Business and political elites support revaluing Africa’s GDP….says it must include a lot of carbon-absorbing flora.
Business and political leaders from across the continent have emphasized the importance of reevaluating Africa’s GDP through a comprehensive assessment of its natural capital and ecosystem services, including its vast forests, which play a critical role in absorbing carbon emissions and increasing the continent’s wealth.
They argued at the recently concluded inaugural Africa Climate Summit (ACS) in Nairobi, Kenya, from September 4 to 6, 2023, where the Nairobi Declaration on Climate Change and Call to Action was adopted, that “Africa possesses immense natural wealth, from its lush forests to its diverse ecosystems, and we must recognize their value.” We can better measure our genuine economic potential by embracing natural resource accounting and creating national accounting standards.”
One of the key concerns discussed at the summit was the disproportionate borrowing costs faced by developing countries in Africa in comparison to wealthy nations, dubbed the “great financial divide.” Leaders emphasized that this financial gap has been a major factor to the region’s periodic debt crises, impeding investment in development and climate action.
“We need responsible sovereign lending practices and greater accountability: including comprehensive credit rating, risk analysis, and debt sustainability assessment frameworks,” they said, emphasizing the severity of the problem. We demand that financial markets remove this inequality by 2025.”
Leaders highlighted the significance of creating global and regional trade arrangements that allow African products to compete fairly on worldwide markets, in addition to tackling the financial divide. They emphasized developing resilience to climate shocks and deploying special drawing rights (SDRs) to assist climate adaptation efforts, advocating that at least US$100 billion in SDRs be re-channeled to Africa.
The proposal for revaluation is based on the assumption that by appropriately accounting for Africa’s enormous natural resources, the continent’s production levels may be more accurately reflected. As a result, African countries will become more appealing as investment destinations, bridging current economic imbalances.
The summit also urged that a new SDR issue dedicated to climate catastrophe response be considered, of the same magnitude as the existing SDR issue. Leaders emphasized the importance of properly leveraging multilateral development banks’ (MDBs’) balance sheets in order to scale up concessional financing and improve debt management.
Regarding international tax cooperation, leaders urged action to reduce Africa’s annual loss of US$27billion in corporate tax revenue through profit-shifting. They called for measures to attract private capital, such as blended finance instruments, purchase commitments and foreign exchange guarantees. They again advocated the redesign of MDBs’ governance for greater inclusivity.
Energy
In the energy sector, leaders set ambitious goals to increase Africa’s renewable generation capacity from 56 GW in 2022 to at least 300 GW by 2030. They emphasised the importance of shifting energy-intensive primary processing back to Africa in support of renewable energy development and reducing global emissions. Additionally, leaders stressed the importance of accessing and transferring environmentally-sound technologies to support green industrialisation on the continent.
The summit also reemphasized the global transition to a low-carbon economy, urging world leaders to consider a global carbon taxation regime that includes a carbon tax on fossil fuel trade, maritime transport, and aviation, as well as a global financial transaction tax (FTT) to fund climate-positive investments.
They also applauded pledges and promises from development partners totaling US$26 billion to help Africa’s renewable energy and adaptation efforts, which they describe as a significant step forward in the continent’s pursuit of a sustainable and equitable future.
Leave a Reply