How the Continent Can Navigate the Global Green Transition Without Sacrificing Development
When EU officials rolled out the Carbon Border Adjustment Mechanism in 2023, they sold it as environmental necessity: a way to stop “carbon leakage” and create fair competition for European manufacturers. But if you’re looking at this from Nairobi, Lagos, or Johannesburg, the CBAM looks like something else entirely: a $27 billion annual hit dressed up in the language of saving the planet.
Here’s the thing about Africa and climate change: the continent produces less than 4% of global emissions but is already experiencing warming faster than anywhere else. Over 110 million Africans felt those impacts in 2022 alone. Now, as rich countries pivot towards decarbonisation, African nations face an impossible-sounding challenge: How do you industrialise, lift millions out of poverty, and meet climate commitments all at once, whilst navigating trade rules increasingly shaped by carbon costs you had nothing to do with creating?
The $27 Billion Question
The maths here is brutal. Research from the African Climate Foundation and the London School of Economics projects the CBAM could shave 0.91% off Africa’s GDP (that’s $25 billion at 2021 levels), with EU exports potentially dropping by 5.72% if this gets expanded to all imports. For a country like Mozambique, where aluminium made up roughly 68% of total exports in 2024, this isn’t just concerning. It’s existential.
“Africa is likely to be more severely affected because we are more exposed than most other countries or regions,” says Professor Dave Luke from the London School of Economics. He points out that whilst 26% of African trade went to the EU, only 2.2% of EU trade came to Africa. That asymmetry isn’t just about economics; it’s a power imbalance that threatens to keep African economies stuck as commodity suppliers forever.
Look at the numbers: South Africa exported about $5.7 billion of iron and steel to the EU. Moroccan fertiliser exports hit $2.5 billion. Egypt sent $2 billion worth. Now these countries face carbon prices of €65-85 per tonne under CBAM, despite Africa producing around 1.5 billion tonnes of CO₂ in 2024, just 4% of the global total. Per capita, that’s 0.9 tonnes compared to 6.5 tonnes in the EU and 14.7 tonnes in the US.
Professor Faizel Ismail, who spent years as South Africa’s ambassador to the WTO and now directs the Nelson Mandela School of Public Governance at the University of Cape Town, doesn’t mince words: “The revenues raised would not support low-carbon transitions in developing countries, but simply add to the arsenal of protective subsidies they are providing to European companies.” He argues the CBAM appears to violate WTO principles, including the Most-Favoured-Nation principle.
The AfCFTA Lifeline
But here’s where it gets interesting. Africa’s best defence against these unilateral climate measures might already be in motion: the African Continental Free Trade Area. Joint modelling by the UN Economic Commission for Africa and CEPII shows that by 2045, intra-African trade will jump 34.6% (that’s $204.3 billion) compared to scenarios without the Agreement. Agrifood, services, and industry would see the biggest gains.
This isn’t just about moving more goods around. The AfCFTA represents a fundamental rethinking of how African economies work, one that could shield the continent from climate measures imposed by wealthy nations. Intra-African trade grew 7.2% year-on-year, hitting $192 billion and accounting for 15% of total African trade in 2023, up from 13.6% the year before, according to Professor Benedict Oramah, who runs the African Export-Import Bank.
“The AfCFTA is not just a trade agreement but a pathway to Africa’s sustainable and prosperous future,” Oramah writes in Afreximbank’s 2024 African Trade Report. He sees it as powerful for promoting sustainable development and driving industrial transformation whilst tackling climate change.
The strategy makes sense: deepen intra-African trade and you reduce dependence on European and American markets, build regional value chains that are naturally more carbon-efficient because of shorter distances, and negotiate from collective strength instead of fragmented weakness.
The financing chasm
But turning this vision into reality takes money. A lot of it. African countries face escalating climate bills, losing 2-5% of GDP on average to climate extremes, whilst adaptation costs run $30-50 billion annually over the next decade (that’s 2-3% of the region’s GDP).
