VIice President Yemi Osinbajo has proposed a Debt-For-Climate (DFC) swap deal to the international community, saying it can significantly advance the cause of global net-zero emissions targets as well as facilitate energy access and the development of African countries.
According to a statement issued on Friday by Senior Special Assistant to the President on Media and Publicity, Office of the Vice President, Mr. Laolu Akande, Professor Osinbajo presented the proposal during a lecture on a just and equitable energy transition for Africa at the Center for Global Development in Washington D.C.
Explaining the DFC concept, Osinbajo said “debt for climate swaps 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.
“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,” he said.
In a call that can at once significantly advance the cause of global net-zero emissions targets, facilitate energy access and the development of African countries, Vice President Yemi Osinbajo, SAN is proposing a Debt-For-Climate (DFC) Swap deal.
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 added that to make this efficient “there are of course significant policy actions necessary to make this acceptable and sustainable.”
The Vice President also proposed the greater participation of African countries in the Global Carbon Market while exploring financing options for energy transition.
According to him, there is a need to take a comprehensive approach in working jointly towards common goals, including the market and environmental opportunities presented by the financing of clean energy assets in growing energy markets.