Eco-finance: Mozambique swaps millions of debt for climate action with Belgium
In a pioneering initiative, Mozambique and Belgium have signed a historic agreement to convert debt into climate action. The agreement, signed in Dubai during COP28, represents a significant milestone in relations between the two countries and in the global fight against climate change.
The signing ceremony, held on Monday 4 December, was attended by Carla Louveira, Deputy Minister of Economy and Finance of Mozambique, and Luck Jacobs, Belgium's climate envoy. The total value of the agreement amounts to 2.5 million euros, approximately 175 million meticais, and forms part of joint efforts towards a transition to a low-carbon economy.
This agreement is an integral part of Mozambique's strategy, widely championed by President Filipe Nyusi, of promoting concrete action on climate change. The signing took place on the sidelines of the summit of Heads of State and Government, as part of the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change, reinforcing Mozambique's commitment to the global environmental agenda.
Carla Louveira, after the agreement was formalised, highlighted the importance of this collaboration, stressing that it is crucial for an inclusive and sustainable transition worldwide. For his part, Jean Van Wetter, a representative of the Belgian development agency Enabel, emphasised that the funds will be allocated to support initiatives that strengthen the resilience of the most vulnerable communities, in both rural and urban areas.
Enabel plans to direct the savings resulting from the debt relief towards technical assistance and capacity building for disaster risk management agencies, as well as community-level clean energy transition projects.
This agreement is a notable example of how sustainable debt management can be aligned with development goals and climate action. The initiative follows the trend seen at COP 27, where the “SuRe” standard was launched to certify sustainability-linked financial instruments.
The decision by Mozambique and Belgium to convert debt into climate action is a bold step that could inspire other countries to follow a similar path, promoting environmental sustainability and economic development. This agreement not only eases Mozambique's financial burden but also reinforces its role as a leader in climate action among developing countries.
