Vice President Yemi Osinbajo, has proposed a debt-forclimate change deal for African countries in order to significantly advance the course of global Osinbajo made the proposal on Thursday during a lecture on a just and equitable energy transition for Africa at the Centre for Global Development in Washington D.C. United States of America.
According to a release by his spokesman, Laolu Akande, Osinbajo explained that the “debt for climate swap is a type of debt swap, where bilateral or multilateral debt is forgiven by creditors in exchange for a commitment by the debtor to use the outstanding debt service payments for national climate action programmes. “Typically, the creditor country or institution agrees to forgive part of a debt if the debtor country would pay the avoided debt service payment in a local currency into an escrow or any other transparent fund and the funds must then be used for agreed climate projects in the debtor country.”
Justifying the rationale behind such a debt swap deal, the Vice President submitted that the commitment to it would “increase the fiscal space for climate-related investments and reduce the debt burden for participating developing countries. “For the creditor the swap can be made to count as a component of their Nationally Determined Contributions (NDC).” He, however, cautioned that there must be significant policy to make the proposal possible. The Vice President also proposed the greater participation of African countries in the Global Carbon Market while exploring financing options for energy transition.
