Freetown, SIERRA LEONE – Akinwumi Adesina, President of the African Development Bank Group, delivered a stark warning at the Sustainable Trade Africa Conference hosted at the UAE Trade Centre in Dubai, cautioning that Africa could face annual losses of up to $25 billion due to the newly implemented EU Carbon Border Tax Adjustment Mechanism.
Adesina highlighted the potential adverse impacts of the EU’s Carbon Border Tax, asserting that it could significantly impede Africa’s trade and industrialization progress. The tax is poised to penalize value-added exports like steel, cement, iron, aluminum, and fertilizers, posing challenges for African economies.
Expressing concern over Africa’s energy deficit and heavy reliance on fossil fuels, particularly diesel, Adesina underscored that this situation might force Africa to revert to exporting raw commodities to Europe, exacerbating the de-industrialization of the continent.
“Africa, already grappling with climate change repercussions, is now facing potential trade constraints,” Adesina stated. He emphasized that Africa’s strongest trade potential lies in intra-regional exchanges, particularly with the new Africa Continental Free Trade Area, projected to boost intra-Africa exports by over 80% by 2035.
Adesina highlighted a concerning trend, citing data from the International Renewable Energy Agency, indicating that Africa received a mere 2% of the $3 trillion global investments in renewable energy over the past two decades. This lack of investment could negatively impact Africa’s ability to competitively export to Europe.
Advocating for what he termed Just Trade-for-Energy Transition (JTET) policies, Adesina stressed the necessity of aligning Africa’s renewable energy ambitions with trade facilitation, allowing the continent to leverage renewable energy without hampering its trade prospects.
He warned that the imposition of carbon border taxes could severely restrict the exports of value-added products such as cement, iron, steel, aluminum, and fertilizers. Adesina concluded, “Amidst the challenges posed by climate change, Africa, already affected, should not face additional constraints from trade-restrictive carbon border taxes that would further harm the continent.” ZIJ/17/12/2023