Transiting to green growth in fossil export-dependent economies: A pathway for Africa

Abstract

Divestment from fossil fuels has been at the heart of global climate discourse. For developing countries that have traditionally been less emitters and at the receiving end of the severest economic impact of climate change, a sweeping divestment could lead to serious socio-economic and political consequences. African countries must collectively adapt energy transition to local context and pursue a pragmatic approach that ensures a gradual transition from fossil fuels to a green economy. The African Continental Free Trade Agreement (AfCFTA) presents a unique platform for Africa to achieve net-zero emissions by continued investments in fossil fuels while drastically cutting emissions arising from current externalised supply chains because AfCFTA will promote cleaner regional supply chains. Africa's fossil fuel-dependent economies must redirect current fossil revenues into creating non-fossil-based industries while making a gradual-but-steady shift from fossil fuel as the source of fiscal revenues. African Export–Import Bank (Afreximbank) is partnering with the African Petroleum Producers Organisation (APPO) to establish an institutional structure, the African Energy Transition Bank that will support African fossil fuel-dependent economies to achieve a smooth and orderly transition to green economies.