UN economist urges African ‘carbon tax’ to answer EU’s border levy

African countries should respond to the EU’s carbon border by imposing their own tax, the chief economist of the UN’s Economic Commission for Africa (UNECA) has said. 

Speaking at the annual meeting of the African Development Bank (AfDB) on Thursday (28 May), Hanan Morsi, the deputy executive secretary of UNECA, warned that the EU levy could hurt Africa’s industrialisation. 

“Part of our concern is that we were not part of the design process — we were not consulted, engaged, or given a say on implementation,” she said. 

“What is taking shape now is not just an environmental tool: climate regulation is increasingly turning into trade regulation, industrial policy, and competitiveness policy, and this has profound implications for Africa,” said Morsi, who added that African governments could consider introducing their own carbon-related taxes directly on producers. 

The levy requires importers to pay a carbon price equivalent to that paid by European producers under the EU Emissions Trading System. 

The bloc’s so-called Carbon Border Adjustment Mechanism (CBAM) came into force last December and affects only six percent of Africa’s total exports, of which just two percent are destined for the European Union. 

The AfDB’s annual meeting in Brazzaville is the first under new president Sidi Ould Tah, who is anxious to increase the bank’s capital to close a $400bn [€344bn] annual development finance gap facing the African continent.