Creecy’s stance on climate finance and Africa’s debt burden

Creecy's Stance On Climate Finance And Africa's Debt Burden
  • Minister Barbara Creecy has reiterated previous calls for climate finance not to exacerbate Africa’s debt burden.
  • Creecy also expressed South Africa’s stance that non-debt instruments should be explored for climate finance, including those that do not require sovereign guarantees.
  • The minister is currently in Nairobi, Kenya, attending the inaugural African Climate Summit.
  • For the latest climate change news and analysis, visit News24 Climate Future.

Barbara Creecy, the Minister of Forestry, Fisheries and Environment, has called for a reimagining of climate finance for Africa and developing nations. She emphasizes that it should not further increase the debt burden or necessitate sovereign guarantees.

Creecy made these remarks during a panel at the inaugural African Climate Summit held in Nairobi, Kenya, on Monday.

The summit focuses on promoting green growth and climate finance solutions for Africa and the rest of the world.

“African countries require a new range of financing instruments with favorable terms and conditions that do not simply generate more debt…” Creecy stated during the conference.

Creecy highlighted the importance of local currency lending to support climate action in Africa and acknowledged the efforts of the Green Climate Fund and the New Development Bank in this regard.

Additionally, Creecy emphasized the significance of accessing grant and concessional finance, a position she also advocated for at the UN Climate Summit, COP27, last year. She expressed that South Africa proposes the deployment of non-debt finance instruments and the avoidance of requiring sovereign guarantees for finance:

“In South Africa’s perspective, we must lead the way in deploying new financial instruments, specifically non-debt instruments, policy-based guarantees, and options that do not necessitate sovereign guarantees.”

– Minister Barbara Creecy

In 2021, developed nations including the UK, US, Germany, France, and the EU pledged $8.5 billion in climate finance to South Africa. However, the majority of the funding comprises loans at concessional rates, with only a small portion being grants.

Reiterating the calls made by African ministers in Cairo, Egypt, in 2022, Creecy urged multilateral development banks and international finance institutions such as the World Bank and IMF to innovate sources of finance and implement debt reforms. This entails these financial institutions assuming first-loss risks on investments and technologies that are not yet commercially available but essential for climate action.

READ | Africa gathers to demand accountability on climate promises – and the cash to survive climate change

In her address, Creecy also highlighted estimates from the African Development Bank, which indicate a need for $130 billion to $170 billion in finance to enhance the continent’s infrastructure for greater climate resilience.

“Climate change impacts will significantly affect the lifespan of planned and future infrastructure within the next decade,” Creecy cautioned.

“If we fail to consider the impacts of climate change now, there is a considerable risk that the current infrastructure and potentially future infrastructure in Africa will be ill-suited for future climatic conditions and expensive or impossible to modify later,” she added.

Estimates from the Global Commission on Adaptation suggest that climate change will result in an annual GDP loss of 2% to 4% by 2040 in the continent, according to Creecy.

Creecy also criticized developed nations for failing to fulfill their 2009 pledge to raise $100 billion per year by 2020 for supporting climate response in developing nations. However, it is anticipated that this goal will be met later this year.

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