Runaway appetite for loans begot a crushing public debt. A slow economy consigned citizens to poverty. The oppressive cost of living has now sent Kenyans to the streets.
Kenya has been in a tight fiscal space for years and outrage over rising cost of living has been simmering. However, the violent standoff between the government and Kenyans was sparked by State’s drastic tax proposals in the suspended Finance Bill 2024.
Kenyans feel disenfranchised by the government, with the youth particularly displeased with its handling of the economy. Like many African countries, Kenya is struggling to contain its public debt whose ratio to the Gross Domestic Product (GDP) has doubled in last decade. The loans from international lenders such as the International Monetary Fund (IMF) are serviced through increased taxation - which Kenyans are protesting.
Debt repayment against the backdrop of an underperforming economy has caused significant funding cuts to development and social welfare programs in recent years, with education and healthcare particularly affected.
This situation is compounded by climate-induced extreme weather events such as floods and drought. The recent floods in Kenya destroyed hard-earned infrastructure, including roads, schools and powerlines. After the destruction of farmlands by floodwaters, Kenya could be staring at food insecurity in the coming months.
But how has Kenya navigated its debt slippery terrain so far? At the Africa Climate Summit last year, actors representing foreign interests presented carbon offsets as a central solution to Africa’s fiscal and climate crisis. This argument formed the dominant narrative at the summit at the expense of Africa’s interests and priorities of energy access and adaptation.
Since then, the government has been eyeing the carbon offsets market as a potential source of funds to overcome its mounting public debt and address the climate crisis.
Last year, Kenya sold more than 2.2 million tonnes of carbon credits at the Nairobi Auction. The sale to Saudi Arabian firms was the largest carbon credit transaction ever at an auction globally.
In the case of Kenya, the bulk of revenue from carbon offset projects will likely go to external debt repayment. Consequently, frontline communities hosting carbon projects will end up virtually empty-handed.
Meanwhile, historic polluters will keep destroying the planet with their emissions. This, essentially, makes carbon offsets a greenwashed neocolonial extraction and abuse dressed as a climate finance solution.
Many developing countries have been forced to cut public spending on essential services to sustain their debt repayment. Africa must approach talks by first recognising that wealthy countries responsible for our climate woes have failed to honour their financial commitments previously. We must also recognise that those culpable for the climate breakdown continue to wreck us with loans in the name of climate finance.
To chart a new path, all climate finance-related transactions involving Africa must put the continent’s interests at the centre. But this can only happen if Africans put their act together and engage differently.
At this year’s ‘‘finance COP’’ in Baku, Azerbaijan, African negotiators should push to have discussions centred on climate finance and climate debt. They must challenge countries that have developed on account of fossil fuels to pay up their debt for damaging the planet.
Agreements from negotiations must also provide for climate reparations in the form of debt cancellation and the transfer of life-saving technology for transformative investments in our prosperity and resilience.
-The writer is a senior policy advisor at Power Shift Africa
