A significant shift in EU trade policy is set to impact African economies as the Carbon Border Adjustment Mechanism (CBAM) takes full effect. This new tax imposes a cost based on the carbon emissions generated in the production of imported goods such as aluminum, steel, and fertilizers, aiming to level the playing field for EU manufacturers. For African nations, the financial impact is substantial, with projections suggesting a potential continent-wide GDP reduction of up to $25 billion. The policy creates a clear divide; countries relying on clean energy, like hydropower-rich Mozambique, may gain a competitive edge. Conversely, nations dependent on coal, such as South Africa, face steep export costs. This mechanism ultimately serves as a powerful catalyst, encouraging African industries and governments to accelerate green energy transitions and secure future access to valuable European markets.
African Business
