- The head of the African Development Bank has made the case for valuing Africa’s natural wealth more fairly, given its importance in the global fight against climate change.
- Akinwumi Adesina notes that the continent’s GDP in 2018 was estimated at $2.5 trillion, yet the value of its natural capital was assessed at $6 trillion.
- “It is high time that we incorporate the value of Africa’s natural capital into our assessments of GDP. It is time for Africa to be both green-rich and cash-rich,” Adesina said.
- This approach is seen as one of the most effective ways to position Africa on a sustainable financial and economic trajectory for greater development.
BAKU, Azerbaijan — A top African policymaker at COP29, the ongoing global climate summit in Baku, Azerbaijan has called for a better evaluation of Africa’s vast natural capital to reflect the true wealth of the continent.
“It is time for Africa’s green environmental assets to be properly priced, allowing the continent to convert its massive green assets into wealth through their inclusion in the GDP,” said Akinwumi Adesina, president of the African Development Bank (AfDB) and former agriculture minister of Nigeria.
Africa is to home to some of the largest sources of natural capital in the world, including tremendous clean energy potential, abundant natural resources, uncultivated arable land, world-renowned biodiversity, and the world’s second-largest tropical rainforest area. However, despite this abundance, Africa continues to experience high levels of poverty and economic stagnation.
“Its vast natural capital has continued to be significantly undervalued,” Adesina said.
“While Africa’s GDP was estimated at $2.5 trillion in 2018, this figure was 2.5 times lower than the estimated value of its natural capital, which was assessed at that time to be $6 trillion,” he added.
Economists say the failure to accurately account for Africa’s resources and contributions, significantly undermines the continent’s true value, resulting in a paradox where the continent is abundantly rich in natural resources yet struggling financially — often referred to as the resource curse. Thus, Africa finds itself in a situation described as “green-endowed but cash-poor,” highlighting the stark contrast between its rich potential and its economic reality.
“Once Africa’s vast forests, environmental services, and natural capital are properly valued, the size of its GDP will increase considerably,” Adesina said.
Living the promise of carbon markets
Carbon markets are recognized as a way to implement the Paris climate agreement and raise funds from capital markets to cover climate-related costs. For instance, the rainforest of the Congo Basin absorbs 1.5 billion metric tons of carbon dioxide each year, making it a critical carbon sink for the world. Yet despite this well-established fact, Africa doesn’t receive a fair value for its forests in carbon markets, Adesina said.
“Africans have been underpaid for carbon due to the undervaluation of Africa’s carbon sinks. The ongoing carbon initiative in Africa is a lose-lose proposition,” he said.
While the price of carbon per metric ton in Europe can sometimes reach as high as $200, in Africa it ranges from just $3 to $10.
“It is time for Africa’s green environmental assets to be properly priced, enabling the continent to convert its massive green assets into wealth through their inclusion in Africa’s GDP,” Adesina said. “This would raise substantial financial resources for the continent, support greater green investments, and provide improved policies for the transition to sustainable development.”
Adesina said he sees a promising future in which Africa unlocks tremendous benefits through precise evaluations of its carbon sinks and natural resources. By correctly valuing these vital ecological assets, he said, the continent can significantly boost its revenue streams, which would empower Africa to manage its debts in a sustainable manner while steadfastly pursuing ambitious green initiatives.
“It is high time that we incorporate the value of Africa’s natural capital into our assessments of GDP. It is time for Africa to be both green-rich and cash-rich,” Adesina said.
For many, this approach is one of the most effective ways to position Africa on a sustainable financial and economic trajectory for greater development, elevating the continent to an equal player on the global stage.
“We don’t need handouts. We don’t need people to simply say they are helping Africa. We want Africa to be valued based on the strength of its natural capital assets, which must be reflected on its balance sheet,” Adesina said.
Thousands of delegates from around the world have gathered in Baku for the U.N.’s annual climate change summit, aiming to explore ways to boost financial support for addressing the impacts of climate change. Among other issues, they’re considering both public and private options to raise nearly $2 trillion needed by Africa by 2030 to combat the escalating effects of climate change.
Banner image by Rhett A. Butler/Mongabay.
Credits
