The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Financial sector experts have validated draft guidelines requiring the industry to integrate climate finance into their operations to enable Uganda to mitigate its vulnerability to human-induced climate change impacts and risks by 2030. The guidelines illustrate steps for mainstreaming climate change in the financial sector to help financial institutions better reflect and manage climate-related risks take advantage of available opportunities and ensure that institutional goals align with national and international climate policies.
Several financial sector players including the Ministry of Finance, Planning, and Economic Development, Ministry of Water and Environment, sector regulators and policy bodies, public and private financial institutions such as Savings and Credit Cooperative Societies – SACCOs commenced the development of the draft guidelines in 2018.
Noah Owomugisha, the Head of Investment at Agricultural Business Initiative (ABI) told URN that climate change exposes assets and investments to losses from extreme weather patterns and climate disasters. “Incorporating climate change consideration into the operations, investment, and lending activities of financial institutions will enable the achievement of sustainable business and national development outcomes both in the short and long term,” Owomugisha illustrated.
In 2022, Uganda fulfilled its obligation by submitting a Nationally Determined Contribution – NDC, a climate action plan to cut emissions and adapt to climate impacts under the United Nations Framework Convention on Climate Change’s Paris Agreement projected at USD 28.1 billion (about 109.189 trillion Shillings implementation budget for climate mitigation and adaptation actions.
Out of the 109.189 trillion, USD 4.1 billion (15.988 trillion) is expected to come from domestic sources. However, in the Financial Year 2023/2024 budget, the government allocated 547 billion Shillings to natural resources, environment, climate change, and land and water management programs. Notably, during the same period, an annual USD 785 million (3.061 billion) of climate finance was mobilized in Uganda between 2019 to 2020, less than 5 percent of the climate finance needs communicated in the NDC.
It is against that background that Benjamin Komna Djabare, a climate finance and policy analyst, also the Deputy Director of Climate Analytics Africa observed that to meet climate investment needs, the government needs significant climate finance and resource mobilization beyond current levels.
Djabare’s observation was contained in a draft guideline presented by Mavis Mainu, the Executive Assistant at Climate Analytics on Friday at the Sheraton Hotel in Kampala.
The guidelines validated by the financial sector players aim to aid the government in mainstreaming climate change in Uganda’s financial sector.
Several financial sector representatives from the Bank of Uganda, the Insurance Regulatory Authority of Uganda (IRA), the Uganda Retirement Benefits Regulatory Authority – URBRA, the Uganda Microfinance Regulatory Authority – UMRA, and the Capital Markets Authority – CMA participated in the validated exercise.
Citing the NDC, Alfred Okot Okidi, the Permanent Secretary in the Ministry of Water and Environment notes that the country’s scope for climate change adaptation has been broadened ranging from agriculture, forestry, infrastructure, energy, and health to also include ecosystems water and sanitation, among others.
Uganda’s Third National Communication 2022, Updated NDC 2022, Uganda Climate Risk Profile 2020, State of Climate of Uganda 2022, and Economic Assessment of the Impact of Climate Change in Uganda 2015 demonstrate that climate risks are on the rise.
The NDC reveals that temperature and precipitation are projected to increase in Uganda over the coming years as well as an increasing trend in extreme or adverse trends of drought, floods, and landslide occurrences among others.
In 2020, Uganda suffered USD 152.2 million, approximately 591.176 billion Shillings in economic losses due to natural disasters, a 14 percent increase compared to 2019. Extreme meteorological and climate events threaten the livelihood of the over 80 percent communities in Uganda.
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