Morocco’s plan to tackle climate change
Morocco is adopting a new strategy targeted at strengthening the country’s ability to combat climate change, according to Reuters.
To encourage access to green financing while simultaneously boosting the local finance sector, Morocco plans to buy climate bonds for a low-carbon future.
On the 2nd of February, Abdellatif Jouahti, the governor of the central bank, Bank Al-Maghrib (BAM), unveiled the bank’s latest plan to go green during a news conference on the “macroeconomic impact of climate change”. The conference was held in Rabat and co-organised with the Central Bank of Spain.
He disclosed the bank’s plan to push its share of foreign currency reserves for green, social and sustainable bonds from 7-10%. The push toward a 10% target aligns with the global efforts to combat climate change.
Green bonds, also referred to as climate bonds, are fixed-income financial instruments used to raise funds for green investments. This includes projects relating to climate mitigation and adaptation.
Morocco’s funding needs around $78 billion between 2022 and 2050 to combat climate change and mitigate its impacts, The World Bank estimates.
During the conference, Jouahri highlighted BAM’s commitment to making the bank’s investment strategy more sustainable and environmentally responsible.
BAM initially invested $100 million in green bonds in 2016 when it launched its green investment strategy. In 2023, the bank pushed its green agenda further, announcing a $200 million investment in sustainable bonds.
Over the past few years, drought has had a substantial impact on Morocco’s harvest and water supply. The country is currently bracing for its sixth dry year in a row which Jouahri stated is a “cause for concern”.
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The World Bank expects drought to cost Morocco 6.5% of GDP and push nearly two million people out of rural areas for towns and cities by 2050.
Jouahri noted the significant role that central banks have in considering the impact of climate change on their missions. He stressed that climate-related risks affect “growth, employment and inflation, thus influencing monetary policy decisions”. He continued by saying that the central bank is working to provide banks with guidelines to measure climate-related risks emanating from major borrowers.
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A report by the Green for South INC, a Toronto-based consultancy, commented on Morocco’s climate financing sector in January 2023.
The report noted that Morocco is the first country in North Africa to adopt “appropriate regulations and guidelines to support climate finance” and emerged as a regional leader in establishing channels to finance climate action.
Morocco adopted a climate mitigation plan (NDC) in July 2022. They had a budget of $78 billion with $40 million put toward setting up climate catastrophe warning systems and $38 million funding mitigation measures.
In terms of green financial activity, Morocco ranks alongside Egypt, Lebanon and Turkey in the group of countries mobilising resources from both global green funds and green bonds.
Reuters.
