…say it must encompass vast carbon-absorbing greenery
Business and political leaders from across the continent have amplified the need to reevaluate Africa’s gross domestic product (GDP) through a comprehensive assessment of its natural capital and ecosystem services, including its vast forests which play a crucial role in absorbing carbon emissions and enhancing the continent’s wealth.
The call for revaluation is grounded in the belief that by properly accounting for Africa’s abundant natural resources, the continent can provide a more accurate reflection of its production levels. This, in turn, will make African countries more appealing as investment destinations and help bridge existing economic disparities.
Speaking at the just concluded inaugural Africa Climate Summit (ACS) in Nairobi, Kenya, from September 4 to 6 2023 – where the Nairobi Declaration on Climate Change and Call to Action was adopted, they argued that: “Africa possesses immense natural wealth, from its lush forests to its diverse ecosystems; and we must recognise their value. By incorporating natural resource accounting and establishing national accounting standards, we can better assess our true economic potential”.
One of the central issues raised at the summit was disproportionate borrowing costs that developing countries in Africa face compared to wealthier nations – referred to as the ‘great financial divide’. Leaders highlighted that this financial disparity has been a major contributor to recurring debt crises in the region, hindering investment in development and climate action.
Expressing the urgency of the situation, they stated: “We need responsible sovereign lending practices and greater accountability: including comprehensive credit rating, risk analysis and debt sustainability assessment frameworks. We call upon financial markets to eliminate this disparity by 2025”.
In addition to addressing the financial divide, leaders discussed the importance of designing global and regional trade mechanisms that enable African products to compete fairly on international markets. They emphasised building resilience to climate shocks and deploying special drawing rights (SDRs) to bolster climate adaptation efforts, proposing the re-channeling of at least US$100billion of SDRs to Africa.
The summit also suggested consideration of a new SDR issue dedicated to climate crisis response – of a magnitude similar to the COVID-19 issue. Leaders underscored the need for better leverage of multilateral development banks’ (MDBs) balance sheets to scale-up concessional finance and improve debt management.
Regarding international tax cooperation, leaders urged action to reduce Africa’s annual loss of US$27billion in corporate tax revenue through profit-shifting. They called for measures to attract private capital, such as blended finance instruments, purchase commitments and foreign exchange guarantees. They again advocated the redesign of MDBs’ governance for greater inclusivity.
In the energy sector, leaders set ambitious goals to increase Africa’s renewable generation capacity from 56 GW in 2022 to at least 300 GW by 2030. They emphasised the importance of shifting energy-intensive primary processing back to Africa in support of renewable energy development and reducing global emissions. Additionally, leaders stressed the importance of accessing and transferring environmentally-sound technologies to support green industrialisation on the continent.
The summit also reemphasised the global makeover to a low-carbon economy, calling for investments of at least US$4 to US$6trillion per year; urging world leaders to consider a global carbon taxation regime including a carbon tax on fossil fuel trade, maritime transport and aviation, as well as a global financial transaction tax (FTT) to fund climate-positive investments.
They also welcomed pledges and commitments of US$26billion from development partners to support Africa’s renewable energy and adaptation efforts, which they say marks a significant step forward in the pursuit of a sustainable and equitable future for the continent.