Dozens of climate groups from across the continent under the aegis of the Pan African Climate Justice Alliance (PACJA), asked world leaders to refrain from increasing the continent's debt burden with loan instruments disguised as climate finance.
As talks hit the mid-way point at this year's United Nations climate summit in Baku, Azerbaijan, African leaders and activists have called for a shift from loan-tied climate funding to grant-based solutions, to address the continent's climate crisis.
Dozens of climate groups from across the continent under the aegis of the Pan African Climate Justice Alliance (PACJA), asked world leaders to refrain from increasing the continent's debt burden with loan instruments disguised as climate finance.
"Developed countries must be alive to the quality of climate finance as unsustainable debt burden, high cost of capital and increasing use of non-concessional finance instruments continue to hinder the ability of African countries to achieve their climate and development goals," Mithika Mwenda, PACJA's Executive Director said in a statement. Mr Mwenda noted that the climate finance to be secured under the new collective quantified goal (NCQG), ought to contribute to climate justice rather than Africa's growing debt portfolio.
"We reiterate our rejection of the proposal for voluntary contribution to the Loss and Damage fund as advanced by developed countries. Raising vital new and additional finance in the form of grants, not loans, to address loss and damage, and strengthening legislation to embed the polluter pays principle into law whilst also propelling emission cuts," the statement read.
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At 72 per cent, loans make up a bulk of the global climate finance, and are largely provided by multilateral development banks (MDBs) like the World Bank at high interest rates, non-concessional and other stringent conditions that only worsen the burden of African countries--most of which are already debt-distressed, at risk or servicing debts with funds that should have been directed to developmental prospects in infrastructure, healthcare, education and other sectors of the economy.
A report by the International Institute for Environment and Development (IIED) puts this in perspective: African countries and their counterparts in the world's poorest and most climate-vulnerable regions service their debts with twice as much as they receive to mitigate their climate crisis. This reality makes loan-based financing an unsustainable and unsuitable solution.
Despite its insignificant contribution of about 4 percent to global carbon emissions, Africa continues to grapple with devastating environmental disasters. Catastrophic flooding in Nigeria and elsewhere in West Africa, extreme heatwaves in the Sahel and multi-year droughts in parts of Southern Africa, have heightened food insecurity and other forms of economic instability.
To tackle the continent's raging climate crisis, the African delegation to COP29 had called for an annual climate finance payout of $1.3 trillion from developed countries--which they insist should come in form of grants and not loans--to replace the existing $100 billion commitment.
So far, talks on a new climate finance goal have stalled at COP29 as countries continue negotiations with no white smoke in sight from the conclave.