At COP29 in Baku, Kenyan Prime Cabinet Secretary Musalia Mudavadi dropped a telling statistic: Africa received only 20% of international adaptation finance, about $13 billion from 2021-2022, and much of that came as loans, not grants, piling onto Africa’s already high debt levels.
“African economies lose up to 5% of GDP, on average, annually because of climate-related disruptions,” notes Claver Gatete, Executive Secretary of the UN Economic Commission for Africa. “Whilst African countries require adequate, predictable and accessible finance, the structure of existing climate finance continues to perpetuate inequities.”
Oramah at Afreximbank drives home another stark reality: Africa has seen a 30% reduction in agricultural productivity since 1961 because of climate change, higher than any other region. Yet the continent is expected to finance its own adaptation whilst facing carbon tariffs on its exports.
The carbon market opportunity
Maybe Africa’s path forward involves flipping the script, turning a climate liability into an asset. African tropical forests hold more carbon than scientists previously thought and sequester more than forests anywhere else in the world. About 26% of African land is classified as forest.
Both the Kyoto Protocol and Paris Agreement recognise carbon trading’s importance in fighting climate change, enshrined in Article 6 of the Paris Agreement. At COP29, negotiators agreed on international carbon market standards under Article 6.4, creating new ways for Africa to trade CO₂ certificates with heavy emitters and capitalise on its low per capita emissions.
The problem? Capacity gaps. Ghana worked with UNDP to set up a framework for implementing Article 6, along with the Ghana Carbon Registry for documenting and authorising carbon projects. But these efforts are scattered. Capacity building programmes like the Eastern Africa Alliance on Carbon Markets and the West African Alliance often work in silos with weak coordination, ineffective stakeholder engagement, limited sustainability, and insufficient private sector involvement.
South Africa has had a carbon tax since 2019, set at roughly €8 per tonne in 2024, well below the EU’s €65-85 per tonne benchmark. Nigeria, Ghana, and Kenya announced feasibility studies in 2023 to assess similar mechanisms. The revenue potential is enormous if structured right, but only if Africa can build the measurement, reporting, and verification systems to compete.
Building those MRV systems to comply with European standards carries serious costs, estimated at 0.5-1.5% of GDP. Without international support, smaller African economies will be effectively locked out of lucrative markets.
Policy imperatives: A four-point action plan
For African policymakers, business leaders, and civil society, four strategic moves stand out:
1. Accelerate AfCFTA Implementation with Environmental Integration
The UN Economic Commission for Africa proposes something radical: if Africa coordinates its approach to carbon markets, it can cut emissions whilst preserving most of the economic benefits from AfCFTA implementation.
UNCTAD advocates for an additional protocol linking trade to environmental considerations, a standalone chapter in the AfCFTA agreement, building on existing frameworks like the African Nature Convention or the African Guidelines for implementing the Nagoya Protocol and relevant aspects of the Paris Agreement.
Yet no decision has been made to negotiate a specific commitment or protocol on climate change or the environment under AfCFTA. This needs to change. Africa needs environmental standards that drive competitiveness, not just compliance costs.
2. Develop Continental Carbon Pricing Architecture
Rather than accepting Europe’s carbon price as a done deal, Africa should establish its own carbon pricing mechanisms that generate domestic revenue. Carbon taxes could keep $28 billion in Africa that would otherwise flow to European treasuries.
“Africa must ensure that increasing its agriculture production does not simultaneously increase GHG emissions and lead to further losses in bio-diversity,” notes a UN Economic Commission for Africa report. The agri-food sector should see some of the biggest benefits from AfCFTA, but countries need to reconcile this tension through investments in sustainable agriculture.
A continental approach would provide scale, prevent regulatory arbitrage, and position Africa as a rule-maker rather than rule-taker in global carbon markets.
3. Mobilise Trade Finance for Green Industrialisation
Closing the energy access gap will take over $25 billion annually through 2030. In 2024, Afreximbank alone disbursed more than $17.5 billion in trade finance, with plans to boost that to $40 billion by 2026.
