President of the African Development Bank (AfDB), Akinwumi Adesina, has expressed serious concerns about the impact of the European Union’s Carbon Border Adjustment Mechanism (CBAM) on Africa.
Adesina estimates that Africa could face annual losses of up to $25 billion due to CBAM. Speaking at the Sustainable Trade Africa Conference during Cop28 in Dubai, Adesina argued that CBAM could significantly hinder Africa’s trade and industrialisation by penalising value-added exports such as steel, cement, iron, aluminum, and fertilisers.
He highlighted the potential consequences of CBAM, stating that Africa, with its energy deficit and reliance on fossil fuels, may be forced to export raw commodities to Europe, leading to further de-industrialisation on the continent. Adesina emphasised the negative impact of climate change on Africa and warned of the potential unfairness in global trade.
The CBAM, which entered its transitional phase on October 1, aims to combat carbon leakage by equalising the price of carbon between domestic products and imports. The mechanism initially applies to imports of carbon-intensive goods such as cement, iron and steel, aluminum, fertilisers, electricity, and hydrogen. Adesina raised concerns about the mechanism’s compliance with the principles of the Paris Accord, calling for “Just Trade-for-Energy Transition partnerships” to address the potential negative consequences for Africa’s renewable ambitions and trade prospects.
In addition to Adesina’s concerns, Benedict Oramah, the president of Afreximbank, warned of the financial costs associated with rapid decarbonisation in Africa, citing a study that revealed potential cuts of $150 billion in merchandise exports due to such efforts.
Between Depleting Workforce And Declining Productivity