The African Risk Capacity (ARC) plans to announce a multi-year funding mechanism called "Extreme Climate Facility" (XCF) to assist African Union Member States during climate change disasters, such as extreme heat, floods, droughts and cyclones.
The climate change bonds are set to be released in 2016.
According to experts, Africa must prepare $10-20 billion every year until 2050 to help them cope with increasing global temperatures.
"Africa needs solutions. The XCF will offer African nations a new financing mechanism to manage climate risks by providing direct access to new private capital and by leveraging development partner contributions. We are leading the way in innovative climate finance," said Chair of ARC's Governing Board and Nigeria's Minister of Finance, Dr. Ngozi Okonjo-Iweala in a press release.
ARC is set to convene with African States to create a standard XCF model. Once it is finalized, the XCF will use the data in measuring climate change impacts by reviewing Africa's 30-year climatology record as a starting point. Meteorological information from all parts of the continent is available through satellite, and will be used to identify high-risk areas.
The model will also track increases in the frequency and magnitude of extreme weather events. These will be compared to the limit set for each region of Africa. Once the area goes over the established limit, XCF will give bonds to the affected countries. The bonds are expected to be used by the authorities in mitigating the disaster and improving disaster risk management.
Executive Secretary of the UN Framework Convention on Climate Change, Christiana Figueres, expressed her support for ARC's initiative.
"Climate change knows no borders. We need operational solutions that will channel climate change funds and increase direct access to climate finance. It is vital to minimize the risk to the most vulnerable. I wish ARC every success," she said.
