Africa Climate Summit Ends With Calls for Carbon Tax, Debt Relief and Green Investment
Kenyan President William Ruto announced the adoption of the Nairobi Declaration.

Over 20 African countries unanimously adopted the Nairobi Declaration on Wednesday, a document that sets out the continent’s demands for climate finance and debt relief ahead of the United Nations climate negotiations in Dubai later this year. 

The declaration calls for a global carbon tax on the use and trade of fossil fuels, low-interest loans for green energy projects in Africa, and reform of the world financial system that forces debt-laden African countries to pay more to borrow money and hampers foreign investment on the continent. 

The AU declaration circulated in Nairobi hours after the summit ended has not yet been made available online, raising concerns about possible revisions.

Kenyan President William Ruto, who hosted the summit and presided over Wednesday’s high-level proceedings, said that $23 billion in green investments was secured during the three-day event. This included hundreds of millions of dollars for African carbon credits, which Ruto and US climate envoy John Kerry highlighted as key to addressing the continent’s massive climate finance gap.

Africa will need at least $2.8 trillion to meet its climate targets by 2030, according to a joint African Union Commission and UN Economic Commission for Africa report released on the opening day of the summit.

Meanwhile, African governments currently spend almost as much on debt payments as they receive in energy investments, the International Energy Agency said on Monday. 

Debt crisis looms over Africa’s energy transition

Debt servicing costs were just 20% lower than total energy investment in Africa between 2014 and 2022, according to the IAEA.

More than 30 of the world’s most indebted countries are in Africa. With debt repayment levels at a 25-year high – the world’s poorest countries spend 16% of government revenue on debt – Africa is heavily reliant on investment from the private sector and foreign governments to build momentum for its energy transition. 

The paradox, as African leaders see it, is that debt is cited by private and multinational lenders – alongside concerns of instability, conflict and government corruption – as creating a risky environment for investment. As a result, the cost of capital in Africa is up to eight times higher than elsewhere, limiting the continent’s ability to attract much-needed investment, said Ruto. 

At the summit’s closing ceremony, Ruto criticized the “unjust configuration of multilateral institutional frameworks that perpetually place African nations on the back foot.”

Africa’s ability to respond and adapt to the climate crisis is hamstrung by this “costly financing which plunges our economies into debt traps and denies them resources needed to mitigate and adapt,” said Ruto. 

Exorbitant borrowing costs hamper clean energy investments in Africa

Around 30,000 delegates attended the inaugural Africa Climate Summit, the first-ever held by African leaders to address climate change.

Exorbitant borrowing costs have limited green energy investment in Africa to just 2% of the global total. In many cases, no money is available at all.

More than 80% of green investments in developed countries, where borrowing costs are low, are funded by private finance. In developing countries, that figure falls to 14%.

“The stock of public debt in sub-Saharan Africa at the end of 2022 was estimated at 1,140 billion dollars,” said African Union Commission President Moussa Faki Mahmat. “In light of these staggering figures and many others, it is clear that there can be no relevant global intervention in favour of Africa without a credible solution to the crippling debt challenge.” 

Some of Africa’s largest economies were notably absent from the inaugural summit in Nairobi, with the heads of state of Nigeria, South Africa, Ethiopia, and Egypt failing to attend. 

China, the world’s largest emitter of greenhouse gases, Africa’s largest trade partner, and one of its largest creditors, declined to make a public statement at the conference, although senior Chinese officials were in attendance.

The declaration also called on the world’s biggest emitters to meet their $100 billion pledge in annual climate finance to developing countries, which has gone unfulfilled since its announcement 14 years ago.

Critics question focus on carbon credits

“Kenya and Africa look forward to a successful COP 28 that is a turning point in the Climate Change conversation,” said Ruto.

Hundreds of millions of dollars for African carbon credits were announced at the summit, including a $450 million commitment by the United Arab Emirates (UAE).

The UAE, one of the world’s largest oil producers, is leading a campaign to reframe its image as a leader in green energy ahead of the UN climate summit in Dubai in November. It committed an additional $4 billion to green investments in Africa, albeit in the form of a “non-binding letter of intent”.

The focus on carbon credits at the Nairobi summit was met with criticism from environmentalists and African politicians who view them as an excuse for major polluters to continue polluting.

African carbon credits are already widely sold to Western companies and governments, such as airlines and energy companies. Critics of carbon markets say that their voluntary nature makes them an easy way for companies and countries to offset their emissions without actually reducing them.

However, carbon credits could help to lower the cost of capital standing in the way of green investment in Africa by providing an additional financial incentive to unlock private sector interest.

Ruto described the African carbon market as “an unparalleled economic gold mine”, adding: “GDP is about capitalising what you have. We have the carbon sinks that serve the world.”

The African carbon market, where a ton of carbon is worth less than $10 compared to over $100 in wealthier nations, is seen by critics as an easy dumping ground for countries and companies seeking to offset their emissions.

The IAEA estimates that African carbon credit sales to governments similar to the deal agreed by Ghana and Switzerland in 2022 could raise even more money than sales to private companies.

‘Agents of change’ – recasting Africa’s role in the energy transition 

The Nairobi declaration seeks to recast Africa’s population of 1.3 billion people – set to double by 2050 – as agents of change in the global climate fight, rather than helpless victims. 

“[Africa] is more than ever called upon to rely first and foremost on its own efforts, on its own genius,” said Mahmat.

Africa is home to 60% of the world’s renewable energy potential and 30% of the critical minerals needed for low-carbon technologies, said Ruto. Despite this, over 600 million people do not have access to electricity.

“It’s becoming increasingly difficult to explain to our people, particularly to our youth, the contradiction: resource-rich continent and poor people,” said Ethiopian President Sahle-Work Zewde. “Africa cannot be nature-rich and cash-poor.”

Involving youth, health sector

Health sector leaders, however, expressed dismay that health was not more prominent in the Summit proceedings and outcomes – particularly in light of the huge toll fossil fuel emissions and climate change are taking in terms of more heat-related illnesses; drought, flooding and food insecurity; and poor urban air quality.  An appeal for a greater focus on  health-related climate issues was circulated at the Summit by WHO and a number of development partners earlier this week.

But in the final declaration, “health” was only mentioned once – in reference to the disproportionate impacts of climate change on the continent on “economies, health, education, peace and security, among other risks.”

“Sadly, the organisers seem to have overlooked the urgency of this health crisis, as it remains conspicuously absent from the summit’s agenda,” CEO of Amref Health Africa Githinji Gitahi was quoted as saying. “This isn’t merely an oversight; it’s a haunting omission that risks squandering a golden opportunity to amplify Africa’s voice on a global stage, especially with the 78th Session of the United Nations General Assembly and COP28 looming on the horizon.”

Ruto, in his remarks, also emphasized the importance of involving Africa’s youth in climate discussions. Africa is the world’s youngest continent, with 40% of its population under the age of 15. 

“We are the last frontier of untapped potential in the form of hundreds of millions of young men and women who are educated, skilled, motivated, innovative, ready and willing to drive the enterprises and industries that will unlock the possibilities promised by our immense endowments of natural assets, mineral resources, and green energy potential in order to unleash opportunities and prosperity for Africa and the world on an unprecedented scale,” said Ruto.

“If the voice of the youth is missing, our efforts to achieve prosperity will not succeed.”

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