Transition Finance and Morocco's New Deal
Transition finance refers to financial practices and investments that support the transition to a low-carbon, sustainable economy.
Transition finance deals between countries of the world are critical for achieving the goals of the Paris Agreement and transitioning to a low-carbon, sustainable economy. These deals involve financial investments, technology transfers, and other forms of support from developed countries to developing countries to help them transition to a low-carbon economy and adapt to the impacts of climate change.
Transition finance refers to financial practices and investments that support the transition to a low-carbon, sustainable economy. This type of finance seeks to address the challenges of climate change and the urgent need to reduce greenhouse gas emissions, while also promoting economic growth and job creation
One of the main objectives of transition finance deals is to address the issue of climate finance, which refers to the financial support that developing countries need to undertake mitigation and adaptation measures. The Paris Agreement recognized the need for climate finance and called on developed countries to provide financial resources to developing countries. This includes funding for projects and programs that reduce greenhouse gas emissions, as well as funding for adaptation measures that help countries cope with the impacts of climate change.
The Just Energy Transition Partnership (JETP) between South Africa and Germany, France, the united Kingdom, the United States and the European Union was one of the key takeaways from COP26, with it being touted as a useful model for other countries to follow. On Friday, Morocco inked a deal of its own.
Oliver Varheyi, Neighborhood and Enlargement Commissioner, announced a new deal on Friday, the 3rd of March 2023, between Morocco and the European Union worth 624 million Euros to support Morocco’s transition to green energy, enhance cooperation on addressing irregular migration management and support reforms around social protection, climate policy and the judiciary.
ESG News reported on Friday that the assistance package will comprise of five key programmes:
Reinforcing social protection – The “KARAMA” programme, worth €130 million, will support a major Social Protection reform, including specific actions to ensure a fair access to universal health cover, family allocations, unemployment insurance and pensions for the Moroccan population.
Supporting the green transition – the programme “Terre Verte”, worth €115 million, aims at supporting Morocco’s agriculture and forestry strategies as well as improving decent employment, ‘green’ entrepreneurship, and the social security coverage of workers.
Addressing irregular migration– A €152 million comprehensive programme on migration will strengthen Morocco’s border management actions in the fight against smuggling networks, the National Strategy of Morocco on Immigration and Asylum, as well as the voluntary return and the reintegration of migrants to their countries of origin, in accordance with international standards in terms of Human rights.
Supporting the Reform of the Public Administration – A €50 million programme will strengthen the access to and quality of public services for citizen and business, through the simplification and digitalisation of administrative procedures, the increased transparency and monitoring of the quality of public service delivery.
Enhancing Financial Inclusion – A €51 million programme will support the Moroccan National Strategy for Financial Inclusion that aims to increase access to finance for MSMEs and start-ups and targets in particular vulnerable populations such as youth, women and people leaving in rural areas.
The transition to a low-carbon economy requires significant investments in new technologies, infrastructure, and business models. These investments are needed to reduce emissions from energy production, transportation, and other sectors, as well as to adapt to the impacts of climate change that are already being felt around the world. Transition finance provides the necessary capital to support these investments, while also helping to manage the risks associated with the transition.
While transition finance has gained significant attention in recent years, there are still many challenges that need to be addressed. For example, there is a need for more standardization and transparency in the market for green finance. There is also a need for better data and analysis to help investors assess the risks and opportunities associated with the transition to a low-carbon economy. Finally, there is a need for more collaboration between governments, investors, and other stakeholders to ensure that the transition is equitable and just.