Africa could lose up to $25 billion (R472bn) a year as a result of the EU Carbon Border Tax Adjustment Mechanism, African Development Bank (AfDB) group president Dr Akinwumi Adesina said yesterday.
He was addressing delegates at the Sustainable Trade Africa Conferenceat the UAE Trade Centre in Dubai.
The new EU carbon border tax could significantly constrain Africa’s trade and industrialisation progress by penalising value-added exports including steel, cement, iron, aluminium and fertilisers.
Adesina said that with Africa’s energy deficit and reliance mainly on fossil fuels, especially diesel, the implication was that Africa would be forced to export raw commodities again into Europe, which would further cause de-industrialisation of Africa.
“Africa has been short-changed by climate change; now it will be short-changed in global trade,” Adesina said.
The continent’s weak integration into global value chains made its best trade opportunity intra-regional exchanges, with the new Africa Continental Free Trade Area estimated to increase intra-Africa exports by more than 80% by 2035.
Adesina said Africa was 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,” Adesina said as he called for what he termed the Just Trade-for-Energy Transition policies, which would enable Africa’s renewable ambitions without restricting its trade prospects.
At the COP28 conference, new research from Bain & Company showed more than 60% of businesses were off track to meet their current sustainability goals. It said progress would require a combination of technology, policy and behaviour change.
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