Sun | May 28, 2023

African nations consider swapping debt for climate funding

Published:Tuesday | March 21, 2023 | 4:29 PM
People walk through floodwaters near flooded farmlands after heavy rainfall in Hadeja, Nigeria, September 19, 2022. During a conference in the Ethiopian capital of Addis Ababa on Monday, March 20, 2023, leaders of African countries hit hard by climate change discussed finance options that would allow for the forgiveness of debt in exchange for investment in green energies. (AP Photo, file)

MOMBASA, Kenya (AP) — African countries saddled with debt and ravaged by losses and damages from weather events like cyclones, drought and extreme temperatures have agreed to consider swapping debt to invest in climate action in a meeting of finance ministers in the Ethiopian capital Addis Ababa.

The “debt-for-climate swap” option is an economic tool that allows a country's debt to be reduced in exchange for commitments on green investments.

It was among several alternative green financing models discussed at the ongoing United Nations conference for finance and economic ministers that supporters say would boost funds to adapt to climate harms, protect nature and finance local communities.

It comes as many African nations are battling with the effects of costly climate change-fuelled events like the ongoing drought in eastern Africa that has killed thousands and decimated livelihoods reliant on rain-fed agriculture and the aftermath of the devastating Cyclone Freddy in the south that's left hundreds dead and thousands of others displaced.

Egyptian finance minister Mohamed Maait said that his country is one of many that is now having to add heavy climate costs to budgets stretched thin by external debt — which takes up to 17% of countries' spending in some cases — and other basic needs.

“What am asking every day and every hour is where do I get the money to protect our people from climate extremes,” Maait said, adding that borrowing was often the only option for some nations.

Interest in green finance has been growing, along with criticism that current mechanisms don't work for countries ravaged by climate extremes but have contributed little to the planet-warming emissions in the atmosphere.

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