In a significant bid that could determine Africa’s role in global climate leadership, Ethiopia has formally launched its campaign to host the 2027 United Nations climate change summit (COP32) in its capital city, Addis Ababa. This places the country in direct competition with Nigeria, which has proposed Lagos as the venue for the prestigious event.

The COP—Conference of the Parties—is the foremost global forum where nearly 200 nations convene annually for two weeks of intensive negotiations aimed at combating climate change. Hosting the summit grants the selected nation a crucial platform to influence agenda-setting and elevate its climate initiatives on the world stage.

President Taye Atske Selassie emphasized the country’s readiness at a recent UN event in Addis Ababa, stating, “We have the capacity, the facilities, the location, and the connectivity to host the much-anticipated climate summit.”

The decision on the COP32 host city lies with the unanimous consent of the 54-member UN Africa regional group, as the presidency of such summits traditionally rotates among global regions. Beyond the opportunity to shape international climate policy, hosting also introduces scrutiny of the host country’s environmental record and domestic industries.

Ethiopia points to its strong environmental credentials in its pitch. The nation became the first to ban imports of non-electric vehicles as part of an ambitious target to reach net-zero emissions by 2050. According to the International Energy Agency, Ethiopia has powered all of its electricity generation from renewable sources since 2022, despite still relying significantly on biofuels and waste in its overall energy consumption.

The selection of host cities typically occurs more than a year before the event to accommodate the logistics for hosting tens of thousands of delegates. Brazil is scheduled to host COP30 in Belém in November 2025, while Australia and Turkey are both vying to stage COP31 in 2026.

Meanwhile, Ethiopia continues to advance climate action on the continent through the ongoing second Africa Climate Summit (ACS2) held in Addis Ababa. In a related development, the COP30 Presidency, in partnership with the International Energy Agency and the African Union, announced that the second “High-Level Dialogue on Energy Transition” will convene on September 8, 2025. This session, taking place alongside ACS2, will help shape energy agendas for the upcoming COP30 in Brazil.

Key figures expected to address the dialogue include IEA Deputy Executive Director Mary Burce Warlick, COP30 President-Designate André Corrêa do Lago, and African Union Commissioner for Infrastructure and Energy Lerato Mataboge. Discussions will focus on pressing topics such as energy access and clean cooking, critical concerns for Africa’s sustainable development.

As Ethiopia hosts its second African Climate Summit and the United Nations Climate Week in 2025, a new report has delivered a stark warning: the country faces a formidable climate finance gap of $252.8 billion needed by 2030 to meet its ambitious climate change goals. This yawning shortfall threatens to undermine Ethiopia’s position as a climate leader in Africa, raising urgent questions about how the nation will bridge the divide between its commitments and available resources.

A Critical Moment for Climate Leadership

Ethiopia has gained recognition across Africa and the world for its proactive approach to climate change. Its pioneering policies include banning imports of non-electric vehicles and achieving 100% electricity generation from renewable sources since 2022. Yet, behind this leadership lies a daunting financial challenge that threatens the implementation of essential climate adaptation and mitigation projects.

The new ‘Climate Finance Shadow Report for the Intergovernmental Authority on Development Regional Economic Community (IGAD REC)’—released by Oxfam on September 4, 2025—illuminates the scale of the funding gap confronting Ethiopia and its IGAD neighbors. The $252.8 billion figure required by Ethiopia alone stands as the highest financial need among the eight IGAD member states, which also include Djibouti, Eritrea, Kenya, Somalia, South Sudan, Sudan, and Uganda.

Across the entire IGAD region, the total climate finance needs are estimated at $417.9 billion by 2030. This figure is particularly alarming given that it represents only about 42% of the $100 billion annual global climate finance target pledged by developed countries to be provided by 2025.

The Size and Nature of the Climate Finance Gap

The report reveals that the bulk of Ethiopia’s climate funding requirement—approximately $220.4 billion—is earmarked for mitigation efforts aimed at cutting greenhouse gas emissions. Adaptation, which involves strengthening resilience to climate impacts, accounts for $32.4 billion, a figure the report cautions may be underestimated due to the inherent difficulties in assessing adaptation needs accurately.

Across the IGAD region, total mitigation costs outpace adaptation costs, with $273.1 billion needed for mitigation compared to $144.8 billion for adaptation. However, the uncertainties around future climate scenarios and limited technical capacity mean that actual adaptation costs could be higher.

The financing gap is compounded by the fact that climate finance flows to the region remain woefully inadequate. Between 2013 and 2022, the IGAD region received an average of $2.3 billion annually in climate finance, which falls drastically to $1.7 billion per year when adjusted for interest and debt servicing. This accounts for a mere 4% of the total financing demand, underscoring a profound mismatch between need and delivery.

Regional Disparities and Access Barriers

The report highlights significant inequalities in climate finance distribution within the IGAD states. Ethiopia, Kenya, and Uganda fare comparatively better, receiving $8.2 billion, $7.4 billion, and $3.4 billion respectively. By contrast, conflict-affected and fragile states like South Sudan ($891 million), Sudan ($960 million), Eritrea ($117 million), and Somalia ($1.4 billion) receive far less support.

