The financial situation in many African countries is critical. High-interest rates and high debt levels directly limit investment capacity, including climate-focused investments. This creates a risk of a vicious cycle of underdevelopment and delayed climate preparedness, with potential social and economic implications intensifying over time and with spillover effects beyond national borders.
Geopolitically, the G20 serves as the primary forum for decisions on debt. However, the G7 can play a key complementary role by fostering dialogue with key stakeholders and institutions such as the International Monetary Fund (IMF) and the Paris Club. Given the significance of the debt roadblock in impeding sustainable investment in African economies, resolving this impasse should be a key priority of the Italian G7.
This policy briefing, prepared by ECCO and E3G, examines the relationship between debt and climate at a pivotal moment for transforming the international financial architecture and for ensuring finance flows towards climate growth opportunities. Italy can play a key role in shaping a more resilient and sustainable future for Africa through both its G7 Presidency and the Mattei Plan.
Italy should acknowledge that debt is a threat and an obstacle to African development and safety, and it should commit to support innovative sources of finance to alleviate debt pressure, raising those issues within the G7, as well as the G20.
Photo by Julian Vera