As both government and non-governmental organisations convened at the Golf Course Hotel in Kampala on March 28, there was an emphasis on the critical need for sustainable climate financing amidst growing concerns over the impacts of climate change.

The stakeholder's dialogue held under the theme; The Nexus Between Climate Change And Fiscal Policy, was organised by Southern and Eastern Africa Trade, Information and Negotiations Institute (SEATINI). 

The dialogue aimed at analysing the forms of climate financing for Uganda, their effectiveness and impact on the resource envelope.

Sam Koojo Mugume, acting assistant in the Macroeconomic Policy Department at the Ministry of Finance, noted that climate change has a huge impact on the fiscal policy environment.

He said that fiscal policy instruments, such as risk-sharing arrangements, were noted as critical tools in safeguarding against climate-related shocks while directing investments towards renewable energy, energy efficiency, and sustainable infrastructure.

“Using taxation as a sustainable tool for climate financing encourages businesses and individuals to adopt cleaner technologies and practices, thereby suppressing the environmental costs of greenhouse gas emissions,” he said.

“The recent climate change disasters from extreme weather, and prolonged drought has underscored the agency of action. Fiscal policies encompassing government taxation, spending and budgeting decisions. Some of these are powerful tools for addressing climate change and building resilience. It is through fiscal policies that we can mobilise sustainable climate finance, incentivize sustainable practices, mitigate risks and invest in adaptation measures.”

Between, 2022 and 2030, Uganda requires $28.1b to implement both unconditional and conditional adaptation and mitigation actions and targets of the updated Nationally Determined Contribution (NDC) and its cross-cutting issues of technology development and transfer, gender, and capacity building across all sectors.

The financial support is expected to be mobilized from domestic and international sources. This implies that Uganda needs about $3.1b annually to finance climate change interventions.

Ms. Jane Nalunga, executive director at SEATINI, noted concerns over Uganda’s preparedness for impending shifts towards a greener economy, particularly amidst initiatives like the Carbon Border Adjustment Mechanism gaining traction in European countries.

“The directive to 'green' our economy is becoming increasingly prominent. But what exactly does that entail for us as a country? It's a question that demands thoughtful consideration and decisive action,” she said.

“As a nation, we've committed to the Nationally Determined Contributions, but implementation requires resources. It's time to translate our promises into action, but where do we find the necessary funding?”

Aaron Werikhe from the Climate Finance Unit at the Ministry of Finance said while Uganda maintains a contingency fund for climate-related disasters, accurately quantifying the severity of these disasters remains a hurdle.