On a per capita basis, disparities are stark: Kenya receives approximately $14 per person per year, while Sudan and Eritrea receive only $2 and $3 respectively. These figures pale in comparison to the global average of $25 per person annually estimated by the OECD between 2016 and 2022.

Challenges are further exacerbated by complex application procedures, stringent eligibility standards, and onerous financial regulations of current climate finance mechanisms. These obstacles disproportionately affect weak and conflict-ridden countries in the IGAD region, hampering their access to necessary funds.

Debt Crisis Deepens Climate Finance Vulnerability

A major concern underscored by the report is the reliance on loan-based climate finance, which adds to an already severe debt burden across the IGAD states, particularly Ethiopia. According to the International Monetary Fund and World Bank’s debt sustainability analyses, Ethiopia is officially classified as facing debt distress.

Ethiopia’s external debt ballooned to 56% of GDP in 2022, surpassing the IMF’s recommended 50% threshold for low-income countries. Roughly 30% of this external debt is owed to private creditors, which often carry higher interest rates and less favorable terms.

The report explains that increasing reliance on foreign loans for climate projects risks exacerbating Ethiopia’s fiscal constraints, as rising global interest rates have significantly increased debt servicing costs. This troubling trend undermines the country’s capacity to invest in climate resilience and sustainable development, potentially pushing it further into financial fragility.

Climate Change, Gender, and Agriculture: Interlinked Vulnerabilities

The Oxfam report also brings attention to the crucial intersections of climate change with gender and agriculture—two pillars of Ethiopia’s economy and society.

The agricultural sector, which more than 80% of the IGAD population depends on for livelihoods, faces critical underfunding; only 15% of the estimated climate finance needs for agriculture have been allocated. Given that agriculture is highly sensitive to climate variability, insufficient investment poses risks to food security and rural incomes.

Women, who constitute approximately 29% of Ethiopia’s workforce, bear disproportionate burdens from climate change impacts. Structural challenges—such as limited land ownership rights, restricted access to financing, and technology deficits—render women especially vulnerable. The report strongly advocates for climate finance that explicitly prioritizes gender equality and delivers targeted support to women to enhance their resilience.

Calls to Action: Justice and Equity in Climate Finance

The Oxfam report issues a powerful call to climate finance providers, national governments, and civil society organizations to urgently increase aid-based (grant) funding, especially for conflict-affected countries within the IGAD region.

The briefing insists climate finance is not charity but a matter of climate justice. Since IGAD countries collectively contribute negligibly to global greenhouse gas emissions, expecting them to shoulder climate action primarily through debt-financing is unjust and unsustainable.

Moreover, the report warns that excessive dependence on high-interest credit—particularly for climate resilience initiatives that may not yield immediate economic returns—could entrench cycles of debt and poverty, exacerbating inequalities and undermining the very goals of sustainability.

Chinese and African Union leaders and diplomats gathered at the Adwa Victory Memorial Museum to mark the 80th anniversary of the Chinese people’s resistance against Japanese aggression and commemorate the victory of the global anti-fascist war. The high-level seminar, themed “Honor the History for a Better Future—China and Africa Jointly Building a New Era of Peace and Prosperity,” highlighted the deep historical bonds and shared destiny linking China and Africa.

The event coincided with two significant historical observances: China’s triumph in World War II and the African Union’s 2025 theme, “Justice for Africans and People of African Descent Through Reparation.” This dual celebration underscored the ongoing, collective struggle for justice, dignity, and peace that unites both peoples.

In his opening remarks, Amb.JIANG Feng, head of the Mission of China to the African Union, described the occasion as a “great triumph of justice over evil” and a “victory of light over darkness.” He reaffirmed the longstanding brotherhood between China and Africa, emphasizing their joint fight for independence, sovereignty, and dignity. Ambassador JIANG highlighted mutual support in these struggles as a foundation for their enduring partnership.

The seminar reflected on the critical role China and Africa played during World War II, particularly in the global anti-fascist effort. The Chinese People’s Resistance War, part of the Eastern Front, was acknowledged for its significance, while African nations were recognized as strategic strongholds and resource hubs for Allied forces. Millions of African troops contributed substantially to the allied cause.

A major focus was on reinforcing multilateralism and advancing a just international order. Ambassador JIANG reiterated China’s steadfast support for the United Nations-centered global order and the principles of the UN Charter. He called for united opposition to unilateral actions breaching international law and trade agreements. In addition, he reaffirmed China’s firm stance on the one-China principle, linking Taiwan’s reintegration to the post-World War II international framework, and urged continued African support for China’s national unity.

Both parties emphasized strengthening the representation and voice of developing nations in global governance. China, the first country to back the African Union’s bid for G20 membership, has championed increased African engagement in international platforms such as BRICS. The recent G20 summit in South Africa served as a notable example of Africa’s rising influence in global affairs.

