Connect with us

BUSINESS & ECONOMY

The problems of climate change, part 2

Published

on

Global Warming: Past as Prologue to the Future
Spread the love

Small island nations across the world are bearing the brunt of the climate crisis, and their problems have been accentuated by the COVID-19 pandemic, which has severely affected their economies, and their capacity to protect themselves from possible extinction. We take a look at some of the many challenges they face, and how they could be overcome.

Low emissions, but high exposure

The 38 member states and 22 associate members that the UN has designated as Small Island Developing States  or SIDS are caught in a cruel paradox: they are collectively responsible for less than one per cent of global carbon emissions, but they are suffering severely from the effects of climate change, to the extent that they could become uninhabitable.

Although they have a small landmass, many of these countries are large ocean states, with marine resources and biodiversity that are highly exposed to the warming of the oceans. They are often vulnerable to increasingly extreme weather events, such as the devastating cyclones that have hit the Caribbean in recent years, and because of their limited resources, they find it hard to allocate funds to sustainable development programmes that could help them to cope better,for example, constructing more robust buildings that could withstand heavy storms.

The COVID-19 pandemic has worsened the economic situation of many island states, which are heavily dependent on tourism. The worldwide crisis has severely curtailed international travel, making it much harder for them to repay debts. “Their revenues have virtually evaporated with the end of tourism, due to lockdowns, trade impediments, the fall in commodity prices, and supply chain disruptions”, warned Munir Akram, the president of the UN Economic and Social Council in April. He added that their debts are “creating impossible financial problems for their ability to recover from the crisis.”

Most research indicates that low-lying atoll islands, predominantly in the Pacific Ocean such as the Marshall Islands and Kiribati, risk being submerged by the end of the century, but there are indications that some islands will become uninhabitable long before that happens: low-lying islands are likely to struggle with coastal erosion, reduced freshwater quality and availability due to saltwater inundation of freshwater aquifers. This means that small islands nations could find themselves in an almost unimaginable situation, in which they run out of fresh water long before they run out of land.

Furthermore, many islands are still protected by reefs, which play a key role in the fisheries industry and balanced diets. These reefs are projected to die off almost entirely unless we limit warming below 1.5 degrees celsius

Despite the huge drop in global economic activity during the COVID-19 pandemic, the amount of harmful greenhouse gases released into the atmosphere increased in 2002, and the past six years, 2015–2020, are likely to be the six warmest on record.

Climate finance (climate-specific financial support) continues to increase, reaching an annual average of $48.7 billion in 2017-2018. This represents an increase of 10% over the previous 2015–2016 period. While over half of all climate-specific financial support in the period 2017-2018 was targeted to mitigation actions, the share of adaptation support is growing, and is being prioritized by many countries. 

This is a cost-effective approach, because if not enough is invested in adaptation and mitigation measures, more resources will need to be spent on action and support to address loss and damage.

Switching to renewables

SIDS are dependent on imported petroleum to meet their energy demands. As well as creating pollution, shipping the fossil fuel to islands comes at a considerable cost. Recognizing these problems, some of these countries have been successful in efforts to shift to renewable energy sources.

For example, Tokelau, in the South Pacific, is meeting close to 100 per cent  of its energy needs through renewables, while Barbados, in the Caribbean, is committed to powering the country with 100 per cent renewable energy sources and reaching zero carbon emissions by 2030.

Several SIDS have also set ambitious renewable energy targets: Samoa, the Cook Islands, Cabo Verde, Fiji, Saint Vincent and the Grenadines and Vanuatu are aiming to increase the share of renewables in their energy mixes, from 60 to 100 per cent, whilst in 2018, Seychelles launched the world’s first sovereign blue bond, a pioneering financial instrument to support sustainable marine and fisheries projects.

The power of traditional knowledge

The age-old practices of indigenous communities, combined with the latest scientific innovations, are being increasingly seen as important ways to adapt to the changes brought about by the climate crisis, and mitigate its impact. 

In Papua New Guinea, local residents use locally-produced coconut oil as a cheaper, more sustainable alternative to diesel; seafaring vessels throughout the islands of Micronesia and Melanesia in the Pacific are using solar panels and batteries instead of internal combustion; mangrove forests are being restored on islands like Tonga and Vanuatu to address extreme weather as they protect communities against storm surges and sequester carbon; and in the Pacific, a foundation is building traditional Polynesian canoes, or vakas, serving as sustainable passenger and cargo transport for health services, education, disaster relief and research.

