African Leaders Advocate for International Levies to Support Climate Change Initiatives

African Leaders Advocate For International Levies To Support Climate Change Initiatives

By Duncan Miriri
Thursday September 7, 2023

African leaders presented a set of new proposals and reforms during the Africa Climate Summit in Kenya, aiming to secure funding for climate change action. The Nairobi Declaration, which was the outcome of the three-day summit, will guide African leaders’ negotiations at the upcoming COP28 summit in November.

The discussions at the summit predominantly revolved around strategies to mobilize financing for adapting to extreme weather, conserving natural resources, and developing renewable energy. Despite being heavily impacted by climate change, Africa receives only about 12% of the necessary annual financing, amounting to nearly $300 billion, according to researchers.

While market-based solutions like carbon credits were highlighted before the summit, the final declaration primarily focused on demanding increased resources from major polluters and global financial institutions. It also urged world leaders to support the introduction of a global carbon taxation regime, which would include a carbon tax on fossil fuel trade, maritime transport, and aviation. This proposal could be supplemented by a global financial transaction tax to ensure substantial financing for climate-related investments.

The implementation of such measures at a global level would shield tax raises from political pressures and enable developing countries to access funding at affordable rates. Although around two dozen countries currently impose carbon taxes, a global carbon tax regime has not gained significant traction so far.

Kenyan President William Ruto mentioned the European Union’s financial transaction tax (FTT) proposals as a potential model. While the European Commission introduced an FTT proposal in 2011, it did not gain unanimous approval from the European Council to become law. Nevertheless, several member states have introduced their own FTTs.

The proposals outlined in the Nairobi Declaration will be taken by African countries to a U.N. climate conference later this month and the COP28 summit in November. The call for a global carbon tax received support, but critics emphasized the need to move away from carbon credits, as they allow polluters to evade responsibility without taking substantial action.

During the summit, governments, development banks, private investors, and philanthropists committed a total of $23 billion to green projects. However, African leaders recognized that these investments merely scratch the surface of the continent’s financial requirements, stressing the need for more fundamental changes.

African countries face borrowing costs that are five to eight times higher than those of wealthier nations, hampering their ability to respond to climate change and resulting in recurring debt crises. The Nairobi Declaration called for multilateral development banks to increase concessional lending to poorer countries and for better utilization of the IMF’s special drawing rights mechanism.

Other suggestions included measures to assist heavily indebted countries in avoiding defaults, such as granting 10-year grace periods and extending sovereign debt repayment periods. Some analysts noted that the summit did not sufficiently focus on supporting African communities in adapting to extreme weather conditions.

“Many vulnerable communities affected by floods, droughts, and the risk of conflict were disappointed by the lack of emphasis on ensuring that green investments benefit them,” said Nazanine Moshiri, a senior analyst at the International Crisis Group think-tank.

Additional reporting by Susanna Twidale in London; Writing by Aaron Ross; Editing by Alison Williams and Emelia Sithole-Matarise

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