Africa’s most populous country, Nigeria has proposed a Debt-For-Climate (DFC) Swap deal to the United States in order to ensure a principle energy transition for African nations.
The Vice President of Nigeria, Prof. Yemi Osinbajo presented the proposal in the United States while leading the Energy Transition Implementation Working Group (ETWG),
Africa Daily News, New York gathered that the VP and other government officials are seeking global partnerships and support for Nigeria’s recently launched Energy Transition Plan.
Osinbajo delivered a lecture at the Center for Global Development in Washington D.C. on the DFC concept on an equitable energy transition for Africa.
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He took time to explain that the debt for climate swaps is a type where debt is forgiven by creditors in exchange for a commitment by the debtor to use the debt service payments for climate action programmes.
The creditor country or institution, Osinbajo explained, agrees to forgive part of a debt if the debtor country would refund in a local currency into escrow, and then use the funds for agreed climate projects.
The Nigerian deputy leader pointed out that the idea increases the fiscal space for climate-related investments and reduces 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 said.
Osinbajo also proposed the greater participation of African countries in the Global Carbon Market while exploring financing options for energy transition.
The VP called for collaboration on the opportunities presented by the financing of clean energy assets in growing energy markets.
In another report, the President of the United States, Joe Biden earlier in the week signed into law a major climate change and health care spending bill, which appears to have given Democrats another boost ahead of the upcoming midterm elections in which Republicans are suddenly less certain of their predicted crushing victory.
The law, which was christened the Inflation Reduction Act, was believed by the White House as the biggest commitment to finding solutions to the problems of climate change in US history, as well as targeting long-sought changes in the way medicines are priced, while adding fairness to the tax system, with a minimum 15 percent tax for corporations.