Strategies for survival

While SIDS have brought much needed attention to the plight of vulnerable nations, much remains to be done to support them in becoming more resilient, and adapting to a world of rising sea levels and extreme weather events.

On average, SIDS are more severely indebted than other developing countries, and the availability of “climate financing” (the money which needs to be spent on a whole range of activities which will contribute to slowing down climate change) is of key importance. 

More than a decade ago, developed countries committed to jointly mobilize $100 billion per year by 2020 in support of climate action in developing countries; the amount these nations are receiving is rising, but there is still a significant financing gap. A recently published UN News feature story explains how climate finance works, and the UN’s role.

Beyond adaptation and resilience to climate change, SIDS also need support to help them thrive in an ever-more uncertain world. The UN, through its Development Programme (UNDP), is helping these vulnerable countries in a host of ways, so that they can successfully diversify their economies; improve energy independence by building up renewable sources and reducing dependence on fuel imports; create and develop sustainable tourism industries, and transition to a “blue economy”, which protects and restores marine environments.

Fighting for recognition

For years, SIDS have been looking for ways to raise awareness of their plight and gain international support. As the Alliance of Small Island States (AOSIS) in 1990, they successfully lobbied for recognition of their particular needs in the text of the landmark UN Framework Convention on Climate Change (UNFCCC) two years later.

Since then, the countries have continued to push for a greater emphasis on ensuring that international agreements include a commitment to providing developing countries with the funds to adapt to climate change. An important step was ensuring that climate change negotiations address the issue of “loss and damage” (i.e. things that are lost forever, such as human lives or the loss of species, while damages refers to things that are damaged, but can be repaired or restored, such as roads or sea walls etc.).

SIDS continue to urge developed nations to show more ambition and commitment to tackling the climate crisis, and strongly support calls for a UN resolution to establish a legal framework to protect the rights of people displaced by climate change, and for the UN to appoint a Special Rapporteur on Climate and Security, to help manage climate security risks and provide support to vulnerable countries to develop climate-security risk assessments.

•SIDS have also advocated for eligibility to development finance to recognize the vulnerabilities they face, including from climate change hazards. The UN will release its recommendations in a report due to be released in August 2021.

Related

(function(d, s, id) { var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) return; js = d.createElement(s); js.id = id; js.src = “//connect.facebook.net/en_US/sdk.js#xfbml=1&version=v2.4”; fjs.parentNode.insertBefore(js, fjs); }(document, ‘script’, ‘facebook-jssdk’));

Source


Spread the love

BUSINESS & ECONOMY

Inquiry on General Babangida’s Involvement in Conventional Banking despite Introduction of Islamic Finance in Nigeria

Published

on

By

Spread the love

Dear Editor,

I hope this letter finds you well. I am writing to express my curiosity and seek clarification on a matter that has caught my attention, specifically pertaining to General Babangida’s involvement in the conventional banking industry despite his role in introducing Islamic finance during the financial reforms of his military government in Nigeria. Vide your special article commemorating his 81st Birthday published in your esteemed news website: https://focus.afrief.org/trending/a-salutary-tribute-to-general-ibrahim-badamasi-babangida-architect-of-islamic-finance-in-nigeria/

It is indeed noteworthy that General Ibrahim Babangida played a pivotal role in shaping the economic landscape of Nigeria by introducing Islamic finance principles. It is fascinating to witness the implementation of Islamic finance in Nigeria, as it promotes principles that align with religious and ethical values. General Babangida’s efforts to introduce this form of finance were undoubtedly commendable, reflecting his commitment to establishing an alternative financial system that adheres to Islamic principles.

However, recent observations suggest his active participation in the conventional banking sector in Nigeria. Certainly, it is intriguing to see General Babangida’s continued involvement in the conventional banking industry, which operates under different principles. While some may argue that his involvement in both sectors is simply a matter of personal choice, it raises questions about the compatibility of his actions with the ideals and principles of Islamic finance. While the former is interest driven, the latter prohibits interest related transactions completely.

