Akinwumi Adesina, President of the African Development Bank Group, has voiced concerns over the potential consequences of the proposed EU carbon border tax on Africa’s trade and industrialization initiatives.
Adesina cautioned that the imposition of a carbon border tax could pose a substantial obstacle, particularly affecting value-added exports like steel, cement, iron, aluminum, and fertilizers. This could potentially hinder Africa’s advancements in these sectors and impede its industrial progress.
He underscored the risk of de-industrialization for Africa, highlighting the continent’s energy deficit and dependence on fossil fuels. He pointed out that this situation could result in potential annual losses of up to $25 billion due to the impact of the EU Carbon Border Tax Adjustment Mechanism.
The Bank President suggested intra-regional exchanges as Africa’s best trade opportunity, with the Africa Continental Free Trade Area expected to increase exports by 2035.
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 the de-industrialisation of Africa.”
“Africa could lose up to $25 billion per annum as a direct result of the EU Carbon Border Tax Adjustment Mechanism,” the Bank President told delegates at the Sustainable Trade Africa Conference held at the UAE Trade Centre in Dubai.
“Africa has been short-changed by climate change; now it will be short-changed in global trade,” the Bank President said.
“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.”
According to data from the International Renewable Energy Agency, Adesina stressed that Africa was already being overlooked in the global energy transition.
“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 stabilise its energy systems in support of its industrialisation,” Adesina said.
