VP Osinbajo: Debt-for-Climate swap deal will reduce Nigeria’s debt burden

The proposed Debt-for Climate swap agreement by the Federal Government will ensure Nigeria’s Energy Transition Plan will be effective in reducing Nigeria’s rising debt burden, and reap billions in debt relief.

This was disclosed by Nigeria’s Vice President, Yemi Osinbajo, in a statement published by his spokesman, Laolu Akande, on Sunday in Abuja.

Nigeria’s Vice President has been in the United States meeting with officials and giving a speech at the Centre for Global Development (CGD), to secure support for Debt For Climate swap agreements.

What Osinbajo is saying

The Vice President stated that the proposed DFC swaps would be a very useful intervention and will be helpful in reducing debt burdens while advancing the Climate Change objectives of the international community.

He also described the idea of a climate change-related financing instrument, as deserving of global consideration as it is a win-win proposal, citing that it will open up the Carbon Market in Africa so that the climate change actions of African countries could be adequately verified by the international community through the assessments of the appropriate verification institutions.

“We are hoping to get support and international buy-ins for these ideas,” specifically the DFC and the participation of African countries in the international carbon market.

He added that the DFC will help solve many of the debt burden challenges in Nigeria and African countries.

Samantha Power, the Administrator of USAID said the idea was “fresh thinking that is very exciting”, she added that the U.S. was open to such new thinking even though it would require a full policy review of the American Government.

What you should know

• CN reported earlier that Osinabjo announced the proposal of a Debt-For-Climate (DFC) Swap deal in order to ensure a just energy transition for African countries.
• The Vice President stated that debt for climate swap 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 programmes.