Mr. Noah Owomugisha, the aBi head of investments—green growth and business development services, said equip- ping financial institutions with the necessary knowledge on green finance is needed to deal with climate challenges.
Climate Change effects could wipe off a significant percentage of Uganda’s Gross Domestic Product (GDP) if the government does not implement several adaptation measures, experts have warned.
Mr. Henry Ssegawa, a financial expert with Uganda Institute of Banking and Financial Services, said during the green finance capacity building training for financial institutions in Ntungamo Municipality that the frequency of rising temperatures had increased, thereby reducing the availability of water for people, crops and animals, not only in Uganda but across East African. This, he said, undermines agricultural production, which contributes great- ly to Uganda’s economy.
Quoting data from the Climate Change Department of the Ministry of Water, Mr. Ssegawa said Uganda’s climate change annual costs could be in the range of $3.2b to $5.9b by 2025, with the biggest impact being on the water, energy, agriculture, and infrastructure.
“That’s a great loss that we want to avert through products that do climate change mitigation and climate change adaptation,” he said.
The financial institutions, which include banks and microfinance institutions, were being trained on how to as- sess businesses and projects that promote green financing and renewable energy for possible funding.
The training is being conducted by aBi Finance and the Uganda Institute of Banking and Financial Services.
Mr. Noah Owomugisha, the aBi head of investments—green growth and business development services, said equip- ping financial institutions with the necessary knowledge on green finance is needed to deal with climate challenges.
“We are trying to build capacities of financial institutions to offer green finance to agribusinesses and small-holder farmers. If we continue to invest the old way, then the time is going to come when our soils are no longer productive and when we can longer get enough harvest to support our households. Green financing enables you to do that,” he said.
Agriculture has become particularly important to the livelihoods of Ugandans, says the World Bank Economic Update for Uganda (UEU), From Crisis to Green Resilient Growth: Investing in Sustainable Land Management and Climate-Smart Agriculture, hence the need to enhance its sustainability.
When jobs were lost and businesses closed due to the Covid-19 crisis, many people returned to agriculture and other natural resource-dependent activities to mitigate and survive the crisis. This increased pressure on natural resources that were already strained by rapid population growth, urbanization, the influx of refugees, and the government’s industrialization drive.
An estimated 41% of Uganda’s land is degraded, according to the report, contributing to economic vulnerabilities and poverty. The rate of degradation and soil erosion is unsustainable and costs about 17% of the country’s gross domestic product (GDP).
“The agricultural sector loses up to 27% of its GDP due to environmental degradation,” said Pushina Ng’andwe, World Bank Senior Agriculture Economist and co-author of the UEU.
“Furthermore, the country’s forest cover declines at 2.6% annually, one of the highest rates of forest loss globally.”
Climate risks, including slow onset change and extreme events, exacerbate this natural capital degradation. The report points out that Uganda is losing opportunities for increasing production, incomes, and ecological benefits because the adoption of sustainable land management and climate-smart agriculture innovations remains low and highly underfunded/underinvested.
“The government needs to prioritize human capital development, greener investment, and support farmers and producers with incentives to adopt sustainable land management and climate-smart agriculture practices,” said Rachel Sebudde, World Bank Senior Economist and lead author of the UEU.
The World Bank proposes a menu of strategies that Uganda can adopt to accelerate the adoption of innovations for a green transition.
Key strategies include breaking barriers to the adoption of innovations to improve climate resilience and management of land and natural resources.
This will enhance opportunities to sustainably raise agricultural productivity and support effective management and preservation of natural capital, economists say also suggesting a shift to public funding towards programmatic approaches and multi-sector implementation to support sustainable land management and climate-smart agriculture.
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