Financial experts and stakeholders in Uganda have taken a significant step forward in combating the impacts of climate change by validating guidelines aimed at mainstreaming climate finance within the country’s financial sector. This move comes as Uganda seeks to enhance its resilience against human-induced climate change and its associated risks by 2030.
The recently validated guidelines outline a roadmap for financial institutions to integrate climate finance into their operations effectively. By doing so, these institutions can better manage climate-related risks, capitalize on available opportunities, and align their goals with both national and international climate policies.
The development of these guidelines involved collaboration among various players in the financial sector, including government ministries such as Finance, Planning, and Economic Development, as well as regulators, policy bodies, and public and private financial institutions like SACCOs (Savings and Credit Cooperative Societies). This collective effort underscores the seriousness and commitment of Uganda’s financial sector towards addressing climate change challenges.
Noah Owomugisha, Head of Investment at Agricultural Business Initiative (ABI), emphasized the importance of considering climate change in financial operations. He highlighted how climate change can expose assets and investments to significant losses due to extreme weather events and climate disasters. Integrating climate considerations into financial activities can lead to sustainable business practices and contribute to national development goals in the short and long term.
Uganda’s climate action efforts have also been bolstered by fulfilling its obligations under the Paris Agreement, including submitting a Nationally Determined Contribution (NDC) action plan. The country’s NDC outlines a budget of USD 28.1 billion for climate mitigation and adaptation actions, with a portion expected to come from domestic sources.
However, current levels of climate finance mobilization in Uganda fall short of the required funding, highlighting the need for increased resource mobilization. Benjamin Komna Djabare, a climate finance and policy analyst, emphasized the importance of significant financial support beyond current levels to meet Uganda’s climate investment needs effectively.
The validated guidelines provide a strategic framework for mainstreaming climate change within Uganda’s financial sector, aligning with broader national efforts outlined in documents like Uganda’s Third National Communication, Updated NDC, and Climate Risk Profile. These documents underscore the rising climate risks facing Uganda, including increased temperatures, precipitation, and occurrences of extreme weather events like droughts, floods, and landslides.
The economic toll of natural disasters in Uganda, amounting to USD 152.2 million in 2020 alone, highlights the urgency of addressing climate change impacts. These events disproportionately affect vulnerable communities, threatening their livelihoods and well-being.
The participation of key financial sector players such as the Bank of Uganda, Insurance Regulatory Authority, Retirement Benefits Regulatory Authority, Microfinance Regulatory Authority, and Capital Markets Authority in validating these guidelines demonstrates a united front in tackling climate change challenges.
Uganda’s validation of climate finance guidelines marks a significant milestone in its climate resilience journey. By integrating climate considerations into financial operations, Uganda is poised to enhance its adaptive capacity, mitigate risks, and achieve sustainable development outcomes in the face of climate change uncertainties. This collaborative effort underscores the collective responsibility of all stakeholders in driving positive change for a climate-resilient Uganda.
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