The African Development Bank (AfDB) has announced plans to establish a carbon markets support facility aimed at unlocking climate finance for Africa, a continent facing disproportionate impacts of climate change despite contributing minimally to global emissions.
The Africa Carbon Support Facility, still in the design phase, was unveiled during the bank’s annual meetings in Abidjan on Thursday. The initiative comes as the AfDB elected Sidi Ould Tah, former Mauritanian finance minister, as its new president.
The facility will comprise two key components: the first will support African governments in formulating policies and regulations to govern carbon trading, while the second will focus on enhancing supply, demand, and market infrastructure necessary for scaling carbon credit transactions.
“Through this, we envision a future where carbon credits can become a tradable commodity on Africa’s stock exchanges,” said Anthony Nyong, AfDB’s Director for Climate Change and Green Growth.
Carbon credits are generated through environmentally beneficial projects such as afforestation, renewable energy installations, and sustainable agriculture. These credits represent one metric ton of carbon emissions reduced or removed from the atmosphere and can be purchased by countries or companies to meet climate targets.
Currently, most African carbon credits—mainly from forestry, land use, and agriculture—are sold in voluntary markets where prices remain low. Embedding these credits into compliance markets and stock exchanges could significantly increase their value.
The move is timely. Africa continues to bear the brunt of climate-related disasters, including severe droughts in the Horn of Africa and cyclones battering Madagascar and the Southern African coast. Yet, the continent receives only about 1% of annual global climate finance, according to African government officials.
AfDB Vice President for Power, Energy, Climate Change and Green Growth, Kevin Kariuki, emphasized that developing carbon markets is critical for the continent’s resilience and financial sustainability.
Nyong added that by accessing compliance markets, African carbon credits could fetch up to 10 times more than in voluntary markets, boosting incomes for local communities and incentivizing climate-positive action.
This initiative marks a significant step in empowering Africa to capitalize on climate finance mechanisms while addressing the urgent realities of the climate crisis.
