A portrait image of Joseph Nganga

Marie Kemplay speaks to Joseph Nganga, vice-president for Africa at the Global Energy Alliance for People and Planet, about the ambitious new Africa Carbon Markets Initiative.

The Africa Carbon Markets Initiative (ACMI), a venture to develop a thriving voluntary carbon market ecosystem in Africa, launched during the recent COP27 climate summit. The scheme aims to produce 300 million carbon credits, unlock $6bn in revenue and support 30 million jobs by 2030, and to generate significant revenue for local communities within Africa. Joseph Nganga, vice-president for Africa at the Global Energy Alliance for People and Planet, and member of the ACMI steering committee, talks to The Banker about this ambitious new initiative.

Q: What are the ACMI’s key objectives?

A: If you look at the voluntary carbon market output from the continent to date, it’s been pretty negligible. Part of that has been market failure, part has been a lack of the right methodologies to support African carbon credits, and part of it is due to low levels of market awareness around African carbon credits.

It is also important to acknowledge that buyers have had concerns about integrity within these markets. These are some of the key issues that the ACMI is seeking to address. And, as global interest in carbon markets grow, we want to position Africa as a key source of carbon credits for global buyers, while also delivering financial benefits to communities within Africa.

A: What mechanisms and processes will be put in place to ensure that revenue generated via these carbon markets is retained and invested within Africa?

A: The market is currently highly fragmented, so other than between project participants there is limited understanding about the economics of those opportunities — how the capital generated is being invested, how much is going to local communities and how much is going to intermediaries.

A key aspect of the ACMI will be a set of principles for market participants to adhere to

One of our main goals, as well as achieving a greater scale of activity, is to increase transparency. We must be mindful of the needs of private sector finance, particularly in relation to projects that are regarded as higher risk, but these needs should not outweigh those of local communities.

A key aspect of the ACMI will be a set of principles for market participants to adhere to. For buyers, this will include ensuring that they accrue as much value to local communities as possible. For project developers, we are asking that they are transparent in how they partner with local communities.

Q: What types of carbon credits do you feel Africa is well-positioned to provide?

A: As a relatively unindustrialised part of the world, a significant proportion of our credits are likely to come from nature-based solutions. In the Congo Basin, for example, we have a fantastic rainforest that has been preserved; but current carbon credit methodologies typically do not support continued preservation of existing forests — they are more geared towards those that are under threat.

That creates a disincentive because it is almost that there needs to be a threat of destruction before those natural resources can be monetised, rather than encouraging preservation from the outset. So that is one area where we want to re-examine those kinds of methodologies, to ensure they are supportive towards African nature-based solutions.

Another example is encouraging farmers to do positive things, such as planting trees on their land or engaging in regenerative agriculture, and ensuring there are the right methodologies and mechanisms in place for financial incentives to flow back to them. These are often smallholder farmers, so it will be important to ensure there aren’t too many intermediaries and there aren’t too many transaction costs, or else the benefits will not reach the farmers.

Q: Does the fact that there are many smallholder farmers in Africa also pose challenges in terms of land rights and ensuring long-term outcomes?

A: Yes, exactly. For buyers, they will want reassurance that land will continue to be used in an agreed manner for decades to come. This is a challenge when you have farmers without secure land rights. This is one of the areas of focus of ACMI and, so far, we have had six governments commit to developing holistic methodologies that that include addressing the issue of land rights.


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