CO2e by 2030, costing up to 300 billion USD in climate financing,” the expert said, highlighting the need to diversify funding and ensure transparent private sector engagement in the area.
Sharing best practices and success stories from Kenya, South Africa, Brazil, Colombia, Bangladesh, and India in climate financing, he recommended that Ethiopia enable policy adaptation and sector-based CRGE frameworks with openness to embrace innovative financial instruments.
Genesis Analytics Team member Belinda Kaimuri highlighted that Ethiopia’s commitment to sustainable development and climate resilience is evident in its ambitious strategy and initiatives. However, mobilizing green and sustainable finance faces considerable challenges, including technical capacity gaps, regulatory shortcomings, and macroeconomic instability.
It is, therefore, crucial to develop cohesive regulatory frameworks, set attractive policies and incentives, strengthen macroeconomic stability, and adopt policies responsive to market and environmental changes.
Additionally, the government should support environmental stakeholders and enforce legal regulations to successfully channel green financing and catalyze the carbon market, she reiterated, emphasizing the need to strengthen incentives and de-risking mechanisms for private sector green project investments.
Ethiopia, heavily reliant on rainfed agriculture, is vulnerable to climate change, facing significant climate risks. Carbon credits and blended finance facilities remain vital to mobilizing substantial green finance, Belinda remarked.
She added that a cohesive regulatory framework and sound macroeconomic policies are essential to attracting local and international investors into Ethiopia’s green market.
“Continuous monitoring and adaptation of policies will enhance Ethiopia’s resilience to environmental risks and support sustainable development goals,” she added.
According to their study findings, thematic bonds, national green funds, and impact bonds are the top financing instruments to support the country’s Climate Resilient Green Economy strategy.
BY ASHENAFI ANIMUT
THE ETHIOPIAN HERALD TUESDAY 22 APRIL 2025
Crรฉdito: Link de origem