Vice President Yemi Osinbajo on Thursday proposed a major climate change swap deal that will save Nigeria millions in foreign debts.
Speaking during a lecture on a just and equitable energy transition for Africa at the Center for Global Development in Washington D.C, Nigeria’s Vice President made an audacious call that can significantly advance the course of global net-zero emissions targets.
Proposing the Debt-For-Climate (DFC) Swap deal, Prof Osinbajo stated that “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.”
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.”
