Debt-for-climate swaps: scale up or give up

In 2024, Africa spent $102.6 billion servicing its external debt, 2.3 times the $44 billion of climate finance recorded on the continent in 2021-2022. By comparison, the debt swaps for climate or environmental commitments concluded in Africa (Seychelles, Gabon, Cabo Verde) total less than $700 million, barely 0.7% of a single year of repayments.

A glaring imbalance

The imbalance is obvious. While Brussels, Paris and Berlin multiply green partnerships and climate agreements, African countries pay their foreign creditors more than twice what they receive to adapt their economies to climate change. The debt-for-climate swap, which cancels or restructures part of a country's public debt in exchange for green investment at home, has existed in various forms since 1987. The Policy Center for the New South highlights its potential and the World Bank has estimated its possible scale. If these operations remain rare, it is neither for technical nor for financial reasons, but for political ones.

Changing perspective

This scarcity suits creditors: as long as African debt pays regular interest, any restructuring looks like a loss. The perspective needs to change. Large-scale debt swaps would not be a favour from Europe, but the condition for an equal relationship between the African Development Bank (AfDB), the Agence française de développement (AFD), KfW and the European Investment Bank (EIB). If they are not linked to the African Continental Free Trade Area (AfCFTA), if African countries do not control how the freed-up funds are used, and if the financing is not long term, these swaps will only give a green appearance to an old dependency. Sovereignty means turning debt into local productive capacity, energy interconnections and value chains between African countries.

Without a change of scale, debt swaps will remain a communication exercise.