Debt swaps catch wind in African renewables

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Egypt and Germany have inked a $58 million debt-swap deal to finance grid connections for two wind farms along the Gulf of Suez. The agreement builds on a $64 million debt swap that was signed in June 2023 and signals a growing trend in climate finance. Cabo Verde, Kenya, Zambia, and Angola are among those that have recently explored these deals.

• For many African countries, overwhelming debt burdens limit the fiscal space needed to invest in climate adaptation and renewable energy, making debt-for-climate swaps an attractive solution.

• Kenya, for instance, has a large debt burden and has explored a debt-for-climate swap to finance a 300 MW geothermal plant. The German government supported the initiative with a $69 million debt-swap agreement.

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