The UN Financing for Development Summit failed to deal with the issue of funding countries hit hardest by the climate crisis.
(Envato Elements)
Sweltering heatwaves, caused by an escalating climate crisis, increasingly shock countries during their summer months. The Earth is getting hotter. As world leaders gathered for the United Nations Financing for Development Summit (FfD4) in Seville, they would have felt the heat, with temperatures in the city and across Southern Europe reaching more than 40°C. The UN’s secretary general warns that extreme weather is no longer a rare event, but the new normal.
Meanwhile, more than 6000km away, protests erupted in Kenya’s capital, Nairobi. These protests, led by Gen Z youth, call for an end to police violence, social spending cuts and tax hikes on the poor. While seemingly unconnected, these are warning signs of a financial and climate system in crisis, and its inability to cope without urgent intervention. Against this backdrop, the UN heads of state and financiers participated in a “once in a decade opportunity to transform how development is financed”.
The FfD4 Conference covered a broad range of themes, including taxation, debt, trade, development cooperation, and private finance, with discussions on the reforms necessary to meet the sustainable development goals and commitments to the 1.5°C Paris Climate Agreement. The convenors recognised that international financial architecture reform is critical to closing the financing gap between now and when countries meet these climate obligations by 2030.
But the Compromiso de Sevilla (the co-signed outcomes document) remains vague on how their commitments will change an unjust financial system. A system responsible for Pacific Islanders awaiting climate refugee visas while watching their homes sink into the ocean, and Kenyan officials deciding between meeting rising interest payments or building clinics and schools.
Many countries in the Global South are experiencing a debt crisis caused mainly by predatory borrowing practices and unfair loan agreements. A study published by the Kiel Institute for the World Economy showed that Western countries tend to lend to resource-poor and highly indebted African countries, often with higher borrowing costs. Climate financing to poor Asian countries that have contributed least to the climate crisis also tends to yield huge debts, with loans making up 94% of the Asian Development Bank’s energy transition funding for the past three years. This almost always has one result. When countries are unable to repay their loans, austerity reforms are implemented, which fuel crises of social hardship and unrest in countries such as Kenya.
Instead of acknowledging this, the Compromiso de Sevilla outlines in meticulous detail provisions to ensure support for countries’ debt servicing. This once-in-a-decade opportunity, meant to transform our financial system, has signalled to the world that a crisis is only worthy of intervention if creditors are not paid, not if working-class people die.
With our leaders not acknowledging and providing concrete solutions to this crisis, climate justice activists stepped up. Braving the dangerous heat of Seville’s streets, voices from around the world gathered under the rallying cries of “Grants, not loans”, “Tax the super-rich” and “End debt apartheid’.
Through the lens of climate justice, development financing can be reimagined as a tool for reparative action. Wealthy countries bear historical responsibility for the climate crisis and must respond with non-debt-creating finance to the Global South. This includes financing for loss and damage, community-led adaptation, and resilience efforts that prioritise those least responsible but most affected.
Meeting the 1.5°C climate goal requires unprecedented investment in renewable energy, climate adaptation, and just transitions, particularly in developing countries. Financiers aim to fill this gap by relying on private sector charity through blended finance. But we are calling for a financing for development agenda rooted not in charity, but in justice. The kind that remembers who lit the fire and who’s choking on the smoke.
Wealth taxes on the super-rich, combined with crackdowns on tax evasion and reductions in fossil fuel subsidies, could raise trillions of dollars. These funds would deliver climate finance to the Global South and fund affordable, community-centred renewable energy systems while making polluters pay for the crisis they’ve caused. A justice-centred approach to development financing means grants, not loans, and following examples set by countries such as Ecuador, where debt was considered odious and therefore cancelled, or in Ghana, where officials renegotiated their debt to fairer terms.
There needs to be international financial system reform through debt cancellation and tax justice, because these are crucial steps towards achieving climate and economic justice. But it’s essential to recognise that these are only the first steps.
Fidel Castro said, “Debt to imperialist banks is unpayable, immoral. Any attempt to pay the debt under the present social, economic, and political circumstances would cost our suffering and impoverished nations rivers of blood, and it could never be done. Our people are not to blame for underdevelopment or for the debt. Our countries are not to blame for having been colonies, neocolonies, banana republics; or coffee, mining, or oil republics whose role was to produce raw materials, exotic products, and fuel at low cost and with cheap labour.”
Debt cancellation is an indispensable condition of change, but an insufficient one. Other changes need to be set in motion to confront our colonial pasts and remake the pillars of our economic system built on extractivism, exploitation and suffering. Reparations, which aim to abolish the idea of indebtedness entirely and instead promote self-reliance, are the only cure for our deeply unequal and unjust system.
Khaliel Moses is the Public Finance Campaigner for 350Africa.org