Dr. Akinwumi Adesina, President of the African Development Bank (AfDB) Group, has cautioned that a new EU carbon border tax might considerably impede Africa’s trade and industrialisation progress by penalizing value-added exports such as steel, cement, iron, aluminum, and fertilizers.
Adesina told delegates at the Sustainable Trade Africa Conference held at the UAE Trade Centre in Dubai that, “With Africa’s energy deficit and reliance primarily on fossil fuels, particularly diesel, the implication is that Africa will be forced to export raw commodities again into Europe, further contributing to Africa’s de-industrialization. Africa could lose up to $25bn per annum as a direct result of the EU carbon border tax adjustment mechanism.”
According to data from the International Renewable Energy Agency, Africa is already being disregarded in the global energy shift. Adesina added that “Africa received just $60bn or two per cent of the $3tn 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.”
Adesina advocated for policies he called “Just Trade-for-Energy Transition,” which would enable Africa’s renewable objectives without limiting its trade prospects stating that Africa would need to adopt natural gas as a transition fuel to lessen the unreliability of renewable energy and stabilize its energy infrastructure in order to sustain its industrialization.
According to Walid Alfalahi, Chief Executive Officer of the UAE Trade Centre, Africa is the new frontier for investment, contrary to popular belief that the continent is a hazardous and difficult location to do business.