AfCMI CEO on the evolution of carbon markets & Africa's place in it

Africa is at the forefront of a dynamic transformation in the global carbon markets, with a potential for significant growth in carbon credit initiatives. Paul Muthaura, CEO of AfCMI, recently engaged with CNBC Africa to discuss Africa's burgeoning carbon credit potential and the continent's strides towards equitable pricing allocation, transparency enhancement, and revenue generation. The evolution of carbon markets has been a pivotal moment for Africa, especially post the Paris Agreement. This has created new opportunities for the continent to step forward and take control of building opportunities in the carbon market space. However, challenges such as legal and policy uncertainties, lack of verification and validation capacity, high costs, and delays in project verification have hindered the growth of the carbon market in Africa. Muthaura emphasized the importance of building appropriate capacity for project developers on the continent, ensuring that Africans are actively involved in building core project development opportunities. The goal is to ensure a more equitable allocation of revenues from carbon credits across all tiers of economies. Addressing the demand side is also crucial, as there is a significant global north demand for carbon credits. Africa must work towards being recognized as equivalent to other credit markets to address pricing issues and ensure effective revenue allocation. The challenge lies in leveraging carbon credits to address fundamental climate and development finance challenges across the continent. Muthaura highlighted that while carbon credit financing may not fund everything, it can be used to free up other revenues for economic growth and investment in green industrialization, renewable energy, and sustainable agriculture. These initiatives can lead to economic growth, improved livelihoods, and community empowerment. The partnership between AfCMI and the African Development Bank has the potential to unlock significant opportunities in the carbon market space. By convening key stakeholders, including finance ministers, the roundtable aims to better understand the opportunities and approaches needed for the operationalization of carbon credits in Africa. This collaboration will enable the scaling of conversations from a jurisdictional level to regional and continental levels, fostering rural development, practice evolution, and opportunity unlocking across the continent. Muthaura stressed the need for standard coordination at a regional level to enhance Africa's negotiating capacity in the carbon market. By establishing regional carbon credits, such as East African credit and South African SADC credit, Africa can enhance its influence on market terms and operations. The signing of the agreement with the African Development Bank will pave the way for the Africa Carbon Market Support Facility. This facility will allocate capital to support the development of legal and regulatory frameworks (upstream) and direct investment in projects (downstream) on the continent. The partnership between AfCMI, the African Development Bank, the Economic Commission for Africa, and the UN aims to drive transparent and equitable pricing and revenue generation in Africa's carbon market. Moving forward, Muthaura envisions a holistic partnership with the involvement of the AU Commission to further enhance the practices and approaches in operating carbon markets on the continent.