-Climate Change, Poverty, and Debt on a Global Scale
By Davis Buyondo
Kampala-Uganda
In the face of escalating global challenges such as climate change, poverty, and debt, the recent Paris Finance Summit in France was organised with the objective of tackling the urgent concerns related to climate and development financing.
Led by President Emmanuel Macron (France), the summit brought together leaders from Europe and the developing world in an effort to discuss how to alleviate the overwhelming debt burden endured by vulnerable nations. Although the summit did not produce immediate and radical solutions, it effectively sparked a crucial dialogue, bringing attention to the pressing need for swift action.
The recently concluded Summit for a New Global Financing Pact in Paris served as a platform for global leaders to confront the pressing challenges of poverty, debt, and climate change.
President Macron led the charge, bringing together prominent figures from the developing world and Europe to deliberate on the critical issue of insufficient financial resources flowing to impoverished and vulnerable countries.
According to Sunita Narain, the Director General of the Centre for Science and Environment (CSE), the most vulnerable countries, in need of funding for climate mitigation, carry an overwhelming debt burden.
Narain stressed the need for prompt and substantial responses, stating, “Today, the most vulnerable countries, which also need funding for climate mitigation, have a crushingly high debt burden. We can no longer talk about small changes, or about short-changing the poor. We need answers and we need them fast.”
Although the Paris Finance Summit did not immediately yield transformational solutions, it played a crucial role in sparking discussions and raising awareness about the climate and development financing crisis.
Avantika Goswami, the Climate Change Program Manager at CSE, attended the summit and acknowledged that while the event could not single-handedly resolve the complex issues within its limited timeframe, it successfully shed light on the scale of the crises faced by countries in the Global South.
The summit provided a platform for these nations to voice their demands and shed light on the actions advocated by the Global North. By initiating this significant conversation, the summit highlighted the urgent need for increased climate finance while underscoring the challenges faced by developing countries burdened by debt and the imperative to transition to low-carbon economies.
“African countries are facing an unprecedented funding squeeze. Public and private debt has reached new heights. Inflation in almost all commodities has risen sharply, and today daily meals are the biggest issue for many Africans,” she said.
Demands From The Global South
According to CSE, Global South governments are requesting several key things from various entities in the international community. They are urging Multilateral Development Banks (MDBs) to address not only their primary development goals but also transboundary challenges.
This additional mandate puts pressure on MDBs’ resources, which developed countries are reluctant to increase by allocating more funds from their budgets, according to the press statement released today. The concern is that if developed countries contribute more financially, they may risk losing influence to large economies like India and China if their paid-in share rises.
The countries of the Global South are specifically asking for increased concessional and grant financing, as well as a reduction in debt levels for developing countries. They are also advocating for debt cancellations for least-developed countries. They argue that these measures are necessary to alleviate the burden of debt and foster sustainable development.
Regarding deals such as the Just Energy Transition Partnerships (JETP), Global South nations emphasize the need to consider each country’s unique circumstances, the welfare of workers and communities, and development objectives that address poverty and unemployment.
They insist on flexibility in acknowledging that some fossil fuel generation may still be necessary to meet a country’s basic energy needs. Additionally, these deals must provide adequate financing, as the funding offered thus far, like the US $8.5 billion provided to South Africa, falls significantly short of the country’s estimated requirement of US $98 billion.
Individual countries have voiced specific requests as well. Kenya desires a global financing mechanism that is not controlled by national or shareholder interests. Brazil questions why it must conduct trade in dollars rather than its own currency, raising concerns about the dominance of certain currencies in global transactions.
Summit Announcements
At the Summit, several announcements were made that partially addressed some of these demands. An additional lending capacity of US $200 billion was pledged to support emerging economies. The World Bank introduced disaster clauses for debt deals, allowing debt payments to be suspended in cases of extreme weather events. The bank also launched a Private Sector Investment Lab, focusing on renewable energy and energy infrastructure to encourage private sector investments in developing countries.
