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Kenya’s president is advocating for the establishment of a global green bank that operates independently from the World Bank and IMF. He argues that traditional multilateral lenders are under the influence of wealthy nations and lack the ability to effectively address the climate crisis. William Ruto, who took office less than a year ago, believes that this new non-aligned bank can help close the funding gap of trillions of dollars necessary to combat global warming. He states, “We are in a crisis situation.”
Ruto made these statements during a meeting of world leaders in Paris, where they were discussing reforms to the global financial system, including the World Bank and IMF, in order to provide funding for climate change initiatives and relieve the debt burden on developing nations. He believes that the Paris agreement should include the establishment of a new financial mechanism controlled by neither shareholders nor any specific country.
Ruto proposes that this mechanism, similar to a global green bank, be funded through global green taxes and levies. These could include taxes on financial transactions and fossil fuels, as well as levies on shipping and aviation. Such measures have the potential to generate between $1.5tn and $2tn annually. While discussions on global climate tax initiatives have been inconclusive, a World Bank paper estimates that implementing a levy on emissions from shipping alone could generate $60bn in revenue per year.
Ruto claims to have discussed his proposal with international leaders, including French president Emmanuel Macron and Chinese president Xi Jinping. While Macron expressed lukewarm interest in the idea of a new green bank, Ruto asserts that all of Africa supports the proposal and China is aware of Kenya’s position.
Ruto, who has been critical of the World Bank and IMF, argues that a new bank operating separately from the traditional financial system is crucial for ensuring that countries like Kenya do not accumulate excessive debt while transitioning to low-emission and sustainable energy systems. He highlights the disparity in borrowing costs between African nations and their wealthier counterparts, emphasizing the need for equal treatment. Ruto aims to prevent Kenya from falling into a debt crisis like Zambia and Ghana.
In addition to advocating for a new green bank, Ruto believes that the IMF and World Bank should be reformed. He proposes that these institutions allocate $500bn annually to refinance high-cost debt held by developed countries. At the summit, Macron echoed the importance of addressing poverty and rising temperatures simultaneously, stating, “No decision maker, no country, should ever have to choose between reducing poverty and protecting the planet.”
Additional reporting by Andres Schipani in Nairobi
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