By Kitab Unango, SSMJ Washington DC, Friday (November 1, 2024) - In an era when climate change is one of the defining global challenges, Africa stands at a crossroads. Despite contributing the least to global emissions, the continent faces some of the most severe impacts, from extreme droughts and food shortages to dwindling biodiversity. In response, African leaders, policymakers, and financial experts increasingly look inward to address economic and environmental challenges. At the eighth Baba
By Kitab Unango, SSMJ
Washington DC, Friday (November 1, 2024) - In an era when climate change is one of the defining global challenges, Africa stands at a crossroads. Despite contributing the least to global emissions, the continent faces some of the most severe impacts, from extreme droughts and food shortages to dwindling biodiversity.
In response, African leaders, policymakers, and financial experts increasingly look inward to address economic and environmental challenges.
At the eighth Babacar Ndiaye Lecture in Washington, D.C., Afreximbank echoed this vision by highlighting the African Continental Free Trade Area (AfCFTA) as a key player in Africa's green energy transition.
Held under the theme, “Saving Lives Today versus Saving the Planet for the Future: Can the AfCFTA Resolve the Climate Change Dilemma?” highlighted the importance of balancing short-term development needs with long-term sustainability goals.
Afreximbank’s leadership, including Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank Group, made a compelling case for AfCFTA’s potential to catalyze a climate-resilient transformation across Africa.
The free trade agreement, launched in 2021, is Africa's largest trade project, with the goal of increasing intra-African commerce by lowering tariffs and other barriers.
However, the potential impact of AfCFTA goes beyond economic growth as it can position Africa as a leader in the global green transition.
By promoting industrialization across the continent, AfCFTA could substantially diminish Africa's carbon footprint by decreasing emissions associated with the current practice of exporting raw materials and subsequently importing manufactured goods.
At the lecture, Professor Yemi Osinbajo, former Vice President of Nigeria, spoke passionately about AfCFTA’s role in “Sustainable Infrastructure for Africa’s Future.
He highlighted how the AfCFTA could transform the continent’s trade landscape, reduce emissions, and drive innovation in green industries.
“Shipping is a major source of carbon emissions,” Osinbajo said. “Under current trade practices, a large share of African raw materials are exported to other regions for processing, only to be shipped back to Africa. Intra-African trade in finished goods will substantially reduce this massive cause of global emissions.”
Osinbajo’s emphasis on value addition is essential for Africa’s climate strategy. Through AfCFTA, African countries can retain more value from their natural resources, such as bauxite, lithium, and cobalt, by processing them locally.
This shift not only cuts emissions but also creates jobs, generates revenue, and stimulates local economies. For instance, Osinbajo cited the potential impact of processing Guinea’s abundant bauxite reserves into aluminum within Africa.
According to studies, this could prevent the emission of 335 million metric tons of carbon dioxide annually and create hundreds of thousands of jobs, giving Guinea and Africa as a whole a competitive edge in the global market.
Economic viability, however, remains a concern for many African nations that still rely heavily on fossil fuels.
Recognizing the challenges posed by the global push for decarbonization, Osinbajo warned that the trend among international development finance institutions to divest from fossil fuels could harm economies like Nigeria and Angola.
Without adequate investment in renewable energy infrastructure, Osinbajo stated, these countries risk economic stagnation, adding that Africa’s green transition must be balanced and gradual, allowing for a phased shift from fossil fuels to renewable energy sources.
Dr. Rania A. Al-Mashat, Egypt’s minister for Planning, Economic Development, and International Cooperation, echoed the call for a pragmatic approach, pointing out that despite Africa’s negligible contribution to global emissions, the continent faces a disproportionate burden in addressing climate challenges.
“Africa needs greater collaboration with national and international stakeholders,” Dr. Al-Mashat said, emphasizing that sustainable economic growth hinges on access to affordable climate financing.
One promising development, highlighted by Afreximbank at the lecture, is the ongoing expansion of the Pan-African Payment and Settlement System (PAPSS), a platform created by Afreximbank in partnership with the African Union to enable cross-border payments within Africa without relying on foreign currencies, facilitating more robust intra-African trade.
PAPSS and the $10 billion Adjustment Fund for AfCFTA work together to assist nations in managing trade changes and funding the shift to green industries.
From a global perspective, the strategic importance of AfCFTA’s climate-friendly agenda is twofold. First, by integrating trade and climate action, AfCFTA allows Africa to contribute to global emission reduction efforts while prioritizing its economic resilience.
Secondly, Africa’s abundant renewable resources, including solar, wind, and hydroelectric power, can serve as the backbone of a green industrial sector that would attract investment, foster innovation, and create long-term economic stability.
Amina J. Mohammed, deputy secretary-general of the United Nations, reaffirmed this transformative vision in her Goodwill Message.
She stressed the urgent need to support Africa’s climate action by ensuring access to affordable financing for renewable energy projects, which could bring electricity to the over 600 million Africans currently without power.
“Renewables can dramatically boost economies, grow new industries, create jobs, and drive development,” Mohammed said, “all while reducing emissions and bolstering energy independence.”
Mohammed urged African leaders to prioritize the inclusion of women and youth in climate-resilient industries, as their participation is crucial for sustainable and equitable development.
The AfCFTA’s green promise, if fully realized, could position Africa as a climate leader, redefining its economic landscape while ensuring a sustainable future for generations to come.
Africa, with the AfCFTA at its forefront, has the opportunity to transform climate challenges through innovation, collaboration, and a shared commitment to a greener future.
The journey to climate resilience will undoubtedly be complex, but as demonstrated at the Babacar Ndiaye Lecture, Africa’s leaders are poised to take bold steps to make the AfCFTA’s green promise a reality.