Climate crisis opportunity for Africa to break dependency cycle — AfCFTA Secretary-General

The climate crisis is a crucial opportunity for African countries to break the cycle of dependency by prioritising green industrialisation, critical minerals processing and renewable energy production, the Secretary-General of the Africa Continental Free Trade Area (AfCFTA), Wamkele Mene, has stated.

He added that African countries needed to strategically position themselves to diversify their economies through increased green productive capabilities and also invest in climate competitive value chains, green infrastructure, agricultural modernisation, climate adaptation and resilience as well as critical minerals production.

Mr Wamkele made the call last Friday, at the Sustainable Trade Africa (STA 2024) a side event at the ongoing 29th Conference of Parties (COP29) of the United Nations Framework Convention on Climate Change (UNFCCC) in Baku, Azerbaijan.

STA 2024

The event, which brought together African policymakers, heads of ministries, departments and agencies (MDAs) in the trade and climate space, and private sector players, including the Jospong Group of Companies (JGC), was focused on sustainable trade and climate resilience in Africa.

It was aimed at pitching Africa’s green economic potential to the rest of the world and wooing investors across the continent to channel their resources into the untapped green economy of the continent. 

Context

The African Continent has a combined population of 1.4 billion people with a gross domestic product (GDP) that is estimated to reach $16.2 trillion by 2035.

Despite the continent's abundant resources, historically, it has contributed only three per cent to global trade with the intra-Africa trade not exceeding 20 per cent of total trade. 

That situation tells a lot about the continent's significant reliance on the export of unprocessed raw materials and highlights the lack of diversified economies.

Bottlenecks

Mr Wamkele said it was worrying that although Africa was abound with opportunities for economic transformation and sustainable development, countries on the continent faced complex challenges such as high external debt, limited climate finance flows and negative spillovers from trade policies.

Among other things, challenges such as market fragmentation, overreliance on the export of unprocessed commodities, and the lack of a common currency remain major challenges that must be overcome for the continent to fully tap the potential of AfCFTA.

He said the fact that the African continent had 42 currencies further entrenched market fragmentation while underdeveloped manufacturing capacity was a wet blanket to value addition on the continent.

Investments potential

Leveraging the global platform to woo investors into Africa, Mr Wamkele said the AfCFTA had proven to provide a stable and predictable trading environment that could help to de-risk investments in sustainable projects, which were often perceived as high risk by foreign investors.

He noted that much progress had been made four years after the implementation of AfCFTA.

For instance, he said trading that had started initially among seven countries, had increased to 39 countries, trading on a range of different products that were not just basic agricultural products, but value-added products.

"We commit ourselves to use the AfCFTA as an instrument for transformation of Africa's problem. We are not just creating a single market, which is an important objective, but given the challenge that we face of climate change, we have had to adapt this agreement to be an agreement that is also responsive to Africa's need for low carbon development pathway that supports our ambitious goals for a net zero future," he said. 

Green industrialisation, commitment

Mr Wamkele said in response to the global green transition, AfCFTA had collaborated with many countries to roll out the Africa Green Industrialisation initiative.

He said the framework that had been developed for the green agenda would ensure that African countries continued on the path of green industrialisation, adding to the production of critical minerals, as well as accelerating the projects in renewable energy.

While working towards unlocking the trade and industrialisation potential of Africa, he underscored the need for developed countries to keep their climate finance promises to help accelerate the process. 

"Commitments were made in COP 28 in Dubai, and very significant amounts of commitments remained.

"I think objectively, we can all agree that the international community has fallen short of the commitments that were made.  

“Where we are to accelerate towards net zero by the year 2050, much resources and investment will be required to be channelled to Africa, to assist and to support the transition to net zero," he said.