By: Justicia Shipena
Namibia should not attempt to increase net debt for climate adaptation and mitigation, says a special briefing report on Namibia’s green transition by economist Robin Sherbourne from Institute for Public Policy Research (IPPR).
Climate adaptation refers to anticipating the adverse effects of climate change and taking appropriate action to prevent or minimise the damage they can cause, or taking advantage of opportunities that may arise.
Meanwhile, climate mitigation is making the impacts of climate change less severe by preventing or reducing the emission of greenhouse gases into the atmosphere.
According to Sherbourne, Namibia is already highly indebted after years of low growth and heavy borrowing.
“At this stage, Namibia should not attempt to increase net debt even for climate adaptation and mitigation,” he said.
With the Covid-19 pandemic, levels of public debt have risen to historic highs to around 70% of GDP. Most of this debt is normal commercial domestic and foreign debt but there is some bilateral and multilateral debt, according to the report.
He recommends that Namibia should instead look to consolidate its fiscal position over the coming years so that it is in a position to borrow later in the decade, whilst at the same time taking maximum advantage of international grants that are available for climate adaptation.
Sherbourne is of the view that there is little sign of public sector reform deep enough to free up resources in the short to medium term. He also said it is not clear at this stage how much adaptation programmes would cost and over what period they would need to be executed.
“In theory, government could issue green bonds to raise funding for climate change-related spending programmes but at current levels of debt it is not clear who the buyers would be unless government obliged domestic savers to buy them,” he said.
The economist stressed that many mitigation measures and adaptation do not generate clear financial revenue streams and therefore lend themselves to project funding. It is possible that foreign bilateral or multilateral lenders could provide funding on concessional terms.
“Other options include ‘debt for nature’ or ‘debt for climate’ swaps where debts are forgiven in exchange for commitments to spend on environmental programmes.”
This he said requires further investigation as it is something new and untested in Southern Africa and Namibia for its current bilateral and multilateral lenders.
Namibia submitted an Intended Nationally Determined Contribution (INDC) in 2015 involving US$22.6 billion and an NDC in 2021 involving US$5.3 billion.
However, in the latest NDC the balance between mitigation (US$3.6 billion) and mitigation (US$1.7 billion) does not reflect the relative importance of adaptation versus mitigation to Namibia, argued Sherbourne.
Namibia adopted the United Nations Framework Convention on Climate Change (UNFCC) and as a member, Namibia is well-positioned to take advantage of resources offered by the Global Environment Facility, Green Climate Fund, the Adaptation Fund as well as a large number of bilateral country donors, he added.
“Namibia should continue to take advantage of international grants and possibly highly concessional loans made available for climate adaptation,” he stated.
On climate compensation, the economist said that given the slow pace of change in reducing emissions, countries are starting to investigate the possibility of seeking legal compensation for the damage they are suffering.
He said there is also interest in taking legal action against oil and gas companies for acting in a way that undermines emissions targets, adding that the case for climate compensation may be weakened for countries that are also fossil fuel producers.
Sherbourne said Namibia should monitor developments in climate compensation in case it presents opportunities for more resources to be made available for climate adaptation over the coming years.