It has been argued many times that Africa is at an inflection point. One key trend to observe is that many of the fastest-developing economies in the world are located in Africa and Asia.
Conversely, despite exceptional growth registered in recent years, the continent still has a perceived risk that is higher than other regions of the world. The region continues to experience the arduous task of mobilising adequate resources to fund its growth and future transformation agenda.
Over time, it has emerged how difficult it is for Africa to access resources for sustainable development and energy transition.
The region is now at the centre of calling for a global financial architecture reform, largely because the current framework is in the hands of people outside of Africa. In a similar fashion we must look at the carbon market with the same lens.
According to the most recent findings of the Intergovernmental Panel on Climate Change, Africa’s contribution to the global emissions are in the region of four percent.
In addition, 70 percent of carbon sequestration by the planet takes place in the tropical belt, which is where Africa lies. Of what economic impact is the carbon sequestration to Africa? In his address at the recently held BRICS summit in South Africa, UN Secretary-General Antonio Guterres in his admission did submit that aligning climate and SDG actions ought to yield long-term co-benefits including realising significant capital inflow of up to $43 trillion by 2050, from the largest emitters to the global South.
With an ability to realise 100 billion US dollars annually, carbon markets offer African countries an incredible opportunity to unlock such massive resources.
No single financial infrastructural arrangement has the ability to achieve resource outflow of this magnitude least for the carbon credit market. Not even net income from abroad commonly referred to as diaspora remittances.
In fact, developmental experts have argued that traditional sources of development finance such as Official development assistance — ODA — and foreign direct investment over the past six or so decades have not yielded much and thus cannot be relied -upon going forward.
However, issues that relate to transparency and integrity have been cited as the main challenges preventing the realisation of a credible carbon market.
Today the playing field is being defined to the advantage of the global north. The Amazon forest for instance, which is the single largest carbon sink globally has been the most affected by market adulteration, surrounding carbon trading system. From the issuance of the certification procedure to the determination of carbon price the whole process has continued to be marred by manipulation, interference and integrity issues.
To better illustrate this, Gabon with its huge and expansive forest cover entered into a carbon trading arrangement that was World Bank initiated and sold carbon for $135 million for 15 years, to a State that belongs to the Global North. The national registry later established the actual cost to be in the region of $2 billion per year.
Transparency and credibility and integrity need to be re-looked at, particularly at the global arena.
