President William Ruto has asked multilateral banks to consider reviewing their terms in relation to loans lent to African countries.
Speaking during the second day of the Africa Climate Summit, Ruto said that most African countries are in a debt crisis as their interest rates are too high.
“This is the continent that has the highest potential; however, we are limited by high-interest rates for development capital. Many of our countries are already in debt distress," said Ruto.
He remarked that the biggest contributor to debt distress is high interest as Africa pays five times more than others.
"This means, if you borrow it will be difficult to pay, that is why we need to have a candid conversation around this matter."
According to the Kenyan Head of State, the banks should review how much African countries are paying so as to ensure equality across the globe.
“We are not asking to be favored or to be treated differently; we want a fair financial system that treats everyone equally. Many of our countries are going into a financial crisis because of climate change. We are shifting resources that are meant for development to deal with the effects of climate change. We have the best of respect for the multilateral banks but we believe they can do better,” he added.
Reiterating his remarks, the United Nations Secretary-General Antonio Guterres said Africa should have an effective debt relief mechanism to tackle climate change financing.
According to Guterres, debt relief will see that debt spent to address the issues around climate change in African countries is canceled off.
This will not only improve the climate change response but also boost the country’s economy.
Additionally, Guterres called for a collaborative approach to addressing the climate crisis.
Their sentiments come at a time when Kenya is at a high-risk debt crisis with over Sh297 billion outstanding International Money Fund (IMF) credit.
It is for this reason that Ruto demands a review of the interest rate for African countries.
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