On 10 September 2025, H.E. Hailemariam Desalegn Boshe, former Prime Minister of Ethiopia, delivered the keynote speech at an official event organised by ALDRI at the Second Africa Climate Summit. The speech is reproduced verbatim below.
(greetings)
It is a great honor for me to welcome you all at this first session of day 3 of the African Climate Summit here in Addis Abeba. It is titled “Accelerating Climate Finance and Debt Relief: Unlocking Africa’s Green and Resilient Future“.
This year’s summit builds on the momentum of the first Africa Climate Summit in Nairobi in 2023, where leaders adopted the Nairobi Declaration.
Central to the declaration was the demand to overhaul the global financial system and ease Africa’s crushing debt burden. These were not merely economic asks; they were lifelines for climate resilience.
The Nairobi Declaration confidently stated Africa is a continent of opportunity: Rich in resources, endowed with endless renewable energies, and home of a young, entrepreneurial workforce. This is true: Given the right financing opportunities, the continent can become a vital part of the solution to global climate change.
But this requires investment, and all over the world, investment is mostly debt financed, private and public. And the two are connected: The country risk premium of private investment is clearly influenced by the public debt situation. The worse your public debt situation, the higher also the risk premium for private investments. So in a situation of debt distress, it doesn‘t help if someone points to the billions of private money that you just need to attract.
And here we are stuck. Many African nations today find themselves in a vicious circle of climate vulnerability and debt. Many of the continent’s economies rank amongst the most climate-vulnerable in the world, yet also among the least fiscally able to respond to this threat. There is strong empirical evidence that climate vulnerability drives up the cost of sovereign debt, causing a climate risk premium on African debt. The higher cost of capital leaves governments with even less fiscal room to invest in adaptation and resilience. The underinvestment that follows only heightens exposure to future climate shocks, feeding back into rising vulnerability to further shocks – setting in motion a vicious circle.
Unless we confront the debt crisis head-on, efforts to finance Africa’s climate ambitions will continue to fall short.
Finance is about numbers, so let me mention three numbers from a recent policy brief of the Debt Relief for Green and Inclusive Recovery Project, using data from the World Bank and Climate Policy Initiative:
First: Sub-Saharan Africa will require more than US$1.4 trillion this decade – about US$143 billion annually – to meet adaptation and resilience goals. On an annual basis this is more than 7% of their current GDP. This does not yet include mitigation.
Second: actual climate finance flows from 2021 to 2023 average just US$35 billion per year, less than a quarter of what’s needed. Worse still, more than half of this comes in the form of new debt rather than grants.
Third: these same governments are projected to spend US$865 billion or roughly 4% of GDP on debt servicing over the same decade.
So while we appreciate all contributions to climate finance, which help our countries: Unless we alleviate the excessive debt burden on our countries, incoming money for climate finance will amount to little.
Or, to frame it positively, debt relief could cover a very significant part of Africa’s climate finance gap.
Africa’s debt crisis is multifactorial, but to a significant extent it is reflecting a broken financial system that puts poorer countries at a disadvantage. To give you just one example, the United Nations Development Programme found that 16 African countries paid an additional US$74.5 billion in excess interest between 2000 and 2020 because credit rating agencies had inflated their risk assessments.
Africa was also particularly affected by a series of macro-shocks in the past five years: first the COVID-19 crisis which burdened our countries with additional expenses to stabilise health systems and our economies, while important sources of income like tourism, remittances or commodity exports collapsed.
Then, as a result of the war in Ukraine, food and fertilizer prices exploded, and food and oil importing countries were hard hit by skyrocketing energy costs.
This price shock triggered a wave of inflation. As part of a triple whammy, the subsequent steep interest rate rises by leading central banks made refinancing on international capital markets prohibitively expensive. And while rates have come down but only a little, we are still burdened with a mountain of expensive debt.
Nobody has better described the critical debt situation of many countries in the developing world than Indermit Gill, the World Bank‘s Senior Vice President and Chief Development Economist. He originally wanted to join us today but regrettably had to cancel his participation at very short notice.
