Editorial: Global carbon levy on maritime shipping to affect African economies

The proposed global carbon levy on maritime shipping could have severe economic consequences for African countries, exacerbating food insecurity and driving up the cost of living if implemented without adequate safeguards, cautions three Africa-focused policy organisations.

Titled ‘Navigating Climate Action: Assessing the Economic Impacts and Trade-offs of a Shipping Carbon Tax for African States’, the report was released by the Africa Policy Research Institute (APRI), Firoz Lalji Institute for Africa at the London School of Economics and Political Science (LSE) and African Future Policies Hub (AFPH).

The report emerges in context of International Maritime Organisation (IMO) commitment in reducing shipping emissions to net zero by 2050.

While de-carbonisation of the shipping industry is seen as essential for global climate goals, the report notes significant concerns for African economies – which rely heavily on maritime trade.

Without measures to cushion the impacts on developing regions like Africa, the proposed carbon tax could amplify existing economic vulnerabilities, the report notes.

Findings suggest that the levy will disproportionately affect African countries by raising freight costs, leading to higher prices for essential goods.

According to the report, maritime shipping services within Africa could decline by as much as 7 percent, while global prices for agricultural and processed food commodities could rise by 0.011 percent and 0.013 percent respectively.

These price increases are expected to have a direct impact on food security, as many African countries depend heavily on imported food. “Almost 90 percent of Africa’s global trade is conducted by sea.

“This heavy reliance on shipping makes African nations particularly vulnerable to shifts in the maritime sector,” said Faten Aggad, Executive Director-African Future Policies Hub (AFPH).

Additionally, the report highlights broader economic strain the levy could place on African households. Countries like Ghana could see household incomes fall by 0.101 percent; a drop ten times greater than that forecast for European households under the same levy.

Furthermore, the economic imbalances exacerbated by this carbon tax will most likely deepen existing disparities between developed and developing nations, with African countries shouldering a disproportionate burden of the global transition to net-zero emissions.

African nations already face higher shipping costs due to smaller trade volumes, less developed infrastructure and weaker negotiating power in global shipping markets.

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