I wonder if General Babangida has ever publicly addressed this matter or explained his reasoning behind being active in both sectors. It would be enlightening to hear his perspective on how he reconciles his involvement in conventional banking with his efforts towards promoting Islamic finance. This has raised questions in my mind and perhaps in the minds of others as well.

I am keen to understand the rationale behind General Babangida’s dual engagement in both Islamic finance and conventional banking. Does this reflect a strategic approach to diversify Nigeria’s financial sector, or are there specific reasons behind his involvement in conventional banking despite advocating for Islamic finance principles?

Additionally, it would be interesting to explore the potential impact of his dual involvement on the perception and growth of Islamic finance in Nigeria. Does his presence in the conventional banking industry hinder the progress of Islamic finance, or does it have the potential to bridge the gap between the two sectors?

I believe that delving into these questions could provide valuable insights and generate constructive discussions within the Islamic finance community in Nigeria. By shedding light on General Babangida’s dual involvement and the potential implications, we can further enhance our understanding of the challenges and opportunities faced by the Islamic economy in our country.

Thank you for considering my questions, and I look forward to reading more about this topic in your esteemed Focus on Islamic Economy.

Sincerely,

 

Abba Musa Mamman Lagos

Kaduna


Spread the love
Continue Reading

BUSINESS & ECONOMY

10 Megatrends Shaping the World in 2024

Published

on

By

Spread the love

The report, “Navigating Megatrends Shaping Our Future in 2024”, was launched during the first day of the World Governments Summit (WGS) 2024, being held under the theme “Shaping Future Governments” from 12th-14th February in Dubai. The report examines the indicators that shape these megatrends, supported by evidence from today as well as future expectations. These trends inform decision-makers and foresight experts about various sectors and the potential opportunities in each.

Khalfan Belhoul, CEO of Dubai Future Foundation, said, “This report has been launched in line with DFF’s efforts to identify and communicate those trends with the most potential to shape opportunities and strengthen local and international partnerships to overcome current and future challenges.”

“The challenges that face us on our journey to the future require that we are agile enough to be able to adapt to rapid change. It is vital we pay attention to the signals we detect – only then can we be prepared to overcome challenges and seize opportunities. The World Governments Summit provides a platform for discussing these challenges and exploring the opportunities.”

Materials revolution

New types of materials will create a shift in the industry, with solutions based on artificial intelligence (AI) such as biopolymers, biorefineries, and chemical recycling paving the way. These solutions will facilitate the development of new biological and novel materials that could rival plastics.

Boundless Multidimensional Data

Enabled by developments such as 5G and 6G in addition to advanced connectivity, the availability of raw data will vastly increase. The Internet of Things (IoT) will continue being deployed in healthcare, agriculture, and smart cities, especially in the Middle East.

Technological Vulnerabilities

The cybersecurity sector will boom amid a sharp rise in smart home devices and wearable tech. According to a report by Allianz, the annual cost of ransomware is projected to reach around $265 billion by 2031. Meanwhile, the debate on the future of decentralised finance will continue.

Energy Boundaries

Advances in tech and the growing demand for energy will drive the pursuit of alternative sources of energy. Novel materials and machine intelligence will enhance current sources of energy, including their distribution around the world – and in space.

Saving Ecosystems

Approaches to conservation will be more interdisciplinary and future-focused, taking into account both societal and environmental factors. Driven by resource scarcity, climate change, and shifts in social values, environmental impact management will become increasingly holistic.

Borderless World – Fluid Economies

The world is witnessing a rise in unmediated transactions in finance, health, education, trade, services, and even space, which are blurring boundaries and creating more cross-border communities. Advances in communications, computing, and advanced machine intelligence will accelerate the creation of a borderless world that will change the way we work, live, and connect.

Digital Realities

The spread of 5G and 6G networks will enhance the applications of autonomous technologies and IoT. As quantum technologies become scalable and reliable, immersive experiences will become even more realistic.

Living with Autonomous Robots and Automation

Robotics and automation will increasingly be deployed across industries beyond automotive, manufacturing and supply chain logistics. This will provide opportunities for efficiency and innovation, although there will also be ethical challenges to address.

Future Humanity

New workplace norms will emerge, with people needing to adapt to non-traditional skill sets in areas such as digital literacy, communications, culture and sustainability.

