Government promises South Africa’s new climate fund won’t get looted

Barbara Creecy, the Minister of Environment, Forestry and Fisheries, has backed the creation of the Climate Response Fund, which she says represents a crucial measure to tackle the consequences of climate-related catastrophes – but assures that it will not suffer the same ill fate as other funds which had “no oversight”.

At a meeting of the Presidential Climate Commission, Creecy said that the fund creates a “mechanism where we can raise money to restore infrastructure that is damaged as a result of extreme weather events and other climate-related occurrences.” 

According to the Disaster Risk Finance Diagnostic report by National Treasury, South Africa “is highly exposed to climatic shocks, particularly droughts, which undermine efforts to stimulate growth,” resulting in over 3,000 deaths and R172 billion (just under R29 billion was insured) in losses experienced over the last 51 years.

This report does not include the approximately R2 billion of damages caused by the floods in KwaZulu Natal at the end of 2023.

President Cyril Ramaphosa announced the fund at this year’s State of the Nation Address (SONA) and told the minister that it should be set up in a way that would resemble the Covid-19 Relief Fund through crowd-in private financing.

Additionally, the President said that the fund “includes climate-proofing existing essential infrastructure and facilities, such as water and food systems, roads, rail and ports, human settlements and health care.”

“Unless we build climate-resilient infrastructure [funding] for loss and damage [suffered as a result of extreme weather events] will become a bottomless pit,” said Creecy.

The minister said that the fund would be designed and operationalised by either the Development Bank of Southern Africa or the Industrial Development Corporation of South Africa and would act as a channel for South Africa to access the international loss and damage fund that is being set up under the United Nations Framework Convention on Climate Change.

Worries about sticky fingers

The Covid-19 relief fund, which amounted to around R500 billion, was used to assist several sectors.

However, many issues relating to this fund occurred, including overpricing, unfair processes, potential fraud and supply chain management legislation being sidestepped.

Commissioners asked Creecy how the government would ensure the climate change response fund did not face a similar fate of misuse and fraud by those in government and the private sector.

“The difficulty during the Covid-19 pandemic was that there was no organised oversight [over how funds were disbursed],” said Creecy.

To attract more finance, people and businesses would “want to know if I give R1 to this fund will it go to deal with climate [change] or will somebody eat it up,” said Creecy.

As such, the minister said that it should be independently administered, with proper due diligence, and money is used for the purposes for which it is connected.

“Where we are is a very different situation; from a government perspective, we need additional finances… and we know that the climate [is] a whole of society concern, so we’ve got to set this thing up so that there’s adequate oversight [and] access but at the same time we must make it available so that it can attract additional finance,” said Creecy.