Victor Ezeja
AdminPresident of the African Development Bank (AfDB) Dr. Akinwumi Adesina has warned that a new European Union (EU) carbon border tax could significantly constrain Africa’s trade and industrialization progress by penalizing value-added exports including steel, cement, iron, aluminum, and fertilizers.
Adesina, while speaking at the Sustainable Trade Africa Conference held at the UAE Trade Centre in Dubai on the sidelines of COP28, said, “Africa could lose up to $25 billion per annum as a direct result of the EU Carbon Border Tax Adjustment Mechanism.
“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 the de-industrialization of Africa.”
He regretted that Africa which is already short-changed by climate change is further taken advantage of in global trade as the continent is already being overlooked in the global energy transition, according to data from the International Renewable Energy Agency.
His words, “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.
“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”
The AfDB President pointed out that 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.
Africa’s default rate, according to the report, 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.
According to him, “I’m talking about a different Africa. There is no project that as partners, we cannot handle.”
In his presentation, 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,” he said, recounting his positive experience of investing in a number of projects in Africa.
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