Africa: Without debt relief, Africa fights climate change with its hands tied

Africa spends nearly three times more on servicing its external debt than it receives in climate finance. Debt cancellation is urgent and crucial.

Earlier this month, environment ministers from across Africa met in Côte d’Ivoire to discuss the continent’s environmental governance and find unified positions to take to international climate negotiations. A key agenda item at this year’s African Ministerial Conference on the Environment (AMCEN) was the need to increase climate finance, given the huge financing gap. African countries currently receive about $30 billion in climate finance each year, but need about $277 billion per year to implement their national climate plans and meet their 2030 targets.

At the conference, Ali Mohamed, Chair of the African Group of Climate Change Negotiators (AGN), expressed an ambitious position on the new climate finance target to be decided at the COP29 climate negotiations in November. He argued that the new quantified climate finance target (NCQG) – which will replace the current $100 billion per year target – should mobilise at least $1.3 trillion per year for developing countries by 2030. This figure, he said, should serve as an initial baseline, with the target periodically reviewed and adjusted as more data becomes available and needs evolve.

In addition to this figure, African ministers and negotiators stressed the importance of fairness, accountability and transparency in how funds are managed and directed to where they are most needed. They also called for a shift from largely loan-based climate finance, which increases countries’ debt burden, to grant and highly concessional financing.

On this front, African negotiators may need to be much bolder. Many countries on the continent are facing deepening debt crises, which seriously undermine their ability to care for their people in the present and invest in their future. In 2023, African countries’ external debt payments reached $85 billion, nearly triple what they received in climate finance. By 2024, countries’ debt service will represent at least 18.5% of budget revenues.

In some countries, the situation is particularly dire. Zambia made headlines in November 2020 when it became the first African country to default on its debt during the Covid-19 pandemic, with debt servicing taking up more than 33% of government revenue. In Ghana, the finance minister revealed in late 2022 that half of the country’s total revenue and more than 70% of its tax revenue was going toward debt repayment. And in Kenya, debt servicing was taking up nearly 70% of domestic revenue as of June 2024.

This situation seriously limits the capacity of African countries to invest in public goods, particularly in terms of climate action.

First, governments forced to allocate limited funds to debt servicing have fewer resources to devote to national priorities. Dozens of African countries currently spend more on debt repayments than on health or education. Faced with multiple and urgent needs and limited resources, Africa’s debt burden makes it much more difficult to invest in long-term renewable energy, grid infrastructure, energy storage, technological innovation, and climate change adaptation.

Second, debt makes borrowing on international markets prohibitively expensive for heavily indebted countries. Interest rates average 6.5 percent for highly indebted countries, compared with 3 percent for more stable countries. Unfavourable borrowing conditions are a significant barrier to mobilising the finance needed for renewable energy and climate change adaptation projects. High debt levels also deter private sector investors who fear economic instability and possible currency devaluation.

Building renewable energy infrastructure and implementing effective climate change adaptation strategies require significant upfront investments. Delays are costly – in terms of human lives and the economy – and become even more so over time. Relying on fossil fuels, for example, may be cheaper in the short term, but it locks countries into a carbon-intensive future while harming the environment and human health. In the meantime, the longer communities wait for measures that would strengthen their resilience to climate change, the greater the irreversible losses and damages.

Cancel the debt

Heavy polluters have long been slow to commit to addressing the environmental damage they have inflicted on the Global South. It is essential that they make up for it through comprehensive reparations. An ambitious new climate finance target will be a major part of this, as AMCEN participants stressed. But international creditors, financial institutions, and historical polluters must also directly address the debt crisis, a legacy of colonialism and more recent shocks such as the 2008 financial crisis, the COVID-19 pandemic, and the Russia-Ukraine war.

In addition to financial compensation, African negotiators should also seek debt cancellation. This could focus first on writing off accumulated international debts to institutions such as the IMF and the World Bank, as well as countries’ bilateral debt, to offset the climate impacts caused by polluters in the Global North. In cases where debt cancellation is not an option, African countries should demand that rich countries transfer technology and knowledge as reparations. This could include providing advanced renewable energy technologies, climate resilience tools, and sustainable agricultural practices. Such technology transfers would enable African countries to leapfrog traditional, polluting development pathways and more quickly transition to a sustainable, low-carbon economy.

These measures could be implemented by an international climate justice court that could hold the most polluting countries to account, oversee reparations, and ensure that commitments are respected and used effectively. This body could also serve as a platform to negotiate fair terms for debt cancellation and technology transfer.

African governments and civil society groups are increasingly mobilizing to call for comprehensive debt cancellation and innovative solutions. Organizations like the Jubilee Debt Campaign and movements like 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 increased political will from rich countries, these efforts risk being in vain. Going forward, African governments and their allies must push for more radical debt solutions—such as unconditional debt cancellation, the creation of global climate remediation funds, and the direct transfer of green technologies—that would truly enable African countries to invest in climate projects and secure a sustainable future.

Karabo Mokgonyana is a renewable energy activist at Power Shift Africa.