He wrote the foreword of the landmark International Debt Report that the Bank published last December. It is a remarkable document, I really commend the Bank for this clear-eyed analysis. What follows is an extensive quote from its foreword authored by Indermit Gill:
Since 2022, foreign private creditors have extracted nearly US$141 billion more in debt service payments from public sector borrowers in developing economies than they disbursed in new financing.
That withdrawal has upended the financing landscape for development. For two years in a row now, the external creditors of developing economies have been pulling out more than they have been putting in—with one striking exception. The World Bank and other multilateral institutions pumped in nearly US$85 billion more in 2022 and 2023 than they collected in debt service payments. That has thrust some multilateral institutions into a role they were never designed to play—as lenders of last resort, deploying scarce long-term development finance to compensate for the exit of other creditors.
That reflects a broken financing system. Capital—both public and private—is essential for development. Long-term progress will depend to an important degree on restarting the capital flows that most developing countries enjoyed in the first decade of this century. But the risk-reward balance cannot be allowed to remain as lopsided as it is today, with multilateral institutions and government creditors bearing nearly all the risk and private creditors reaping nearly all the rewards.
In the absence of a predictable global system for restructuring debt, most countries facing distress opted to tough it out rather than default and risk being cut off indefinitely from global capital markets. In some cases, new financing arriving from the World Bank promptly went out to pay off private creditors.
The result, for many developing countries, has been a devastating diversion of resources away from areas critical for long-term growth and development such as health and education.
Let me add here also climate adaptation and resilience.
But to continue from the remarkable World Bank report:
The squeeze on the poorest and most vulnerable countries—those eligible to borrow from IDA—has been especially fierce.
No wonder that more than half of IDA-eligible countries are either in debt distress or at high risk of it. No wonder that private creditors have been retreating even as multilateral financing increases.
These facts imply a metastasizing solvency crisis that continues to be misdiagnosed as a liquidity problem in many of the poorest countries. It is easy to kick the can down the road, to provide these countries just enough financing to help them meet their immediate repayment obligations. But that simply extends their purgatory.
These countries will need to grow at a faster clip if they are to shrink their debt burdens—and they will need much more investment if growth is to accelerate. Neither is likely given the size of their debt burdens.
It’s time to face the reality: the poorest countries facing debt distress need debt relief if they are to have a shot at lasting prosperity. A twenty-first century global system is needed to ensure fair play in lending to all developing economies.
So much from this remarkable document that spelt out with such clarity the situation that we are in.
I am one of eight African leaders – former Presidents, Prime-Ministers and Vice-Presidents -, who have come together earlier this year in Cape Town to form the African Leaders Debt Relief Initiative. We can speak out, where sitting ministers and heads of government may want to stay silent in order to „tough it out“ in absence of a predictable system of debt relief.
President Cyril Ramaphosa was so kind to receive us for an extensive conversation. He strongly endorsed our initiative, not only in private, but also publicly when speaking to the G20 meeting of finance ministers that started the next day.
He reminded us that perseverance will be needed. He said that It was never going to be easy to achieve that the African Union be represented as a permanent member of the G20. But African unity and perseverance succeeded in pushing it through, and the same will be true for debt relief.
There are still two and a half months until the G20 meeting in Johannesburg, the first on African soil. Progress on debt is still possible, and we know it is a priority for President Ramaphosa.
To quote another great African leader: „It always seems impossible until it‘s done“.
Thank you for your attention.
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We are entering a new era marked by profound geopolitical shifts, shrinking development assistance, rising trade barriers, and escalating global conflicts. Amid these challenges, however, lies a unique opportunity to foster new and innovative global partnerships grounded in mutually beneficial investments and shared values.
Africa should be central to any such effort. Home to some of the world’s fastest-growing economies, the continent possesses vast renewable-energy resources, including wind, solar, geothermal, and hydro, as well as over one-fifth of the world’s critical minerals, essential to the green transition. But a level playing field is vital to realizing Africa’s growth potential. That means addressing a rapidly escalating debt crisis, which threatens to unravel decades of hard-won development gains.
