Why is the AfDB joining the African Carbon Markets Initiative?

Despite the controversy surrounding the issue of carbon credits, the African Development Bank (AfDB) intends to participate in the development of this mechanism in Africa. The pan-African financial institution has announced that it will join the African Carbon Markets Initiative (ACMI) on 30 May 2024. The announcement was made at a round table organised as part of the AfDB’s Annual Meetings, which ended on 31 May in Nairobi, Kenya.

For Kevin Kariuki, AfDB Vice President in charge of Electricity, Energy, Climate and Green Growth, this “strategic decision” should enable African countries and the private sector to obtain additional resources to combat climate challenges. ACMI was launched at the 27th United Nations Conference of the Parties on Climate Change (COP27) in Sharm el-Sheikh, Egypt.

Contributing to financial innovation in Africa?

The aim was to develop voluntary carbon markets in Africa, while strengthening the continent’s contribution to the global reduction in carbon dioxide (CO2) emissions under the Paris Agreement. The Nairobi-based ACMI is led by the Global Energy Alliance for People and Planet (GEAPP), Sustainable Energy for All (SEforALL) and the United Nations Economic Commission for Africa (UNECA).

By joining, the AfDB “commits to establishing a mechanism to support carbon market initiatives across our continent”, promises Kevin Kariuki. According to Kariuki, this initiative will contribute to “the financial innovation that Africa needs to finance adaptation and resilience to climate change”.

For Alexander Ampaabeng, Ghana’s Deputy Finance Minister, who also took part in the round table organised by the AfDB, however, it is necessary for countries to improve transparency through strategic investment in technology. “Through digital monitoring, reporting and verification, Africa will benefit from better carbon pricing,” added Deputy Minister Alexander Ampaabeng.