African Debt Managers Urged to Embed Climate Finance at Core of Sovereign Borrowing Strategy

African sovereign debt managers must integrate climate finance into the architecture of national borrowing strategies or risk entrenching a cycle of low investment, weakened growth, and compounding climate vulnerability. That was the central message to emerge from the Second African Forum on Sovereign Finance, which concluded in Addis Ababa on Friday.

Jointly organised by the UN Economic Commission for Africa and Financial Sector Deepening Africa, the three-day event brought together debt management offices and ministries of finance from 18 countries alongside multilateral institutions, credit rating agencies, and climate finance specialists.

Participants identified a structural flaw in the IMF’s Debt Sustainability Framework: climate downside risks are modelled in, but the risk-reduction benefits of resilience investments are not. The asymmetry means that governments investing in climate adaptation receive no credit in sustainability assessments — creating a perverse incentive to underinvest.

FSD Africa CEO Mark Napier called for a systemic rethink. “Current circumstances suggest that we should double down on financing strategies for climate and nature action to build medium and long-term resilience. The connection between sovereign debt and climate, sovereign debt and domestic capital markets reform are part of an interconnected system,” he said.

With Africa’s external debt at approximately $1.2 trillion and interest payments alone exceeding public health budgets in 30 countries, fiscal space for climate adaptation is rapidly narrowing. Total debt service has more than doubled over the past decade to $163 billion, according to the African Development Bank. External obligations are projected to reach $88.7 billion in 2025.

ECA Deputy Executive Secretary Mama Keita framed the stakes plainly. “Africa’s debt challenge has become a development crisis, a climate vulnerability, and a governance emergency, all of which must be tackled together in an integrated response,” she said.

The forum was timed deliberately against the global post-COP30 policy cycle. Discussions focused on linking Medium-Term Debt Strategies, Debt Sustainability Analyses, and Liability Management Operations to environmental and social performance targets — moving climate alignment from aspiration to operational practice.

ECA Executive Secretary Claver Gatete called on debt managers to engage investors and guarantee providers as strategic allies in designing risk-sharing mechanisms tailored to African contexts, and to establish country-level roadmaps guiding implementation through 2026 and beyond.