Paper short abstract:

Article 2(1)(c) of the Paris Agreement on Climate Change should influence financial sector reform in Africa. The paper provides theoretical and empirical contributions to support how this objective may be achieved through collaboration.

Paper long abstract:

The changing paradigms of financial sector policies and regulations in Africa since independence in the 1960s and 1970s have generated alternative perspectives on the role of public and private finance in responding to development challenges. These paradigms were initially influenced by a Keynesian worldview suggesting a dominant role for public sector. As 'neo-liberal' orthodoxy gained prominence in the late 1970's, adoption of the 'Washington Consensus' meant a lesser role for the state. Aziakpono (2016) argues that a new consensus is evolving for more balanced engagement of public and private sector and suggests that collaboration is needed within the financial sector. Building on this work, the paper argues that such collaboration will contribute to achieving Article 2(1)(c) of the Paris Accord on Climate Change, whose objective it is to make all finance flows consistent with greenhouse gas emission and climate resilient development. Empirical work by UNEP Inquiry on sustainable finance practices in Kenya and South Africa will be drawn upon in this paper to frame the emerging roles of public and private sector in achieving sustainability (i.e. environmental, social and governance factors). The paper proposes a pathways approach to support policymakers in meeting the objectives of Article 2(1)(c) of the Paris Accord. Specifically, to enable them to i) understand the capacity of the national finance system to promote climate response; and ii) differentiate among the different roles for public, private and development assistance in the climate response.