The voluntary carbon market is gaining momentum in Africa, with Tanzania revealing that it will receive at least $20 billion investment for carbon offset credits from more than 20 companies around the world.
Selemani Jafo, Minister of State in the Vice President’s Office, Union and Environment, emphasized that the adoption of legislation on carbon trading in the country last year brought in over $1 billion investment. This money will be used to fund carbon trading activities across Tanzania.
He also noted that carbon credit trading will help the country’s Nationally Determined Contributions. Tanzania aims to cut greenhouse gas emissions by 30%-35% by 2030.
Carbon credits are market-based financial instruments that represent a reduction in CO2 emissions certified by independent international bodies or governments. As businesses and organizations look for viable ways to rein in their emissions, carbon credit markets become their ideal solution.
The credits are from various projects or initiatives that lower greenhouse gas emissions. In Tanzania, carbon credits play a crucial role in preserving forests and protecting the way of life of local communities.
The carbon market presents an opportunity for the country to generate funds and address deforestation and forest degradation. The East African nation has 48 million hectares of reserved forests, which offers significant opportunities for carbon trading.
The 20 companies that committed to investing in carbon credit projects in the country are from the U.S., Canada, Switzerland, Russia, Italy, Singapore, Estonia, UAE, and Kenya. Their applications were received by different agencies and institutions in Tanzania. Their investment will protect reserve forests, village forests and game reserves as well as community-based wildlife management areas.
Tanzania is also working on the biggest carbon credit project in Africa, it is under the partnership of the Tanzania Wildlife Management Authority and GreenCop Development PTE, a Singapore-based company. The collaboration aims to develop carbon projects in the African country.
Growing value of carbon credits in Africa
Africa has been grabbing the spotlight in the carbon credit market. Last May, the 3rd-biggest credit producer in the continent accounting for 13% of Africa’s total revenue, Zimbabwe, required that half of the sales go to the nation’s treasury. Similarly, Zambia, the 5th largest producer of carbon credits, also has plans to do the same.
Jacob Zuma, the former South African president, recently indicated that the Belarus African Foreign Trade Association will list the first carbon credits on a newly created exchange in Zimbabwe. He also stated that 2 million credits will start to trade on the African voluntary carbon market.
Meanwhile, Africa’s biggest supplier of carbon credits, Kenya, is in the process of regulating its carbon market. Malawi has also formed a dedicated agency to handle this matter.
Obviously, governments in African developing nations are positioning themselves strategically in the emerging carbon markets. They are developing mechanisms and frameworks to ensure that carbon credit projects in their territories are reliable in attracting investors and innovating nature-based solutions to climate change.