- Climate Finance Must Address Tax, Debt and Illicit Flows – African Civil Society
African civil-society and policy organisations have called for a fundamental restructuring of the continent’s climate-finance model, warning that attracting external funding will not be enough unless governments also improve taxation, curb illicit financial flows and retain more value from natural resources.
Green Tax Youth Africa, Followtaxes and ACCT-J said Africa’s climate transition must be linked to tax justice, debt sustainability, responsible investment, credible carbon markets and reforms to the global financial architecture.
Their position was developed through the four-part Road to COP31 Africa Policy Dialogue Series, which brought together grassroots and youth representatives, gender advocates, government officials, private-sector actors, development partners, lawyers, civil-society organisations and international experts.
The organisations want Africa to move beyond being primarily a recipient of climate decisions and financing arrangements designed elsewhere. They argue that the continent must become an active architect of the fiscal, financial and economic systems supporting its transition.
Nii A. Addo of Green Tax Youth Africa said climate policy could not be separated from the economic structures governing revenue, investment and livelihoods.
“Climate action is ultimately a question of political economy. A just transition requires not only emissions reductions, but also fair taxation, sustainable public finance, responsible investment, equitable natural-resource governance, decent livelihoods and meaningful participation of communities and young people,” he said.
The call comes ahead of the United Nations Climate Change Conference, COP31, scheduled to take place in Antalya, Turkey, from November 9 to 20, 2026.
The organisations cited African Development Bank estimates indicating that the continent requires more than US$242 billion annually through 2030 for climate action.
Climate-finance inflows are estimated at approximately US$29.50 billion, leaving a financing gap of more than US$213 billion every year.
The African Development Bank has separately estimated that current climate-finance flows satisfy only about 23.00% of the continent’s annual requirement for implementing its nationally determined contributions towards 2030.
Closing such a wide gap exclusively with external funding is unlikely, particularly as African countries confront high borrowing costs, elevated debt-service obligations and declining access to affordable development finance.
The organisations argued that Africa must strengthen its domestic financial foundations while continuing to demand greater international support.
Africa’s average tax-to-gross domestic product ratio stood at 16.10% in 2023. However, 20 of the 38 African countries covered by the Organisation for Economic Co-operation and Development recorded ratios below 15.00%.
Weak tax collection limits governments’ ability to finance climate-resilient infrastructure, renewable energy, disaster preparedness and support for communities affected by climate change.
At the same time, overly aggressive taxation could place additional pressure on households and businesses already struggling with high living and operating costs.
The communiqué therefore advocates progressive green taxation—fiscal measures that discourage environmentally harmful activities while protecting vulnerable households and supporting productive investment.
Such policies could include pollution charges, reform of environmentally harmful subsidies and stronger taxation of extractive activities. Their design would need to ensure that the cost of climate action is not transferred disproportionately to low-income citizens.
Illicit financial flows represent another major concern. Africa loses significant resources through tax avoidance, trade misinvoicing, corruption and the movement of undeclared profits outside the continent.
Preventing those leakages could provide governments with resources that are already being generated within African economies but are not available for public investment.
“Africa’s climate-finance challenge is not only about attracting more money. It is also about retaining more value, mobilising domestic resources, preventing financial leakages and securing fairer conditions within the international financial system,” the organisations said.
They called for improved tax and customs systems, greater transparency across natural-resource value chains and stronger international cooperation to prevent profits from being shifted away from the jurisdictions where economic activities occur.
The groups also highlighted the ongoing negotiations on a United Nations Framework Convention on International Tax Cooperation as an opportunity to strengthen developing countries’ influence over global tax rules.
Existing international tax arrangements have frequently been criticised for giving richer countries and multinational corporations greater influence over the allocation and taxation of profits.
A more inclusive convention could help African governments obtain better information, strengthen enforcement and mobilise additional domestic revenue.
Ghana’s climate-finance requirements illustrate the scale of the challenge facing individual countries.
According to Ghana’s first Biennial Transparency Report, implementing the country’s nationally determined contributions from 2020 to 2030 will require between US$9.30 billion and US$15.50 billion.
Ghana’s Climate Prosperity Plan has also identified approximately US$76 billion in potential commercial investment opportunities.
Converting those opportunities into financed projects will require credible policies, investment-ready proposals and transparent arrangements for sharing risks and returns.
The large difference between climate-finance requirements and available public resources means private investment will be essential. However, investment presented as climate finance must deliver measurable environmental and social benefits.
The organisations therefore called for responsible environmental, social and governance investment and stronger safeguards for African carbon markets.
Carbon trading could direct funding towards forest protection, renewable energy and emissions-reduction projects. Without credible rules, however, communities risk losing control over land and natural resources while intermediaries capture a disproportionate share of the revenue.
Carbon credits must be supported by verifiable emissions reductions, transparent pricing and fair benefit-sharing with affected communities.
The groups also want developed countries and multilateral institutions to expand concessional finance. Loans carrying market-based interest rates can worsen debt vulnerabilities, even when they finance environmentally beneficial projects.
Climate-vulnerable countries have contributed relatively little to historical global emissions but frequently borrow at high rates to repair damage caused by floods, droughts and other climate-related events.
Debt and financing reforms should therefore recognise climate vulnerability and preserve fiscal space for essential development expenditure.
Green Tax Youth Africa, Followtaxes and ACCT-J said they would continue consolidating the evidence and recommendations generated through their dialogue series to support policy engagement, coalition building and accountability beyond COP31.
Their central message is that Africa requires more than an increase in the volume of climate finance.
It needs a fairer fiscal and financial system capable of mobilising domestic resources, preventing financial leakages and directing investment towards a just, resilient and sustainable future.
