The Impact of the CBAM on African Economies and the Role of the AfCFTA

The EU's Carbon Border Adjustment Mechanism (CBAM), effective October 2023, imposes carbon tariffs on imports to prevent carbon leakage and encourage global decarbonisation. The document argues that the CBAM will disproportionately harm African countries, particularly least-developed countries (LDCs), by reducing GDP and exports of key materials like aluminium, iron, and steel. It highlights concerns regarding the mechanism's equity, its potential conflict with WTO non-discrimination rules, and the EU's plan to use revenues for internal debt rather than supporting LDCs. The brief recommends that the AfCFTA negotiate for exemptions, a slower phase-in period, and the exclusion of indirect emissions, while urging the EU to increase climate finance and technology transfers to Africa.

• The CBAM is expected to have a significant negative economic impact on Africa, potentially reducing the continent's combined GDP by -0.91% (approximately $16 billion at 2021 levels) and reducing exports to the EU by -5.7%.
• Specific African export sectors are forecast to decline significantly, with aluminium potentially dropping by up to 13.9%, iron and steel by 8.2%, fertiliser by 3.9%, and cement by 3.1%.
• Least-developed countries (LDCs) in Africa are identified as the most vulnerable to the CBAM; in one scenario where the mechanism applies to all imported products, LDC GDP decreases could range from 1.5% to 8.4%, with Gambia and Mozambique noted as being among the most affected.
• The CBAM may violate World Trade Organization (WTO) non-discrimination principles, specifically the 'most-favoured-nation' status (Article I of GATT) and 'national treatment' (Article III of GATT), if it discriminates between 'like' products based on carbon intensity or provides double benefits to EU producers through unphased-out free allowances.
• There is a conflict regarding the use of CBAM revenues; while the European Parliament initially suggested supporting LDCs, current indications suggest funds will be used to repay EU COVID-19 recovery debt (NextGenerationEU) and fund the EU's own Social Climate Fund.
• The document recommends that the AfCFTA Council of Ministers negotiate for specific concessions, including the total exemption of African countries, a slower phase-in period, the exclusion of indirect emissions, and the exclusion of organic chemicals and polymers from the sectoral scope.
• To support the transition, the EU is urged to provide climate finance and technology transfers to Africa equivalent to the CBAM's estimated annual proceeds of €9.1 billion.

APA

South African Institute of International Affairs (2024). The Impact of the CBAM on African Economies and the Role of the AfCFTA. https://saiia.org.za/research/the-impact-of-the-cbam-on-african-economies-and-the-role-of-the-afcfta/

Chicago

South African Institute of International Affairs. The Impact of the CBAM on African Economies and the Role of the AfCFTA. 2024. https://saiia.org.za/research/the-impact-of-the-cbam-on-african-economies-and-the-role-of-the-afcfta/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=The Impact of the CBAM on African Economies and the Role of the AfCFTA |date=23 April 2024 |url=https://saiia.org.za/research/the-impact-of-the-cbam-on-african-economies-and-the-role-of-the-afcfta/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2024impact, author = {{South African Institute of International Affairs}}, title = {{The Impact of the CBAM on African Economies and the Role of the AfCFTA}}, institution = {South African Institute of International Affairs}, year = {2024}, month = apr, url = {https://saiia.org.za/research/the-impact-of-the-cbam-on-african-economies-and-the-role-of-the-afcfta/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }