The Trumpian ocean which rocked the boat of multilateralism, continues to generate uncertainties around several issues of development, including climate action, and trade. While the impacts of the US decisions for global health, and healthcare in Africa in particular, are estimated to be profound, their effect on climate action, at least, may not be as grim from an African standpoint, if the right measures are instituted.
US Position on Climate Action
The putting America First In International Environmental Agreements (AFIEA) Executive Order withdraws the US government from the Paris Agreement under the UNFCCC, and revokes any commitment made by the Federal government under the UNFCCC (this does not imply leaving UNFCCC, which would require more than two-thirds approval in the Senate). It also revokes the US International Climate Finance Plan (USICFP) put in place by the Biden administration to double US climate finance from an average of US$2.9billion at close of 2016, by 2024. Subsequent to the Executive Order, the US has withdrawn from the Board of the Loss and Damage Fund with chaos emerging over which Board members will take its finance tab. It has also withdrawn from the Just Energy Transition Partnership Initiative to which South Africa was a direct beneficiary of more than US$1 billion from the US for its JETP program.
The US financial contributions to the Paris Agreement reveal a significant gap between pledges and actual disbursements, and they have had a historically questionable commitment to climate finance. Despite pledging US$11.4 billion annually in 2023, only US$1billion was ever appropriated by Congress. The outstanding commitments, including US$3billion to the Green Climate Fund and US$1billion from a previous pledge, remain undelivered. The Biden Administration’s 2025 fiscal request of US$3billion for the US International Climate Finance Plan (USICFP), mirrors past spending levels, showing no real increase in climate funding. In 2024, only US$0.9billion of the requested amount of US$3billion was delivered.
The US has long sought to shift financial responsibility to other nations, and the USICFP justifies this by emphasizing that the US contributes only 15 percent to global emissions annually, and makes no reference to its historic accountability. The plan does not provide any concessional finance for Africa’s adaptation and mitigation needs, focusing instead on leveraging private capital through institutions like the US International Development Finance Corporation and USAID, primarily via debt instruments.
Although the plan mentions the need to end fossil fuel subsidies, evidence suggests that these subsidies have only increased, with the oil and gas industry set to benefit significantly (US$1.7 billion in 2025, and US$10billion over a decade). While the US may not continue to fund the UNFCCC, resulting in a reduction of about one-fifth of its budget, the revocation the USICFP would have minimal impact on African governments, whose priority remains securing concessional finance for climate resilience rather than relying on inconsistent US commitments. This is not a Trump problem; it is a US problem.
At any rate, the approach of the US: big commitments, little delivery, and direct and indirect weakening of efforts to mobilise finance at zero cost, seems to be the approach of developed countries. Developing countries and experts called for funds in excess of US$1trillion, and COP29 delivered less than 30 percent of this goal, to be financed from multiple sources. Maybe Europe offers a glimmer of hope as its contributions increased between 2013 and 2022. But Oxfam provides evidence to the contrary, putting the true value at about US$24.5billion, a third of what was claimed.
Where Does this Leave Africa?
It has been argued that Africa must rely on its domestic resources to mobilise finance for climate action, as it insulates finance from the vagaries of external sources. Mobilising tax revenue is a key part of this strategy as it will free up trillions of dollars in revenue lost to tax abuse and under-taxation, which can be used for climate action. But this will depend on multiple efforts underway, including the push for a global minimum tax and fairer tax rules under a proposed UN International Tax Cooperation Convention. These reforms will need to be championed by Ghana, Kenya, Nigeria and Egypt – Chair of the Bureau, as Africa’s representatives on the Intergovernmental Negotiations Committee.
The average tax rate in Africa oscillates at around 29.2 percent, with no African country reporting tax below the proposed minimum of 15 percent by the OECD for a global tax regime. This validates the need for the proposed Convention.
The outcomes of the Intergovernmental Negotiating Committee’s meeting earlier in February, however, reflects the enormity of the task. The US has withdrawn from negotiations to deliver new the Convention, opposing its outcomes as an overreach on its tax jurisdiction. It walked out of negotiations on the first day. European partners favor an OECD proposal, which would introduce a 15 percent minimum effective tax rate. Some EU members also threatened to leave if their demands, such as consensus-based decision-making instead of a simple majority, and voluntary compliance, were not met. While most developing countries support a simple majority, developed countries’ rejection of these proposals could undermine progress. Rules for decision making are important because if they are consensus based, one country can stall progress, even if there is a clear majority, as is often the case with oil exporting states under the UNFCCC. These positions by developed countries are simply no different than the ‘transactional Trumpian approach’, where a handful of countries with economic wherewithal are rocking the boats of a multilateral effort.
Countering Inequities, Protecting Sovereignty and Jarmonising Strategy for Negotiations
Should the efforts fail, countries in Africa will have to rely on Bilateral Investment Treaties (BITs), to mobilise tax revenue for climate action at home. These agreements have historically not benefited host countries in Africa, and they constrain progressive tax reform due to Investor-State Dispute Settlement (ISDS) clauses. Such clauses, are often negotiated unfairly, often result in decisions and judgments against African governments, leading to billions of tax payer dollars paid to multinational companies during disputes. Estimates suggest that Africa has paid out US$5.7billion in settled cases and another US$19.5billion is at stake in ongoing cases. Africa must realise that, on BITs, the EU countries will likely negotiate from a common template as a bloc, as the Commission retains the power to reject any negotiations that conflict with EU law; is inconsistent with the EU’s principles and objectives for external action; or constitutes an obstacle to negotiation of an agreement by the EU. To this end, the OECD proposal may likely be the bedrock of most negotiations for European Companies. Considerations of modifications to the EU CBAM in the light of preparedness of EU companies, when African countries had long complained of its inequities is evidence enough. The Americans will pursue their ‘transactional diplomacy’ in tax negotiations.
Perhaps South Africa’s G-20 leadership may offer some hope. While the agenda does not prioritise global tax reform for climate action, it does acknowledge inequality, and aims to address this and tax efficiency. Africa has a seat here and should utilise it to its benefit.
Africa requires a cooperation agreement to bolster its position in global tax negotiations, particularly with the OECD/G20 framework, and to counter the misuse of ISDS mechanisms that hinder tax cooperation. This is feasible, since other regions have already advanced similar initiatives, in the hope that their outcomes will influence the proposed UN Tax Convention. While existing platforms like the African Tax Administration Forum (ATAF) and the AU’s Agenda 2063 emphasise the importance of tax governance, the absence of a unified continental tax agreement leaves African nations fragmented and less influential in global tax reform talks. Without this unified approach, Africa risks being marginalised in critical decisions impacting its fiscal sovereignty and ability to achieve sustainable development goals. A cohesive strategy would not only strengthen the continent’s negotiating power but also promote regional economic integration and protect against exploitative practices by multinational corporations.
