Kenya hosts first-ever Africa Climate Summit

In this version of Africa, a vision emerges of green prosperity: Africa contains 60 percent of the world's solar potential, massive geothermal capacity and tropical forests that remove far more carbon dioxide from the atmosphere than the Amazon.

"In a fair world, this should be worth billions," Ruto told delegates.

Showcasing Africa as a destination for climate investment rather than a climate victim is part of a strategy to attract more capital. Currently, only three percent of global energy investments are made in Africa, whilst the continent is home to 17 percent of the world's population — a figure expected to double in the next 30 years.

The summit marks the start of a string of big meetings leading up to the COP28 UN climate negotiations in Dubai in November and the first collaborative effort by African leaders to influence those meetings in their favour and gather momentum for the green transition in Africa.

More than 20 presidents and heads of government are expected to attend the summit. European Commission president Ursula von der Leyen and secretary-general of the United Nations António Guterres will also attend.

Prohibitive borrowing costs

Ruto, who chairs the Committee of African Heads of State on Climate Change, has emerged as an outspoken voice on the international climate stage since his election in September 2022 and has consistently stressed more climate financing needs to be made available.

In June, when attending a climate and finance summit in Paris, he made headlines when he dismissed a key proposal for "catalysing private money" made by French president Emmanuel Macron on stage as "tokenism" because it wasn't backed by new money.

"Trillions of dollars are looking for green investment opportunities," he said. But he also reiterated that African leaders would "not shy away from difficult conversations."

According to Ruto, the "most prohibitive obstacle" to climate and developmental progress on the African continent is the high cost of debt and borrowing.

Sixty percent of African governments are in or at risk of debt distress. Yet the debt-to-GDP in Africa at an average of 64 percent is low when compared to Japan (266 percent), the US (128 percent) and France (98 percent.) But, African governments pay much more for their debt.

"It is not a secret that we are paying at least five times as much as advanced economies to borrow from the financial market," Ruto said.

Investors claim these higher rates reflect higher risk, but negative risk perceptions on financial markets are not always rational or are based on a lack of data.

This contributes to what has been dubbed the "African premium" and can amount to up to €68bn a year in extra borrowing costs for African governments above what makes economic sense — more than twice the total amount of aid given to the continent, as the United Nations Economic and Social Council recently noted.

Financial reform

The situation has significantly worsened due to steep interest rate hikes in the US and the EU.

On Friday, global anti-poverty organisation ONE Campaign calculated that African governments now pay 500 percent more over previously raised debt (2016-2021), adding a further $56bn [€52bn] in costs over the coming years.

As costs of interest repayments rise, social and green spending goes down, particularly in low-income countries.

Sub-Saharan African countries face annual debt servicing costs that are almost as high as their climate finance needs.

In April 2023, Kenya delayed paying salaries for civil servants rather than defaulting on a eurobond payment. Nigeria spent 96 percent of its annual national budget on foreign debt repayment in 2022. Public hospitals in the country are in such dire straights a young doctor fell to her death last month when a lift fell nine stories.

The World Bank, the International Monetary Fund and the African Development Bank were created to provide low-cost loans, but they are currently too small to deal with the scale of the problem.

Amy Dodd, the main author of the ONE report, told EUobserver that a massive increase in lending by the World Bank, the International Monetary Fund (IMF) and other global lenders was needed.

This coming weekend, at the G20 meeting to be hosted by India in Delhi, finance ministers will discuss debt relief and a proposed tripling of the size of multilateral development banks.

But countries have struggled to come up with a shared communique earlier this year as the world remains divided over the Russian invasion of Ukraine.

African collaboration

Coming out of the IMF and World Bank's annual spring meeting in Washington in April, a group of African finance ministers demanded the African Union be confirmed as a full member of the G20 before the end of the year.

Other demands included access to more low-interest loans, a demand to unlock hundreds of billions of the IMF's unused reserve assets and a solution for the €3.9 trillion debt problem hanging over the developing world today.

Ruto on Monday voiced hope that African leaders could "collaborate" and come up with a 'Nairobi Declaration' in support of a climate reform agenda.

He also stressed that success in Africa's green transition would be a success for all.

"The conversation about the North versus South needs to end," he said. "When the [climate] apocalypse comes, it will come for all of us."