Looking ahead, the seminar spotlighted future cooperation with a focus on economic development. China has remained Africa’s largest trading partner for 16 consecutive years. With diplomatic ties spanning 53 African countries, China has eliminated tariffs on 100 percent of African imports, expanding market access and opening new opportunities for African goods.

Discussions centered on implementing “Ten Partnership Actions” and supporting the modernization of African industry and agriculture. Both sides stressed building a “China-Africa community with a shared future,” a vision championed by Chinese President Xi Jinping.

As the world grapples with conflicts, inequality, and climate challenges, participants agreed that intensified cooperation is essential. The Global Governance Initiative (GGI), proposed by President Xi, aims to promote global governance grounded in sovereign equality, the rule of law, and a people-centered approach. This framework aligns closely with the African Union’s Agenda 2063, offering a roadmap for sustainable peace and shared prosperity.

The seminar concluded with a renewed commitment by China and Africa to advance their historic partnership and collaboratively tackle the complex challenges of the 21st century.

Investor demand for Ethiopian Treasury bills (T-bills) soared to 159% of the amount offered, a surge the Ministry of Finance (MoF) attributes to improved primary market conditions following the introduction of a three-month T-bill issuance calendar.

At the start of the budget year, the MoF published its inaugural three-month T-bill issuance calendar. According to the Ministry’s first domestic debt bulletin, issued this week, “The issuance calendar offers market participants improved transparency into upcoming auctions, enabling better planning and fostering investor confidence.”

Since its introduction, market participation and subscription rates have markedly improved across all T-bill tenors. During the first two months of the 2025/26 fiscal year (July and August), the government raised 111.1 billion birr through four T-bill auctions, exceeding its planned issuance of 103.4 billion birr.

Investor demand was exceptionally strong, with total bids reaching 164.7 billion birr. This represents 159% of the amount offered and resulted in an average subscription rate of 107%.

“This performance reflects both deepening market participation and the effectiveness of recent reforms to improve transparency and predictability in domestic debt issuance,” the Ministry stated.

The auction outcomes revealed important shifts in investor behavior. Initially, demand was concentrated on shorter-term 28-day and 91-day bills, while longer-term 182-day and 364-day bills saw subdued interest.

In early August, the subscription ratio for the 364-day tenor fell to a low of 20%, underscoring weak demand.

This period also saw a yield curve inversion, where 182-day bills offered higher yields than 364-day bills.

From a financing perspective, the gross issuance of 111.1 billion birr was used primarily to refinance 78.2 billion birr in maturing T-bills and to roll over another 9 billion birr. This resulted in a net issuance of 23.9 billion birr.

By the end of August 2025, cumulative net issuance represented 14% of the annual target of 172.9 billion birr.

“Overall, developments in July–August 2025 highlight the positive impact of the government’s active management of the T-bill market,” the MoF concluded.

This bulletin is the government’s first significant debt analysis published in nearly a year, following a report on the first quarter of the 2024/25 fiscal year.

A separate MoF debt report from the Debt Management Division, dated June 30, 2025, placed Ethiopia’s total public sector domestic debt stock at 2.5 trillion birr. Long-term Treasury bonds (T-bonds) accounted for the largest share at 80%, while medium-term treasury bonds and T-bills represented 8% and 10%, respectively.

It is worth recalling that since the end of 2022, the government had imposed a mandatory purchase requirement of 20% in T-bonds on commercial banks for every loan disbursement.

This policy was discontinued as of July 2025. As of the end of August 2025, the 364-day T-bill remained the largest component of outstanding T-bills, accounting for 39% of the total stock.

The Ministry’s reforms are showing positive results. By addressing pricing distortions and enhancing transparency, the new measures have helped improve average yields and subscription patterns, and are beginning to shift investor demand toward longer-term maturities.

These are critical steps for reducing rollover risks and supporting the development of the domestic debt market.

Regarding debt holders, the state-owned Commercial Bank of Ethiopia (CBE) remains the dominant creditor, holding 44% of all outstanding domestic debt.

The National Bank of Ethiopia accounts for 27%, and pension funds hold 18%. This pattern is mirrored in T-bill holdings: CBE holds 45.3% of outstanding T-bills, followed by pension funds at 32.5%, and other commercial banks at 13.5%. Insurance companies hold 6.1%, while other institutions, including Ethiopian Investment Holdings, account for 2.6%.

The bulletin also highlighted key operational enhancements, including the trading of 182-day T-bills on the Ethiopian Securities Exchange (ESX) and the government’s transition toward fully electronic transactions. These initiatives aim to increase the market’s efficiency, accessibility, and reliability.

The government has announced plans to finance its budget deficit by borrowing from the market rather than taking direct advances from the central bank—a practice that has previously contributed to inflation.

For Ethiopia’s 2025/26 budget year, the approved budget of 1.93 trillion birr carries a deficit of 22%, amounting to 417 billion birr.

The government plans to finance this deficit through a shift to market-based mechanisms, relying on domestic sources such as Treasury bills and other instruments, alongside international budget support.