The International Monetary Fund (IMF) announced that the target of providing US $100 billion in Special Drawing Rights (SDRs) to vulnerable nations had been met. The proposal of ‘recycling’ SDRs from wealthy countries to poorer nations or MDBs as a means to expand concessional finance for developing countries was put forward.
Furthermore, a Euro 2.5 billion Just Energy Transition Partnership deal was announced for Senegal, aiming to increase the share of renewable energy in the country’s electricity mix to 40 per cent by 2030. Advocacy for polluter taxes, particularly on shipping emissions, gained momentum, and support for a financial transactions tax grew.
Debt-related proposals included Colombia and Kenya’s call for a Global Expert Review on Debt, Nature, and Climate. The review would assess the impact of debt on the capacity of low- and medium-income countries to preserve nature, adapt to climate change, and decarbonize their economies.
The European Union (EU) presented a call to action on ‘Paris Aligned Carbon Markets,’ with the objective of expanding carbon pricing mechanisms to cover at least 60 percent of global emissions (compared to the current 4 percent) and allocating a portion of the revenues to climate finance.
It was also suggested that the long-awaited goal of delivering US $100 billion in climate finance would be achieved this year.
The urgency for action is highlighted by Sunita Narain, who emphasizes that every climate change disaster plunges Global South countries into greater debt as they borrow to survive and rebuild. Structural issues underlying the world’s vast inequities must be addressed, ensuring that countries in the Global South can afford the costs of adaptation and mitigation. Urgent action is required to secure the necessary funds.
Implications For The Developing Countries
The demands and outcomes of the Paris Summit have significant implications for developing countries, especially those in Africa.
In Uganda, Community Transformation Foundation Network (COTFONE)’s role as the Stop Ecocide International (SEI) campaign representative for Uganda involves advocating for the enactment of global environmental law at the international criminal court to bring the environmental destructors to justice.
During the Civil Society convening at the Summit, COTFONE as the African Representative on MenEngage Global Environment and Climate Justice Working group joined other climate activists and feminist movements to call on Global North countries and climate-killing companies to fulfil their existing obligations, pay their taxes, and transform our global economic and financial systems to better serve people (especially women and gender diverse people) and protect the planet.
Kayinga Muddu Yisito, the Network Coordinator of COTFONE, says the developing countries in Africa like Uganda, often face financial constraints in pursuing their development goals. The request for more concessional and grant financing means that they are seeking additional resources that come with favourable terms, such as low-interest rates or grants that do not require repayment.
Still, he maintains, this financial support would enable African nations to invest in infrastructure, healthcare, education, and other critical sectors to foster economic growth and improve the well-being of their populations.
According to Kayinga, many African countries carry substantial debt burdens that can hinder their economic progress and ability to invest in sustainable development. The call for debt reduction and cancellations is aimed at providing relief to these nations, allowing them to allocate more resources towards social and economic development rather than servicing debt obligations.
Still with the energy sector, Kayinga says the emphasis on Just Energy Transition Partnerships is significant for African countries that heavily rely on fossil fuels for their energy needs. As per COTFONE, adequate financing is crucial to support this transition.
For Africa, which possesses significant renewable energy potential, such partnerships could unlock opportunities for sustainable energy development and contribute to mitigating climate change.
Biodiversity Conservation Forum
According to Antonio Kalyango, the Executive Director of the Biodiversity Conservation Forum (BCF), the African nations’ request for a global financing mechanism that is not influenced by national or shareholder interests indicates their aspiration for a just and fair system that provides sufficient financial assistance for their development projects.
By advocating for a mechanism that goes beyond individual interests, African countries aim to tackle the obstacles arising from limited financial resources and create opportunities for sustainable growth.
Furthermore, Kalyango explains that access to climate finance holds great importance for African nations in addressing the impacts of climate change, adapting to changing circumstances, and mitigating greenhouse gas emissions.
The commitment to achieving the long-awaited goal of US $100 billion in climate finance, along with the European Union’s call for ‘Paris Aligned Carbon Markets,’ has the potential to enhance the availability of climate finance for African nations.
He suggests that this would facilitate the implementation of measures for climate change mitigation and adaptation and support the continent’s endeavours to transition to a low-carbon economy.
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