The scale of the crisis is staggering. In 2023 alone, low- and middle-income countries spent $1.4 trillion servicing external debt, with African countries often paying the highest interest rates and penalties. As a result, these countries have little choice but to divert critical resources from priorities like education, health care, and climate resilience to service exorbitant loans.
Today, more than half of African countries allocate more funding to debt servicing than health care. In Malawi, debt servicing exceeds education spending by a factor of two, meaning that a growing share of young people are effectively being sentenced to a future of ignorance, unemployability, and poverty.
While African governments must commit to sound fiscal management and accountability, the continent’s debt dilemma is not merely the result of budget mismanagement or unwise borrowing. It is also rooted in structural inequities within the global financial system: African sovereign borrowers face extremely high interest rates on international capital markets – even higher than those paid by countries with similar or worse credit histories. This “Africa premium” persists despite the continent’s relatively low default rates.
Moreover, African countries do not have the option of refraining from borrowing, since many are on the front lines of a climate crisis they did not cause. Countries like Kenya, Malawi, and Mozambique have had to take on considerable debt to recover from increasingly frequent and severe natural disasters. Small island developing states like Mauritius are borrowing just to survive rising sea levels. The COVID-19 pandemic, global inflation, and surging food and energy prices have only deepened these vulnerabilities.
Now, the United States has announced steep tariffs on imports from African countries running trade surpluses with it – countries that rely on exports to finance their debt payments. Although implementation has been paused for 90 days, the impact is already being felt across the continent’s fragile economies. Making matters worse, cuts to US foreign-aid programs are set to strain essential services, slow progress toward economic recovery, and exacerbate political and social insecurity, with Africa’s most vulnerable communities suffering the most.
In a deeply interconnected global economy, the consequences of such policy decisions will not remain confined to Africa. By disrupting supply chains, destabilizing economies, and hindering the energy transition, these moves will harm consumers and businesses worldwide, erode investment opportunities, and stifle potential economic growth.
Any solution to Africa’s debt crisis must address the systemic inequities built into the global financial architecture, which leave countries with little choice but to borrow at punitive rates to respond to crises they did not create. That is why I have joined seven other former African heads of state and government to form the African Leaders Debt Relief Initiative, under which we are pushing for a revamp of the global lending system to secure debt relief and improve borrowing conditions for developing economies.
In our newly launched Cape Town Declaration, we call for a large-scale debt-relief initiative grounded in fairness and transparency. This must include comprehensive debt restructuring involving all creditors – private, bilateral, and multilateral – through a predictable and inclusive process. Lower interest rates and longer repayment timelines are essential to creating fiscal space.
We also call for reforms to the global financial system focused on eliminating the “Africa premium” and strategic investments in health, education, peace-building, and climate resilience in order to advance the United Nations’ 2030 Sustainable Development Goals and the African Union’s Agenda 2063. The upcoming G20 Summit, to be held in Johannesburg in November, offers an ideal opportunity to make progress toward these goals. Already, debt sustainability is at the top of its agenda.
Debt relief for Africa is not an act of charity, but a matter of justice. We deserve a fair chance to put our houses in order, invest in our people, and contribute to global economic growth, security, and resilience – not just to repay loans that perpetuate dependency and penury. From Nigeria’s economic reforms to continent-wide responses to past debt-relief programs like the Heavily Indebted Poor Countries (HIPC) initiative, we have shown our willingness and ability to make the most of such opportunities.
Half-measures will not suffice. Only by breaking the cycle of debt – with creditors treating us fairly, multilateral institutions amplifying our voices, and high-income countries fulfilling their climate-finance commitments – can we reach our full potential. This is in the world’s self-interest. After all, a strong, fast-growing Africa can play a crucial role in powering global supply chains, driving innovation, and advancing the green-energy transition.
The Cape Town Declaration is our roadmap. The question is: Will the world walk this path with us?