Belgian Development Minister Caroline Gennez has put forth a proposal to cancel a portion of Mozambique's debt to Belgium in exchange for investments in climate crisis initiatives.
The "debt-for-climate swap" plan encompasses 2.4 million euros out of the total outstanding debt of 5.6 million euros.
Gennez delivered the proposal in a letter to the Mozambican government in the capital city of Maputo. If accepted, this initiative could strengthen the "loss and damage" component of a new cooperation agreement between the two nations.
On Tuesday, Gennez and Mozambique's Minister of Foreign Affairs and Cooperation, Verónica Macamo, signed the agreement. The program, with a total budget of 25 million euros spanning 2023 to 2028, aims to assist Mozambique in transitioning to a more climate-friendly economy.
This bilateral program marks Belgium's first exclusive focus on climate change, according to Gennez. As part of the agreement, Belgium will support Mozambique's efforts in green energy and sustainable waste management. Additionally, 2.5 million euros from the budget will be allocated to address losses and damages caused by human-induced climate change.
Presently, Mozambique repays 500,000 euros annually towards its 5.6 million euro debt to the Belgian government. Under the proposed swap, these repayments would be redirected from the Belgian state to the Belgian development agency, Enabel. Enabel would then utilize the funds for climate change projects in Mozambique.
"This approach allows us to achieve two goals simultaneously: reducing the outstanding debt and mobilizing additional resources to combat the climate crisis," stated Gennez on Friday. "If we truly support African countries in their transition to a more climate-friendly economy, solidarity and development must go hand in hand, transcending conventional financial support."
This proposal represents the first of its kind from Belgium to a partner country. However, it still requires approval from the Belgian federal government if the Mozambican government agrees to the terms. Photo by Hansueli Krapf, Wikimedia commons.