Kingsley Ighobor: Sierra Leone Telegraph: 20 November 2023:
Antonio Pedro, the acting executive secretary of the United Nations Economic Commission for Africa, recently discussed Africa’s development with Africa Renewal’s Kingsley Ighobor. Mr. Pedro highlights the benefits of the African Continental Free Trade Area (AfCFTA) for African economies, the promise of carbon credits and the prospects of Africa’s blue economy. The following are excerpts from the interview:
How does the AfCFTA support Africa’s development?
We could liken AfCFTA to Africa’s Marshall Plan. Why? It aims to strengthen the business fundamentals of the continent. Given the small size of our individual economies, we need to leverage a multiplier effect, creating a single, integrated market to attract investments.
But, to achieve a multiplier effect, we need to address many challenges such as our infrastructural shortcomings. The Programme for Infrastructure Development in Africa aims to address some of those.
We also need to address the legal and regulatory misalignments that are barriers to trade. At the African Union Commission Summit last February, the Assembly adopted three important protocols related to competition, investment and intellectual property rights.
These protocols serve as catalysts for the AfCFTA to drive Africa’s structural transformation and as pillars for the emergence of a globally competitive value chain on the continent. For sure, a market of 1.4 billion people, projected to reach 2.5 billion people by 2050, presents a substantial incentive for investors. Such a market would be the combined size of China and India today.
Africa could generate $82 billion annually if we could sell sequestered carbon at $120 per tonne.
Is the AfCFTA implementation progressing as you expected?
We need to celebrate certain milestones. Notably, unlike many other continental blueprints, we secured the ratification of the AfCFTA in record time. The UN Economic Commission for Africa (ECA) and other stakeholders supported that exercise by raising stakeholders’ awareness of the ways in which the AfCFTA could address their concerns and challenges.
So far, we have about 30 national AfCFTA strategies, which lay the foundation for intra-African trade. While we are in the early stages, we already see promising signs of trade, such as Kenya’s tea exports to Egypt.
These are baby steps. To implement the AfCFTA fully, we need to do more, such as domesticating the protocols in national laws and regulations. However, the protocol on the free movement of goods and services is still a problem. This protocol is very important because we cannot trade without it.
In light of the Moroni Declaration, do you see Africa’s blue economy as the next big thing?
It’s huge! The Moroni Declaration, originating in a conference in Moroni, the capital of the Comoro Islands, was about island states and climate action.
The declaration recognized that Africa’s island states suffer from the same predicaments as its landlocked countries, which now have land-linked strategies. One observation that informed the declaration was that our island states are essentially sea-locked, somewhat segregated from existing regional integration frameworks. We need to make the connection, moving from sea-locked to sea-linked.
The blue economy presents an opportunity for island states to participate meaningfully in Africa’s structural transformation.
In addition, the blue economy presents an opportunity for island states to participate meaningfully in Africa’s structural transformation.
We also looked at the state of port infrastructure. Many ports are in the river mouths. We need to dredge those ports to accommodate larger container ships. The sea-linked agenda includes constructing deep seaports in island states so that they can position themselves as trans-shipment hubs.
We looked equally at merging nature conservation, climate action and the use of carbon credits to generate revenue streams for sustainable livelihoods.
The Moroni Declaration and the Great Blue Wall Initiative launched at COP26 [in Glasgow] underpin efforts to develop Africa’s blue economy, which would increase the conservation of our marine ecosystems from about 3 per cent to 30 per cent.
For most African countries, we are also talking about value addition in the fisheries sector. In sum, these initiatives could generate up to a million jobs for young people.
The projected value of the carbon credit market is $120 billion by 2050. How does Africa benefit from this market and where are its primary entry points?
The Congo Basin is one of those entry points. It is the world’s second-largest lung, after the Amazon. Its wetlands have huge carbon sequestration potential. To create a carbon credit market, the ECA is working with the Congo Basin Climate Commission to develop a credible registry and realize a more competitive price for each tonne of carbon sequestered.
Our data suggests that Africa could generate $82 billion annually if we could sell sequestered carbon at $120 per tonne. This is more than the continent currently receives from the Official Development Assistance of the Organisation for Economic Co-operation and Development.
In Africa’s Sahel region, carbon credit is about harnessing the full potential of solar energy to transform the livestock sector. For example, countries like Chad and Niger possess 100 million and 20 million heads of cattle, respectively. Yet, they cannot fully utilize these resources because of the lack of cold chains and meat processing facilities, both of which rely on energy availability.
Solar energy will create jobs and other economic opportunities and reduce the prospects of extremist groups like Boko Haram recruiting young people. Producers of solar can convert the energy produced into carbon credits, while simultaneously attracting socially conscious investors.
Furthermore, the Horn of Africa holds significant promise in this sector
Through climate action debt swaps, countries could exchange debt for a commitment to undertake renewable energy projects.
How long will Africa take to benefit tangibly from carbon credits?
In February this year, we held the Africa Business Forum under the theme, “Making carbon markets work for Africa.” Thereafter, we began working with countries on this issue through the African Carbon Market Initiative.
As part of the same dynamic, we are introducing climate action debt swaps, meaning that countries could exchange debt for a commitment to undertake renewable energy projects. For example, Cape Verde recently negotiated a debt swap with Portugal valued at approximately $150 million.
We want to generate more such agreements, as Africa needs an ecosystem conducive to transformational leadership and change, where leaders coordinate their actions with speed, scale, and intention. (Photo: Antonio Pedro).
What reforms would you like to see in the global financial architecture?
The United Nations Secretary-General [António Guterres] has been clear that the existing global financial architecture is not fit for purpose.
We have advocated for the reallocation of special drawing rights (SDRs), issued by the IMF. The African Development Bank (AfDB) proposed rechanneling these SDRs through multilateral development banks such as the AfDB to strengthen their capacity for assisting member states more effectively.
The Secretary-General also proposed an annual $500 billion stimulus for developing countries. We are looking at an evolution of the World Bank, to make it more agile and less bureaucratic, so that member states can access resources faster and at higher volumes.
We also intend to engage on the problem of credit ratings of our member states. These ratings do not currently reflect the real risk profile of these countries. We need to interrogate the methodology behind the credit ratings, which are making financing unaffordable.
How close are your ideas to reality?
It is a long, complicated success. While we recognize the challenges, we want to harness the opportunities. Africa possesses the leadership, the determination, the strategies and the opportunities to achieve the SDGs.
You can read the first part of Jingsley’s interview here.