COP28: Africa could lose $25 billion per year as new EU carbon tax begins warns AfDB’s Adesina

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With Africa’s energy deficit and reliance mainly on fossil fuels, especially diesel, the implication is that Africa will be forced to export raw commodities again into Europe

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DUBAI, United Arab Emirates, December 7, 2023/ — African Development Bank Group President Dr Akinwumi Adesina (www.AfDB.org) has warned that a new EU carbon border tax could significantly constrain Africa’s trade and industrialization progress by penalizing value-added exports including steel, cement, iron, aluminium and fertilizers.

Adesina said, “With Africa’s energy deficit and reliance mainly on fossil fuels, especially diesel, the implication is that Africa will be forced to export raw commodities again into Europe, which will further cause de-industrialisation of Africa.”

“Africa could lose up to $25 billion per annum as a direct result of the EU Carbon Border Tax Adjustment Mechanism,” the Bank President told delegates at the Sustainable Trade Africa Conference held at the UAE Trade Centre in Dubai.

“Africa has been short-changed by climate change; now it will be short-changed in global trade,” the Bank President said.

“Because of weak integration into global value chains, Africa’s best trade opportunity lies in intra-regional exchanges, with the new Africa Continental Free Trade Area estimated to increase intra-Africa exports over 80% by 2035.”

Adesina stressed that Africa was already being overlooked in the global energy transition, according to data from the International Renewable Energy Agency.

“Africa received just $60 billion or 2% of the $3 trillion of global investments in renewable energy in the past two decades, a trend that will now impact negatively on its ability to export competitively into Europe,” said Adesina as he called for what he termed the Just Trade-for-Energy Transition (JTET) policies, which would enable Africa’s renewable ambitions without restricting its trade prospects.

Africa will need to use natural gas as a transition fuel to reduce the variability of renewable energy and stabilize its energy systems in support of its industrialization, Adesina said.

The Chief Executive Officer of the UAE Trade Centre, Walid Mohammed Hareb Alfalahi said Africa is the new frontier for investment contrary to widespread perception that the continent is a dangerous and difficult place to do business.

“What you hear about Africa is not the reality. I see the potential in Africa. I see the possibilities to do more,” said Alfalahi as he recounted his positive experience of investing in a number of projects on the continent.

Adesina said a report by Moody’s Analytics showed that Africa had the least default rate on investment in infrastructure compared to other parts of the world.

According to the report, Africa’s default rate stands at 5.5 per cent, compared to Latin America’s 12.9 per cent, followed by Asia at 8.8 per cent, Eastern Europe 8.6 per cent, North America 7.6 per cent, and Western Europe 5.9 per cent.

Adesina also highlighted some of the mega projects that had attracted investor interest through the Africa Investment Forum that was created by the African Development Bank and seven other founding partners. The projects include Mozambique’s $24 billion liquefied gas project, the $15.2 billion Abidjan to Lagos Highway corridor covering 5 countries and the $3.6 billion Tanzania to Burundi and DR Congo railway line.

“I’m talking about a different Africa. There is no project that as partners, we cannot handle,” said Adesina.

The conference, moderated by the African Development Bank President’s Senior Adviser for Communication, Dr Victor Oladokun, was also addressed by the President of the African Export-Import Bank, Afreximbank, Professor Benedict Oramah. He warned, “Preliminary results of a study recently commissioned by Afreximbank reveal that rapid decarbonisation by fossil fuel-exporting countries in Africa could cut merchandise exports by $150 billion.”

Gbenga Samson
Gbenga Samsonhttp://ThisDayLive.com
Samson Gbenga Salau [Editorial Board Adviser] Gbenga Samuel Salau is a professional journalist with over 17 years experience in journalism, he is a graduate of Communication and Language Arts, University of Ibadan. On completion of his youth service, he joined The Guardian as a freelance journalist and was later absorbed as a staff. While in the University, he was a campus journalist reporting for the Independence Hall and Faculty of Arts Press Clubs. As a campus journalist, he won the following awards; Independence Hall Press Best News writer; University of Ibadan Union of Campus Journalists’ Best News Reporter/Writer; First Runner-up, Reuben Abati Award for Investigative Journalism; Association of Faculty of Arts Students’ Press Best Reporter; University of Ibadan Union of Campus Journalists’ Best Political Writer; Winner, Reuben Abati Award for Investigative Journalism, and University of Ibadan Union of Campus Journalists’ Best Interviewer. He served the Association of Communication and Language Arts Students, as the Public Relation Officer, the same year he was appointed the News Editor of the Association of Faculty of Arts Students Press. The following session, he was made the General Editor, and a member of the 13-man University of Ibadan Students’ Union Transition Committee. As a reporter in The Guardian, in 2014, he won the Promasidor Quill Award Best Report on Nutrition and DAME Business Reporting category. In the 2015 edition of the Promasidor Quill Award, he won the best Report on Nutrition and Brand Advocate Categories, while in 2016, he won the NMMA Print Journalist of the Year, first runner-up Golden Pen Reporter of the Year and SERAs CSR Awards. Gbenga Salau loves traveling, reading, and listening to songs with good lyrics no matter the genre.

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