November 13, 2024

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Afreximbank Calls for Increased Collaboration to Accelerate the Green Energy Transition in Africa

L-R: Mr. Haytham Elmaayergi, Executive Vice President, Global Trade Bank at Afreximbank, H.E. Prof. Benedict Oramah, President and Chairman of Board of Directors of Afreximbank, Professor Yemi Osinbajo, SAN, GCON, the Immediate Past Vice President of the Federal Republic of Nigeria, H.E. Monique Nsanzabaganwa, Ph.D. Deputy Chairperson, African Union Commission and Mr. Dennys Denya, Senior Executive Vice President, Afreximbank

The Keynote speaker at the eighth Babacar Ndiaye Lecture in Washington, D.C., Professor Yemi Osinbajo, spoke about the role of the AfCFTA in Addressing Africa’s climate Change and Development Challenges

The eighth Babacar Ndiaye Lecture held at the Four Seasons Hotel in Washington D.C., on 26 October 2024, underscored the need for African nations to strike a balance between short-term development imperatives and long-term climate goals.

Under the theme “Saving Lives Today versus Saving the Planet for the Future: Can the AfCFTA Resolve the Climate Change Dilemma?” discussions centred on how the African Continental Free Trade Area (AfCFTA), Africa’s most ambitious trade initiative, could serve as a vehicle for economic growth and environmental sustainability, positioning the continent as a leader in the global green transition. 

The Lecture drew a distinguished audience of policymakers, academics, financial experts, and climate advocates. 

Speaking about Dr. Babacar Ndiaye in his opening remarks, H.E. Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank Group, said “Dr Babacar Ndiaye was most concerned by the long-term threats posed to humanity by climate change. He once said, “Climate change is the greatest threat to development, particularly in Africa, where millions of people depend on the environment for their livelihoods … Africa’s economic transformation cannot happen without addressing climate change.” 

Dr. Ndiaye’s reflection on the impact of climate change was spot-on and intellectually deep.” But, “disappointingly, the global debate on climate has been so much focused on emissions reduction with the question of reducing its impact on Africa and other developing countries always reduced to a footnote. A call for Africa to decarbonize, when the continent has not even carbonized, poses a serious threat to the socio-economic development of a gas-rich continent that has at least six hundred million people without electricity.”

The African Continental Free Trade Area Agreement “is seen as a potent means of reducing carbon emissions as it is helping to domesticate industrial activities and minimize the carbon emissions caused by shipping of commodities to far-away lands for value addition and reshipping to Africa and elsewhere. We believe that The AfCFTA could offer a pathway to a just transition, enabling local industrial value addition while protecting the planet.” 

Professor Yemi Osinbajo, SAN, GCON, the Immediate Past Vice President of the Federal Republic of Nigeria, delivered a powerful address titled “Sustainable Infrastructure for Africa’s Future: Harnessing Innovation and Partnerships.” He spoke passionately about the advantages of the AfCFTA and its potential to transform Africa’s trade landscape, reduce carbon emissions, and foster innovation in green industries.

The reduction of emissions by intra-African trade has been the subject of several empirical studies. Professor Osinbajo referred to a recent ECA/ CEPII study titled “Greening the African Continental Free Trade Area Agreement’s Implementation” published in December 2023, which found, inter alia, that implementing the AfCFTA can boost intra-African trade by 35% in 2045 while increasing GHG emissions by less than 1%, compared to no AfCFTA or climate policies. 

These studies do not factor in using renewable energy sources in the processing and manufacturing of traded goods, an assumption of the Climate Positive Growth paradigm, which would again substantially reduce emissions. 

Professor Osinbajo cited mining bauxite in Guinea as an example. If Guinea, which has 25% of global deposits of bauxite, processed the bauxite it mines to aluminium with renewable energy in readiness for export, Guinea could save the world 335 million tonnes of carbon dioxide equivalent (CO2e) per year, which is approximately 1% of global emissions, and create 280,000 jobs and generate $37 billion of additional revenue. If it chooses to sell the aluminium within Africa, it will again save the huge shipping cost to countries thousands of miles away. 

A Bloomberg study done for the African Development Bank (AfDB) in 2021 on the manufacture of battery precursors found that manufacturing battery precursors in the Democratic Republic of the Congo (DRC), which has plenty of lithium and cobalt, is three times cheaper than manufacturing it in the US, EU, and China. Manufacturing in the DRC would extend value chain opportunities to other African countries, they would need manganese from Zambia, Tanzania, Gabon, and South Africa to contribute to its capacity to produce these battery precursors. Manufacturing using renewable energy could significantly reduce the cost of manufacturing. Africa’s abundant renewable energy has very low seasonality or intermittency, making it possible to reliably provide a renewable baseload to power continuous industrial production.

In her Goodwill Message, Ms. Amina J. Mohammed, Deputy Secretary-General of the United Nations and Chair of the United Nations Sustainable Development Group, spoke about the rapidly closing window to prevent the worst impacts of climate change. She addressed the fact that many African countries are mired in debt, exacerbated by extended crises with little access to long-term concessional financing to invest in sustainable development. 

“With adequate access to financial resources at a reasonable cost, renewables can dramatically boost economies, grow new industries, create jobs, and drive development, including by reaching the over 600 million Africans living without access to power,” said Ms Mohammed. 

She also stressed the importance of prioritizing inclusive policies that empower women and youth when building climate-resilient economies.  

“By harnessing the collective might of the AfCFTA, Africa can make strides in addressing both climate action and sustainable development by promoting regional integration and fostering green industrialization.  

“The AfCFTA can help build climate-resilient economies while creating jobs, reducing poverty, and strengthening food security.”  

The eighth Babacar Ndiaye Lecture also reinforced Afreximbank’s commitment to leadership in financing sustainable infrastructure and trade policies across the continent. 

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