Africa’s quarterly economic performance and outlook April–June 2023:economic performance of Africa and the role of carbon markets

Abstract

African countries have ratified a few international treaties and agreements and have issued laws at the national level to tackle the negative effects of climate change. Carbon markets have exhibited the potential to support developing countries in their efforts to tackle the twin goals of accelerating sustainable development by attracting more climate finance and curbing greenhouse gas emissions. Therefore, the aim of the present paper is to introduce the concept of carbon markets and explain how they could be beneficial for African Governments in reducing greenhouse gas emissions and augmenting funding of their development priorities for poverty reduction and overall economic development. The following section is dedicated to the recent growth performance of Africa and the significance of the continent’s industrialization agenda and the need to incorporate climate adaptation and mitigation measures into overall industrialization and development priorities. In section 3, the impact of climate change on African economies is considered, while in section 4, climate change mitigation measures and their effectiveness in African economies are addressed. In section 5, attention turns to the importance of carbon markets for African countries, followed by the main challenges affecting the growth of carbon markets in Africa in section 6 and the different types of carbon pricing mechanisms and their significance in section 7. Section 8 contains suggested policy recommendations to assist African countries in their quest to fully exploit the potential that comes with credit markets.