COVID-19 fiscal policy response and climate change action in Africa

Workers prepare to harvest lettuce at a hydroponics farm on April 30, 2021 in Harare, Zimbabwe. Image: Getty, Tafadzwa Ufumeli
Workers prepare to harvest lettuce at a hydroponics farm on April 30, 2021 in Harare, Zimbabwe. Image: Getty, Tafadzwa Ufumeli

This paper analyses the fiscal policy measures adopted by African countries in response to COVID-19 and how these impact progress on their climate change actions of the countries.

Summary:

  • Stimulus packages adopted by the six African governments reviewed have been generally climate neutral thus far.
  • Countries have mostly focused on social cash transfers for the vulnerable, credit lines for businesses facing liquidity challenges, and tax relief and/or subsidies for businesses and individuals.
  • Nigeria’s package was, on balance, green, thanks to a removal of fossil fuel subsidies and some investments in clean energy. Uganda on the other hand had a marginally red package.
  • South Africa had both green and red policies that made its fiscal stimulus approximately neutral.
  • Tanzania, Benin and Senegal did not include climate related interventions in their COVID-19 economic stimuli.
  • Room for achieving greener recovery still exists as environmental taxes that help consolidate fiscal positions can still be imposed and more job creating green projects can be implemented.

19 Nov 2021
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Research by
Series
COVID-19 MACROECONOMIC POLICY RESPONSES IN AFRICA 09
Region
Middle East & North Africa, Sub-Saharan Africa
SAIIA Programme
Economic Diplomacy
Tags
COVID-19, Monetary and Fiscal Responses
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