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

Nicola A. Ranger, Christopher Adam, Channing Arndt and Roberto Spacey Martín

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: climate change; central banking; Sub-Saharan Africa; financial markets; financial risk (search for similar items in EconPapers)
JEL-codes: E58 O13 Q54 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2025-10-06
New Economics Papers: this item is included in nep-afr, nep-cba, nep-ene, nep-env and nep-mon
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Published in Annual Review of Resource Economics, 6, October, 2025, 17(1), pp. 339 - 360. ISSN: 1941-1340

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