Addis Ababa, Ethiopia – 27 May 2025 – The United Nations Economic Commission for Africa (ECA) and the United Nations Conference on Trade and Development (UNCTAD) convened a Regional Dialogue on External Financing and Climate-Resilient Development aimed at building climate-resilient, inclusive, and sustainable economies for African Small Island Developing States (SIDS).
Highlighting the unique combination of challenges the island nations face, Ms. Zuzana Brixiova Schwidrowski, outgoing Director of the ECA’s Macroeconomic, Finance and Governance Division said:
“SIDs economies are typically small, open, and heavily import-dependent. They rely on a narrow set of sectors—often tourism and agriculture—that are particularly sensitive to global shocks, health emergencies, and environmental disruptions. Their geographic remoteness inflates the cost of trade and limits economies of scale.”
Moreover, limited fiscal space, shallow capital markets, and constrained administrative capacity pose significant barriers to economic diversification and investment in resilience. Many African SIDS are also disproportionately burdened by unsustainable debt levels.
She noted that Cabo Verde has seen its public debt-to-GDP ratio surge to 109% in 2025, reflecting both past investment needs and the lingering effects of the COVID-19 pandemic. Comoros has recently moved from a moderate to high risk of debt distress, limiting its room to manoeuvre under IMF lending arrangements.
Fiscal prudence, said Ms. Schwidrowski, must go hand-in-hand with creative approaches to financing development.
Selected as pilot countries for the ECA’s “Mobilizing External Financial Resources Beyond COVID-19 for Greener, More Equal, and Sustainable Development in Selected Vulnerable SIDS” project, “Comoros and Cabo Verde have demonstrated political will to reform and innovate and are charting a path forward that many others across Africa can learn from,” said Schwidrowski.
The financing needs are substantial. In Comoros, the identified climate financing needs exceed USD 1.4 billion, yet only a fraction has been mobilized. A pipeline of nine adaptation projects awaits support.
Meanwhile, Cabo Verde, despite improvements in debt management, faces a USD 103 million annual SDG financing gap. Innovative platforms like Blu-X which is a regional listing and trading platform for sustainable and inclusive financial instruments, are being developed to position the country as a hub for sustainable bonds and climate-linked investments.
The goal, said Schwidrowski, is to enhance their capacity to design and implement coherent, climate-responsive financial strategies.
“Our aim is not just to diagnose the financing gap, but to narrow it,” stressed Schwidrowski.
Participants reviewed and validated national financial strategies and roadmaps for Comoros and Cabo Verde, incorporating innovative financing tools such as green bonds, blue bonds, diaspora bonds, and debt-for-climate swaps. Discussions also focused on identifying necessary institutional reforms, improving coordination between Finance and Environment Ministries, and fostering peer exchange among African SIDS.
Discussions also emphasised the need for an international financial architecture that better serves the needs of vulnerable countries. Many African SIDS, while classified as middle-income, struggle to access concessional finance, often penalized for their income rather than supported for their fragility.
This situation, stressed Schwidrowski, “calls for a re-evaluation of eligibility criteria for financial assistance, enhanced access to global climate funds, and regional mechanisms that reflect the realities of SIDS.”
Participants hailed from Comoros, Cabo Verde, Seychelles, Mauritius, São Tomé and Príncipe, Equatorial Guinea, Guinea-Bissau, Madagascar, and Benin, alongside partners from UNCTAD and the broader UN system. The meeting is seen as an important contribution to financing development discussions, ahead of the Fourth International Conference on Financing for Development (FFD4) in Sevilla, Spain.
ECA will be extending this exercise to additional African countries and supporting countries in operationalising these strategies through capacity-building and technical assistance.
Note to Editors:
-
The Fourth International Conference on Financing for Development (FFD4) will be held in Sevilla, Spain from 30 June - 3 July 2025 and is seen as a unique opportunity to reform financing at all levels, including to support reform of the international financial architecture and addressing financing challenges preventing the urgently needed investment push for the SDGs.
-
The Financing for Development conferences are seen as the only space where leaders from all governments, along with international and regional organizations, financial and trade institutions, businesses, civil society and the UN System unite at the highest levels, to foster stronger international cooperation.
-
The Regional Dialogue on External Financing and Climate-Resilient Development, was jointly organized on 26-27 May by the United Nations Economic Commission for Africa (ECA) and the United Nations Conference on Trade and Development (UNCTAD) under the umbrella of the 14th Tranche of the United Nations Development Account.
-
This gathering of experts marks a milestone in efforts by the United Nations to empower African Small Island Developing States (SIDS) to access the external financial resources they urgently need to build climate-resilient, inclusive, and sustainable economies.
Issued by:
Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Ethiopia
Tel: +251 11 551 5826
E-mail: eca-info@un.org