Absa Group And Business Unity South Africa Lead Critical Roundtable On Just Energy Transition
Absa Group And Business Unity South Africa Lead Critical Roundtable On Just Energy Transition. Absa Group in partnership with Business Unity South Africa hosted a hybrid Carbon Border Adjustment Mechanism (CBAM) roundtable that brought together key industry stakeholders, policymakers, and thought leaders to discuss the implications of the European Union’s (EU’s) CBAM on Africa’s exports, supply chains, and economic sectors.
The discussion highlighted how CBAM presents both opportunities and challenges for African markets as it aims to impose carbon tariffs on imports of carbon-intensive goods such as cement, steel, aluminium, fertilisers, and electricity from countries with less stringent climate regulations than the EU. The policy incentivises sustainable production by ensuring that imports are subject to the same carbon costs as EU-made products.
“Africa accounts for only 4% of global carbon emissions, yet it remains the most climate-vulnerable region. A fair and equitable just energy transition is crucial for Africa to mitigate the economic impact of CBAM, ensuring the continent can transition sustainably without disproportionate financial burdens on its industries and communities. For this transition to happen, governments must create policies and incentives that promote green technologies and enhance carbon reporting. Strengthening public-private partnerships to develop regional carbon markets will facilitate emission offsets and align with global carbon pricing mechanisms,” said Xolelwa Mlumbi-Peter, Deputy Director-General in the International Trade and Economic Division, Department of Trade, Industry and Competition.
“At Absa, we understand the critical importance of CBAM for our clients and the broader economy. This is a defining moment for African industries to innovate and attract green finance, requiring collaboration among businesses, governments, and financial institutions. While we recognise Africa’s particular vulnerability to climate change, our Net Zero declaration underpins our belief in and support for a Just Transition,” said Punki Modise, Absa Group Chief Strategy and Sustainability Officer.
“Our commitment is to use our financial expertise as an active force for good, empowering Africa’s tomorrow while addressing climate-related risks such as climate finance and green loans. Through our Sustainability, Social, and Ethics Committee, we are dedicated to managing these risks and advocating collectively to ensure a sustainable future for all,” she added.
CBAM presents African businesses with a compelling opportunity to unlock Africa’s potential by strengthening intra-African trade through the Africa Continental Free Trade Area agreement and fostering sustainable regional supply chains. Embracing forward-thinking strategies now, will enable Africa to align with future compliance standards and play a significant role in advancing the global sustainability agenda.
Speaking at the event, Saliem Fakir, Executive Director of the Climate Foundation, said: “Critics argue that CBAM primarily protects the EU’s competitiveness in green industrial development, but its impact will vary across African countries. For example, Africa could face a significant economic hit of up to €25 billion due to the exposure of sectors like steel, cement, and fertiliser. Lower-income countries like Mozambique face different challenges as half of the aluminium from Mozambique’s Mozal smelter, which exports to the EU, would be affected. Meanwhile, countries like Kenya, Nigeria, and Egypt will experience varying degrees of impact depending on carbon pricing scenarios, though the overall effect on Africa’s GDP is estimated at around 1%. This variation underscores the complexity of CBAM’s implementation and the need for nuanced solutions, as the EU seeks to lead in global carbon pricing while balancing the interests of its industries.”
Insights shared during this discussion concluded that though CBAM presents challenges, it offers African economies a unique opportunity to modernise industries and embrace a greener future. With the right strategies, Africa can leverage CBAM to drive sustainable growth, attract new investments and strengthen its integration into global green supply chains.
