AFRICA COULD LOSE
AFRICA COULD LOSE -BILLION PER YEAR The EU’s newest carbon tax could significantly harm African trade, according to African Development Bank Group President, Dr Akinwumi Adesina. African Development Bank Group President Dr Akinwumi Adesina has warned that a 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. Speaking at the Sustainable Trade Africa Conference held at the UAE Trade Centre in Dubai, Adesina said, “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 de-industrialisation of Africa. “Africa could lose up to -billion per annum as a direct result of the EU Carbon Border Tax Adjustment Mechanism,” the bank president told delegates. “Africa has been short-changed by climate change; now it will be short-changed in global trade,” added Adesina. “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.” Adesina stressed that Africa was already being overlooked in the global energy transition, according to data from the International Renewable Energy Agency. “Africa received just -billion or 2% of the -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 stabilise its energy systems in support of its industrialisation, Adesina said. The Chief Executive Officer of the UAE Trade Centre, Walid Mohammed Hareb Alfalahi, said that Africa is the new frontier for investment, contrary to widespread perceptions 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,” said Alfalahi, as he recounted his positive experience of investing in a number of projects on the continent. Adesina said 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. According to the report, Africa’s default rate stands at 5.5%, compared to Latin America’s 12.9%, followed by Asia at 8.8%, Eastern Europe 8.6%, North America 7.6% and Western Europe 5.9%. 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 -billion liquefied gas project, the .2-billion Abidjan-to- Lagos Highway corridor covering five countries and the .6-billion Tanzania-to- Burundi and DR Congo railway line. “I’m talking about a different Africa. There is no project that as partners, we cannot handle,” said Adesina. The conference, moderated by the African Development Bank President’s Senior Adviser for Communication, Dr Victor Oladokun, was also addressed by the President of the African Export-Import Bank (Afreximbank), Professor Benedict Oramah. He warned, “Preliminary results of a study recently commissioned by Afreximbank reveal that rapid decarbonisation by fossil fuel-exporting countries in Africa could cut merchandise exports by 0-billion.” About the African Development Bank Group The African Development Bank Group (AfDB) is the premier multilateral financing institution dedicated to Africa’s development. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NSF). The AfDB has a field presence in 41 African countries with an external office in Japan, and contributes to the economic development and social progress of its 54 regional member states. For more information: www.AfDB.org 20
CARBON TAX Two of Africa’s most consequential financial office-holders spoke at the Sustainable Trade Africa Conference, which was held in Dubai. Pictured with the Chief Executive Officer of the UAE Trade Centre, Walid Hareb Al Falahi, left, and Mahmood Albastaki, the Chief Operating Officer, Digital Trade Solutions at DP World, right, are Dr Akinwumi Adesina, President of the African Development Bank Group, centre left, and Prof Benedict Oramah, President of the African Export-Import Bank (Afreximbank), centre right. 21
