daniel chigunwe
Business Writer
A new report by the African Export-Import Bank (Afreximbank) paints a concerning picture: abrupt decarbonisation, a necessary step in the fight against climate change, could further erode African GDP and merchandise exports by 1 and 14,6 percent, respectively.
This finding raises a crucial question: in a continent where economies are heavily reliant on commodities and natural resources, how can Africa achieve decarbonisation without sacrificing economic development?
The 2024 African Trade Report, titled “Climate Implications of the AfCFTA Implementation”, acknowledges the significant threats climate change poses on African and other developing economies.
The report highlights that climate disasters have already eroded significant proportions of the Africa economy and 77 percent of African trade.
Droughts, floods, and extreme weather events are taking a heavy toll on the continent’s ability to produce and trade goods.
However, the report also finds a ray of hope. The African Continental Free Trade Area (AfCFTA) has the potential to be a powerful tool for mitigating climate change.
By encouraging domestic production and reducing reliance on long-distance shipping, the AfCFTA could significantly reduce carbon emissions.
The AfCFTA is the largest free trade area in the world, connecting 55 countries, covering about 1,3 billion people and accounting for a combined GDP of around US$3 trillion.
Currently, many African nations export raw materials and then re-import finished goods. This process often involves long shipping distances, which contribute significantly to carbon emissions.
The AfCFTA aims to change this dynamic by encouraging the development of domestic manufacturing capabilities across Africa. This “domestication of value addition” as the Afreximbank report terms it, would reduce the need for long-distance shipping and the associated carbon emissions.
The report emphasises the urgency of implementing the AfCFTA.
“African governments and all stakeholders must commit to finalising negotiations and installations of all pending protocols and creating the institutional structures necessary for the implementation of the Continental Trade Agreement,” the report urges.
“This is not just a trade agreement but a pathway to Africa’s sustainable and prosperous future.”
Afreximbank recommends a three-pronged approach for Africa to maximise the benefits of the AfCFTA.
Its full implementation is crucial to unlock its benefits for trade and emissions reduction.
Streamlining customs procedures, harmonising regulations, and investing in infrastructure to facilitate the movement of goods across borders are all essential steps.
Imagine a continent where goods can flow freely, without delays or bureaucratic hurdles. This would not only boost trade but also reduce the need for long-distance shipping, leading to lower carbon emissions.
Investment in energy infrastructure
The report calls for investment in energy infrastructure to facilitate sharing electricity derived from various sources, including renewables. This will be particularly important for countries reliant on fossil fuels.
A continental electricity grid would allow countries with abundant renewable resources, like geothermal or solar power, to share their surplus with those that lack them.
This would not only reduce reliance on fossil fuels but also promote regional integration. Imagine a continent where countries can tap into a shared pool of clean energy, powering their industries and homes without harming the environment.
Sharing resources
The AfCFTA should be used as a platform for African nations to share resources to address food security and energy poverty. Countries with surpluses in food or energy production can use the AfCFTA to easily trade with those facing shortages.
This would promote regional self-sufficiency and resilience in the face of climate shocks. Imagine a continent where countries facing food shortages can easily access surplus crops from their neighbours, ensuring food security for all.
By following these recommendations, African nations can leverage the AfCFTA to achieve a sustainable and prosperous future.
The AfCFTA is not just a trade agreement; it is an opportunity for Africa to transform its economies, reduce its reliance on fossil fuels, and build resilience to climate change.
The road ahead will not be easy, but with full commitment and a focus on long-term goals, Africa can use the AfCFTA to chart a course towards a sustainable future.
The report also acknowledges the challenges that lie ahead. Abrupt decarbonisation could have a negative impact on African economies in the short term. Additionally, successfully implementing the AfCFTA will require significant investment in infrastructure and capacity building.
However, the report argues that the long-term benefits outweigh the risks. By embracing innovation and investing in clean technologies, Africa can transition to a low-carbon economy without sacrificing economic growth.
The success of the AfCFTA hinges on collaboration between African governments, businesses, and civil society organisations. All stakeholders must work together to create an enabling environment for trade and investment.
The international community also has a role to play. Developed countries can support Africa’s transition to a low-carbon economy by providing financial assistance and technical expertise.
Bongani Ndlovu