European Union’s Carbon Border Adjustment Mechanism (CBAM) has been designed to incentivize cleaner manufacturing practices in countries from which it imports goods.
Starting in October on a temporary basis, the CBAM will implement a carbon tax on exports bound for the European Union.
But the measure has elicited concern in Africa which counts Europe as a major export market.
A study carried out by the African Climate Foundation and the London School of Economics suggests that the CBAM’s economic repercussions will be ‘far-reaching’ and most strongly felt in Africa.
Their modelling based on €87 per ton suggests that the CBAM would lead to around $25 billion in losses based on 2021 GDP levels, nearly four times higher than what the EU gave to Africa in development assistance in 2021.
Products such as iron and steel, cement, aluminium, fertiliser, hydrogen, and electricity – which make up a significant portion of Africa’s exports to Europe, will be the first victims of the mechanism.
After 2026, the CBAM’s scope will extend to other products, potentially leading to bigger economic loss.
Experts say the measure is punitive, and dramatically reduces the space for developing countries to achieve growth and to create jobs.
Our guest this week is Faten Aggad, the senior advisor climate diplomacy and geopolitics at the African Climate Foundation.
Uganda mulls zero tax on electric cars
Uganda is racing to switch to e-mobility despite having limited infrastructure in the country. Authorities say waiving tax on electric vehicle imports will encourage mass adoption.
The goal is to reduce pollution and to improve Kampala’s green credentials.
East Africa sees record growth in FDI
East African countries defied economic turbulence in 2022 to post a 17 percent growth in foreign direct investment, with South Sudan and Kenya seeing the highest percentage increases.
On the contrary, Inflows fell in Southern, western and central Africa.