The Global Fund for Loss and Injury raises hopes [Business Africa]

 

Africa loses nearly $200 billion annually to climate-related destruction, ranging from damaged infrastructure and flooded roads to decreased agricultural production. As climate shocks intensify across the continent, attention is turning to the Loss and Damage Fund, established at COP27, to determine whether it can provide significant financial support to vulnerable countries.

This fund was designed to help developing countries recover from the devastating impacts of climate change — impacts that many African economies are already struggling to absorb.

Speaking on the Business Africa program , Ibrahima Cheikh Diong , executive director of the Loss and Injury Response Fund, said that progress is being made in setting up the institution, but key questions remain regarding funding and implementation.

Africa is among the regions most vulnerable to climate shocks — from droughts in the Horn of Africa to floods in West and Central Africa . These disasters often destroy roads, bridges and crops, weakening economic growth and threatening food security.

A major development in operationalizing the fund has been the adoption of the Barbados Implementation Modalities , which define how the financing mechanism will operate and how affected countries will be able to access support.

For many African economies already facing debt pressures and development challenges, the success of this fund could determine how effectively governments respond to climate disasters in the years to come.

Global tensions are impacting African markets.

Beyond climate risks, global geopolitical tensions also affect African economies.

Tensions around the Strait of Hormuz , one of the world's most critical oil transit corridors, have periodically driven up global crude oil prices.

For import-dependent economies like Ghana and Zambia , rising oil prices can quickly translate into increased fuel costs, transport tariffs, and food prices in local markets.

Because fuel prices influence the cost of transportation and logistics, increases in global oil markets often ripple through supply chains, ultimately affecting the price of everyday consumer goods across the continent.

Namibia is preparing to formalize its informal sector

Namibia is preparing for a major shift in its economic policy. The country's informal sector employs more than half of the national workforce and makes a significant contribution to economic activity. Yet, millions of workers remain outside the formal tax system and lack any social protection.

The government now plans to begin formalizing this sector in 2026, an initiative aimed at increasing tax revenues while improving access to financial services and social safety nets.

However, the transition may not be easy. For many small traders and entrepreneurs, entering the formal economy could mean new regulatory requirements, taxes, and compliance costs — raising concerns about the impact of this reform on livelihoods.

As African economies face climate pressures, global market volatility and internal structural reforms, policymakers are under increasing pressure to strike a balance between resilience, growth and social protection.