Economic and political incentives for climate action: creating a business case for the private sector

Africa is at a pivotal moment in its development trajectory, set against the backdrop of the current geopolitical and geoeconomic landscape characterised by political polarisation, trade tensions among major economies, protectionist policies, regional conflicts, isolationist politics, resource nationalism, shifting energy policies,uncertainties around official development assistance, and economic realignments. The global economy is evidently shifting from multilateralism and open markets towards fragmented blocs. These emerging trends have a direct impact on the pathway of sustainable development in Africa.
Africa’s rich natural resources and youthful population present a unique opportunity for the continent to leapfrog into a more sustainable and inclusive future. However, despite these advantages, African countries face numerous challenges including extreme poverty, rising debt levels, unemployment, political instability, high food and energy prices, severe climate impacts, limited access to capital, technology, and markets, as well as underdeveloped infrastructure particularly in transport, energy, and digital connectivity. Trade and investment remain central to addressing these challenges, as they provide avenues for job creation, industrialisation, poverty reduction, export growth, and infrastructure
development. Deepening regional cooperation and undertaking comprehensive policy reform packages are key to unlocking Africa’s potential and fully leveraging trade and investment for sustainable growth.

The Current Landscape of Trade and Investment in Africa
Africa’s trade and investment landscape has been adversely affected by the proliferation of restrictions on cross-border investment flows, alongside barriers to trade worldwide since the early 2020s, compared with the two preceding decades. This is evidenced by the reduced frequency of new investment and trade agreements, the widespread adoption of inward FDI screening mechanisms (with the number of countries implementing such measures more than doubling in the past decade), and the rising incidence of outward FDI screening by major economies. Advanced economies are responsible for around 70 percent of the trade-distorting policy measures introduced between 2022-2024, while developing countries have borne most of the effects. During 2000-2019, global trade in real terms expanded at an average rate of about 5 percent per year. That pace slowed to about 2.5 percent per year during 2020-2024. Moreover, after peaking in 2008, the ratio of trade to GDP in developing countries has since trended downward.

source:
https://www.linkedin.com/posts/climate-action-platform-for-africa-cap-a_economic-and-political-incentives-for-climate-action-activity-7389601759553536000-qRRE?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAtGGkQBsxwMBmX3lEJO8btihnfBCaHqTz4