By Thuku Kariuki

With a fair carbon market system, Africa could generate over USD 82 billion through the sale of carbon credits, Claver Gatete, Executive Secretary, United Nations Economic Commission for Africa (ECA) says in an exclusive interview.

How has climate change affected African economies this far?

Well, the estimate is that actually it is affecting the African countries by reducing the GDP by 5% on average. But some countries they go up to 15% GDP being affected and sometimes it happens because we didn’t have the loss and damage fund. We find that some of the countries are allocating an extra 9% of their budget to go to address the issues of climate. You saw it in Malawi. You are seeing it in the island states. We are seeing it in many other countries with the fires and other things where you have to have unplanned and unpredicted expenditure that is going to climate. So many African countries are being affected and it’s just a matter of time before many more are affected and that’s why we are coming up with this issue of funds for mitigation and funds for adaptation.

How is the loss and damage fund going to help and how are African countries going to access it?

With the loss and damage fund, they have announced USD 656 million for the loss and damage fund in this COP so far. We are assisting the Member countries on coming up with a process, a procedure, a guideline on how to access it.

What are the measures that UNECA together with African governments are taking to curb the climate excesses?

We are working with Member countries first of all, to come up with carbon credit frameworks. The market has not been fair. In some countries it goes up to over USD 100 per ton. But in the African countries it goes even up to below USD 10 per ton. So, the market is not fair. We are now helping the countries to do it properly, to have registries, to have the protocols that conform to the international standards so that you can get the better price for your mineral. Just to give you an example, if we are selling it at the same level as the West, which is USD 120 per ton, then on an annual basis, Africa will generate USD 82 billion and that is more than one and a half times the amount that we get in terms of aid. So that shows that we have the potential to be able to generate all the resources that will be invested to prevent this kind of climate effect. So, it’s very, very important for us to understand what this means so that we can create our own market, the registry that conforms to international standards, with the support of the Economic Commission for Africa.

What are the biggest challenges that you would say Africa is facing in trying to achieve climate resilience?

One, is the finance, because this is happening at a time, we are struggling with the effects of the COVID-19, the the high cost of debt and also other shocks, including the war in Ukraine. Then, with the inflation being very high, countries are struggling to pay the foreign exchange and pay their own debt. They don’t have a room because the resources they get from the international financial institution are not enough. I’m talking about the concessional resources. That’s why we are debating on the reform of the international financial architecture. That’s the biggest challenge because the starting point is already finding the countries having very small fiscal space. And that’s why they don’t have the investment to be able to invest in these kinds of projects. But we can start small. We don’t have to start on a big scale. We can start small and then expand accordingly. And one of the opportunities that we have is that we can de-risk these projects and then we bring in the pension funds, we bring in the social and wealth funds to be invested here. Initially the external investment has been a problem because of the perception of risk. But if we take out the risk, then the foreign investment combined together with the domestic investment can really make a big difference.

Are there any set timelines? And if there are, which timelines are there? What has to be achieved?

There are things you cannot put a timeline, because the people who come to invest and also how things are done is not what is determined by us as ECA. What we normally do is provide the capacity and also help them to bring in the private sector and other countries to help us in terms of developing. It’s not a quick fix, but we need to start somewhere. That’s why we cannot, we are not the only ones who determine really how this one should be, but that’s why we are saying that this one is a work in progress but it’s good that it’s now starting.

Which projects are you already facilitating as the Economic Commission for Africa?

We have the DRC and Zambia project which is beginning now. We are creating a market, creating a special economic zone where there is the ecosystem that is going to help in terms of producing the battery electric vehicles (BEV). When we do it on the African continent, then it will generate USD 46 trillion by 2050 and USD8.8 trillion by the year 2025 according to estimates by ECA and Bloomberg.

But this will have to go step by step. Doing the right investment, de-risking, bringing back the African resources that were being invested outside because there’s no risk to fear, then you can invest your own money and you know that you are going to get a return, at the same time we create a market on the African continent. It creates jobs, it creates everything. So, everybody gains on the African continent.