Vice-President Yemi Osinbajo has asked developed countries to “forgive” some of the debts owed to them by African nations as a way to advance climate projects in the continent.
Osinbajo said this on Thursday during a lecture on a just and equitable energy transition for Africa at the Center for Global Development in Washington D.C., according to a statement by Laolu Akande, his spokesperson.
Referring to the concept as a debt-for-climate (DFC) swap deal, he said it is one in which the debts of African countries will be forgiven while they commit to use same for climate projects.
He added that the deal will significantly advance the course of global net zero emissions targets, facilitate energy access and the development of African countries.
“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 programs,” Osinbajo was quoted as saying.
“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.
“This 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).”
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