Advanced Health and Nutrition

Accelerated progress in advanced machine intelligence, nano- and biotechnology, additive manufacturing, and IoT will transform health and nutrition, improving health and wellbeing for people of all ages. Technology will reduce, if not eradicate, some communicable and non-communicable diseases and enhance the sustainable use of and access to water and food.


Spread the love
Continue Reading

BUSINESS & ECONOMY

Africa’s New Online Foreign Exchange System will Enable Cross-border Payments in Local Currencies – what you need to know

Published

on

By

Spread the love

The high cost of making cross border payments on the African continent has driven governments on the continent to seek options of settling trade and other transactions in local currencies. This has given birth to the Pan-African Payment and Settlement System which was formally launched in Accra, Ghana, in January 2022.  Development economist Christopher Adam, who has studied the exchange rate policies of African countries, answers some key questions.

Why are African countries exposed in the international currency market?

Three main reasons. First, African economies are small and as such are highly dependent on trade with the rest of the world. Their exports are dominated by primary commodities including oil and gas, minerals and cash crop agriculture. On the import side, they purchase a whole range of goods – from essential commodities not produced at home such as fooddrugs and medicines, to capital goods and energy. A large proportion of these are sourced from China and other major economies of the global north. But because African countries are small relative to their trading partners they rarely have the power to determine the prices of imports and exports. They are “price takers” in world markets. And with world prices being set in the major reserve currencies of the world (the US dollar, euro, yen and renminbi), African countries are exposed to movements in these world prices. Second, “intra-African” trade is still a relatively small proportion of the total trade of African countries.

Finally, since African countries’ currencies mostly can’t be directly exchanged in international transactions, the dollar remains the most widely used currency in trade, even between African countries.

What’s required for the system to get off the ground?

The basic idea of the system is to be able to settle trade between African countries without having to use the US dollar.  There are two major challenges with that. First, intra-African trade accounts for less than 15% of Africa’s exports at present (although supporters of the African Continental Free Trade Area expect this to grow significantly over the coming decades). The African payment system therefore does not eliminate the role of the dollar (or other foreign currencies) in trade settlement entirely.

The second issue is that trade is not balanced between African countries. For example, Kenya exports goods of higher total value to Ethiopia than it imports from Ethiopia. If Ethiopia paid in its own currency, Kenya would end up with Ethiopian currency that it didn’t need. Some form of settlement currency that is acceptable to all is required – most likely the US dollar.

What are the challenges and potential risks?

Since trade rarely occurs instantaneously, some institution in the trade financing chain carries the exchange rate risk. Because of the gap between placing an order for imports and receiving them to sell in the local economy, there is a risk that the value of local currency will change relative to the currency in which the import is denominated.

In the “old” system, this risk is borne by the trader because everything is priced in dollars. The local currency value of the income from exports or the local currency cost of imports will change with movements between the local currency and the dollar, but the banks and those counterparts pricing in the dollar are protected.

Under the new system the same allocation of risk will remain in “external trade”. This currency risk is also present for intra-African trade.

An important question for the new African payment system is: who bears the exchange risk if one African currency depreciates relative to another? Should the importer carry the risk, or the exporter? Can and should the African payment system bear this risk of exchange rate movements itself? Where both currencies are volatile, traders might still prefer the relative stability of settlement through the US dollar.

The success of this system also depends on scale. The more trade settlement is routed through it, the easier it will be to settle in local currencies. Large currency imbalances will be less common. But until the system achieves this scale, the African payment system will need a strong balance sheet so that traders and participants can have confidence that settlement will be swift and risk free. It is unclear at the moment how this is to be achieved.

What is the best case scenario?

If the system can address the trade imbalance problem, provide clarity on risk management and reach scale, it could be very successful. But this is all going to be driven by underlying economic performance. Improved settlement will help but what is really driving this is the structure of trade. The more the economies of Africa can develop intra-African trade and the less dependent they are on extra-African trade, the less will be dollar dependence in trade. This growth in trade depends to some degree on trade settlement and trade financing but much more on production, consumption, trade policy and fiscal policy.

Christopher Adam is a Professor of Development Economics, University of Oxford


Spread the love
Continue Reading

Trending

Copyright © 2023 Focus on Halal Economy | Powered by Africa Islamic Economic Foundation