But finance needs to flow to the right places. Studies by Vivid Economics, Oxford University, and UNECA for South Africa, DRC, and Egypt show that transitioning to the climate economy consistently delivers higher growth trajectories for African countries. South Africa’s Automotive Masterplan could double employment from 120,000 to 240,000, with 20% of production being electric vehicles by 2030.
Africa holds 39% of the world’s renewable energy potential but has received only 2% of global clean energy investment over the past two decades, a gap that threatens both Africa’s development and global climate goals.
4. Build Technical Capacity for Climate-Smart Trade
At the 13th Conference on Climate Change and Development in Africa, experts called for investing in integrated climate monitoring systems, early warning, and indigenous knowledge to close Africa’s data gaps and guide policymaking. Without robust data infrastructure, African exporters can’t demonstrate their products’ carbon intensity, ceding the narrative to importers.
“Without closing knowledge gaps, our people remain exposed to risks we cannot anticipate or manage,” warns James Kinyangi, Coordinator of the ClimDev-Africa Special Fund at the African Development Bank. “Investing in climate data and early warning is not optional; it is essential for saving lives and building resilience.”
The geopolitical stakes
The climate-trade nexus isn’t purely technical; it’s deeply political. At COP28, the BASIC group (Brazil, South Africa, India and China) tried to introduce “unilateral trade measures related to climate change” as an agenda item, which could have created an impasse in climate talks. The proposal got support from 134 countries but was excluded from the final agenda.
In June 2024, BRICS released a statement condemning trade policies introduced “under the pretext of environmental concerns,” like “unilateral and discriminatory” CBAMs. This language also appeared in the declaration for the BRICS Summit in October 2024.
These coalitions matter. South Africa belongs to both BRICS and the African Union, creating diplomatic leverage that smaller African nations lack individually. At the continental level, AfCFTA convened a ministerial session in 2024, calling for a coordinated position on CBAM and exemptions for the 33 African countries classified by the UN as Least Developed Countries.
Professor Ismail advocates for multilateral engagement: “We should be demanding that the EU, the US, China and others really engage at the multilateral level, as there needs to be greater coherence between the UN Framework Convention on Climate Change, the WTO and the G20 on finance and how we can collectively avoid ‘war games’ in the climate space or the green space.”
From rhetoric to reality
Moving forward means African leaders need to get past summit declarations and make hard policy choices. Mithika Mwenda, Executive Director of the Pan African Climate Justice Alliance, puts it bluntly: “Africa cannot afford to be trapped in endless pledges whilst our people suffer.”
The 13th Conference on Climate Change and Development in Africa identified five priorities: science and data infrastructure; adaptation and loss/damage finance; transforming climate finance from aid to investment ($2.5-3 trillion annually by 2030); just energy transition with universal access; and governance coherence under African Union leadership.
“This conference was not an end in itself,” concluded Claver Gatete. “It is a bridge that links evidence with ambition, technical depth with political momentum, and Africa’s aspirations with actions. Africa is not waiting to be acted upon. We are shaping our destiny, leveraging our resources, and bringing solutions to the world.”
The real question is whether that shaping happens fast enough to prevent the continent from bearing disproportionate costs for a climate crisis it didn’t create, whilst being shut out of markets by carbon measures it can’t afford to meet. The answer will determine whether trade agreements and climate policy become Africa’s greatest strategic opportunity or its most devastating economic trap.
For Africa, the green transition can’t be just green; it has to be just. And justice here means the right to industrialise, the right to energy access for 600 million people still living without electricity, and the right to compete on fair terms in global markets. Anything less isn’t climate policy. It’s neo-colonialism wearing a new mask.
Prepared by EB Analysis Desk; This article draws on research from the African Climate Foundation, London School of Economics, UN Economic Commission for Africa, African Export-Import Bank, World Bank, and proceedings from COP28, COP29, and the African Climate Summit. It represents views from across African institutions, civil society, and academic experts engaged in climate-trade policy.
