Creecy: Climate finance shouldn’t worsen Africa’s debt burden

• Minister Barbara Creecy has reiterated previous calls for climate finance not to worsen the debt burden for Africa.
• Creecy also shared SA’s position that non-debt instruments be explored for climate finance, including those that don’t require sovereign guarantees.
• The minister is in Nairobi, Kenya, for the inaugural African Climate Summit.
• For climate change news and analysis, go to News24 Climate Future.

Forestry, Fisheries and Environment Minister Barbara Creecy has called for the reimagining of climate finance for Africa and developing nations – in that it should not increase debt burdens nor require sovereign guarantees.

The minister made the remarks during a panel at the inaugural African Climate Summit, which kicked off in Nairobi, Kenya on Monday.

The summit is themed around driving green growth and climate finance solutions for the continent and the rest of the world.

“African countries need a new suite of financing instruments, with a set of favourable terms and conditions that are not merely debt generators…” Creecy told the conference.

Creecy added that local currency lending will be imperative to support climate action in Africa – and she acknowledged efforts by the Green Climate Fund and New Development Bank in this area.

Creecy noted the importance of accessing grant and concessional finance – something which she has also advocated for at UN climate summit, COP27, last year. She said that South Africa’s position is that non-debt finance instruments be deployed. This includes not requiring sovereign guarantees for finance:

In 2021, developed nations the UK, US, Germany, France and the EU pledged $8.5 billion in climate finance to South Africa. The balance of the funding is largely in loans at concessional rates – with grants only accounting for a small portion.

Citing a communique adopted by African ministers in Cairo, Egypt in 2022, Creecy reiterated previous calls for multilateral development banks and international finance institutions, like the World Bank and IMF, to innovate sources of finance and introduce debt reform. This also includes having these financial institutions take on first-loss risks on investments and technologies not yet commercially available but needed for climate action.

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Creecy, in her address, also noted that estimates by the African Development Bank show that between $130 billion and $170 billion in finance will be needed to improve infrastructure on the continent for it to be more climate resilient.

“Climate change impacts will be genuinely felt during the lifespan of the planned and future infrastructure within the coming decade,” Creecy warned.

“If the impacts of climate change are not taken into account now, there is a considerable risk that the current and potentially the next generation of infrastructure in Africa will be locked into designs that could be inadequate for the future climate and costly or impossible to modify later,” she added.

Estimates from the Global Commission on Adaptation indicate climate change will lead to a loss of 2% to 4% in GDP annually in the continent by 2040, Creecy said.

Creecy also critiqued developed nations for not upholding their 2009 pledge to raise $100 billion per year by 2020 to support climate response in developing nations. This goal, however, is expected to be met later this year 2023.