Africa spends nearly three times more servicing its external debt than it receives in climate finance. Debt cancelation is urgent and critical, writes KARABO MOKGONYANA
Earlier this month, environment ministers from across Africa gathered in Côte d’Ivoire to discuss the continent’s environmental governance and find unified positions to bring into international climate talks.
High on the agenda at this year’s African Ministerial Conference on the Environment (Amcen) was the need for enhanced climate finance given the enormous funding gap.
African countries currently receive around $30 billion in climate finance each year yet require about $277 billion annually to implement their national climate plans and meet their 2030 goals.
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At the conference, Ali Mohamed, Chair of the African Group of Negotiators on Climate Change (AGN), articulated an ambitious stance regarding the new climate finance target to be decided at the COP29 climate talks in November.
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He argued that New Quantified Goal on Climate Finance (NCQG) – that will replace the current $100 billion per year target – should mobilise at least $1.3 trillion annually for developing countries by 2030. This figure, he said, should be an initial baseline with the target periodically reviewed and adjusted as more data becomes available and needs evolve.
Alongside this top-line figure, African ministers and negotiators emphasised the importance of equity, accountability, and transparency in how funds are managed and directed to where they are most needed.
They also called for a shift from climate finance largely based on loans, which increase countries’ debt burdens, to funding in the form of grants and highly concessional finance.
On this front, however, African negotiators may need to be much bolder. Many countries on the continent face deepening debt crises that are severely undermining their capacity to care for their populations in the present and invest in their futures.
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In 2023, African countries’ external debt payments reached $85 billion, almost triple what they received in climate finance. In 2024, nations’ debt servicing will account for at least 18.5 percent of budget revenues.
In some countries, the situation is especially dire. Zambia made headlines in November 2020 when it became the first African country during the Covid-19 pandemic to default on its debt, the servicing of which was consuming over 33 percent of government revenues.
In Ghana, the finance minister in late-2022 revealed that half of the country’s total revenues and over 70 percent of its tax revenues were going towards debt repayments.
And in Kenya, debt servicing as of June 2024 was absorbing nearly 70 percent of domestic revenues.
This situation profoundly constrains African countries’ ability to invest in public goods, not least when it comes to climate action.
Firstly, governments forced to allocate limited funds to servicing debts have less to direct towards national priorities. Dozens of African countries currently spend more on debt repayments than on health or education.
Faced with multiple pressing needs and limited resources, Africa’s debt burden makes the prospect of investing in the long-term construction of renewable energy facilities, grid infrastructure, energy storage, technological innovation, and climate adaptation much harder.
Secondly, indebtedness makes the cost of borrowing on international markets prohibitively expensive for debt-ridden countries. Interest rates average 6.5 percent for high-debt nations compared to 3 percent for more stable ones. Unfavourable borrowing terms present a considerable barrier to mobilising the finance needed for renewable energy and climate adaptation projects. High debt also deters private sector investors wary of economic instability and potential currency devaluation.
Both building renewable energy infrastructure and implementing effective climate adaptation strategies require substantial upfront investments.
Delays are costly – in terms of both lives and the economy – and become more costly over time.
Relying on fossil fuels, for instance, may be cheaper in the short-term, but it locks countries into a high-carbon future while damaging the environment and people’s health.
Meanwhile, the longer communities have to wait for measures that would enhance their resilience to climate change, the more irreversible losses and damages accrue.
High-polluting countries have long delayed their commitments to address the environmental damage they have inflicted on the Global South. It is essential they make amends through comprehensive reparations.
An ambitious new climate finance goal will be a ma jor part of that, as participants at Amcen emphasised. But international creditors, financial institutions, and historic polluters must also directly address the debt crisis, which is a legacy of both colonialism and more recent shocks such as the 2008 financial crisis, Covid-19 pandemic, and Russia-Ukraine war.
One form of reparations besides monetary compensation that African negotiators should pursue is debt cancellation. This could focus firstly on wiping international debts accrued historically with institutions like the IMF and World Bank and bilateral country debt, as a means to compensate for the climate impacts caused by Global North polluters.
In cases where debt cancellation is not feasible, African countries should demand that rich countries transfer technology and knowledge as a form of reparations.
This could include the provision of advanced renewable energy technologies, climate resilience tools, and sustainable agricultural practices.
Such technology transfers would empower African nations to leapfrog traditional, polluting development pathways, and transition more rapidly to a sustainable, low-carbon economy.
These measures could be operationalised by an international climate justice tribunal that could hold high-polluting countries accountable, oversee reparations, and ensure commitments are met and used effectively. The body could also serve as a platform for negotiating fair terms and conditions for debt cancellation and technology transfer.
There is a growing movement among African governments and civil society groups pushing for comprehensive debt cancellation and innovative solutions.
Organisations like Jubilee Debt Campaign and movements such as Debt for Climate are advocating for debt cancellation linked to climate resilience.
The African Union and the African Development Bank have called for large-scale debt relief to support sustainable development. However, without stronger international cooperation and political will from wealthy nations, these efforts risk falling short.
Moving forward, African governments and their allies must push for more radical solutions to debt – such as unconditional debt cancellation, the establishment of global climate reparations funds, and the direct transfer of green technology – that would truly allow African nations to invest in climate projects and secure a sustainable future. — AFRICAN ARGUMENTS
