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Climate change and Sub-Saharan Africa: the role of central banks

Author

Listed:
  • Ranger, Nicola A.
  • Adam, Christopher
  • Arndt, Channing
  • Martín, Roberto Spacey

Abstract

Climate change is driving three transformations in the landscape of global finance, with implications for central banks in Sub-Saharan Africa (SSA). First, pressures on financial institutions related to climate-related physical risks are mounting, with potential to threaten price and financial stability. Second, global and domestic responses to climate change are creating risks and opportunities for SSA economies. Third, the ongoing shift in the global financial architecture toward sustainability could either crowd-out or crowd-in international investment flows to SSA. Uncertainties in each increase the challenges for central banks and supervisors. We find that, without action, the risks outweigh the opportunities. To fulfil their mandates, SSA's central banks are obliged to react; however, the paucity of peer-reviewed evidence hinders the development and execution of appropriate responses. Preparedness is crucial if actions by SSA central banks are to play their part in shifting the balance towards managing risks and grasping opportunities.

Suggested Citation

  • Ranger, Nicola A. & Adam, Christopher & Arndt, Channing & Martín, Roberto Spacey, 2025. "Climate change and Sub-Saharan Africa: the role of central banks," LSE Research Online Documents on Economics 129898, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:129898
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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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