Africa's green industrial future hinges on global trade and investment reform

Mail & Guardian

30-05-2025

The continent has what is needed to lead the green industrial revolution but it can't do it without building its trade and investment partnerships. (File photo)
South Africa's G20 presidency identified green industrialisation as one of its priorities for the Working Group on Trade and Investment. Africa faces a pivotal moment as climate-related trade measures tighten and the global economy reconfigures around decarbonisation. This framework supports the integration of developing countries in global green value chains.
The continent has the resources, the demographic dividend and the ambition to lead in the emerging green economy, but without an enabling global trade and investment environment, we risk this opportunity slipping away.
The G20, as the world's most influential economic forum, must recognise that green industrialisation is not just an environmental imperative but a development strategy. The Africa Future Policies Hub's recent
Green competitiveness for inclusive growth
The global push toward decarbonisation is reshaping trade flows, production systems and industrial policy. From carbon border taxes, like the EU's Carbon Border Adjustment Mechanism, to green subsidies and technology standards, countries are adjusting the rules of engagement in the name of climate action. But, if these changes are not matched with complementary support for developing economies, they could further entrench global inequality.
Africa's contribution to historical emissions is minor but many industries, some of which are carbon-intensive and still in their infancy, face new barriers to export. Instead of punitive trade measures that disregard the continent's development realities, the G20 should champion an agenda of cooperative green competitiveness — one that recognises differentiated responsibilities, fosters innovation and builds productive capabilities across regions.
Renewable energy and mineral value chains must be effectively leveraged to serve as a foundation for new industrial models. To realise these benefits, market shifts, coordinated policy efforts and global partnerships are needed. Inclusive green initiatives must be strategically targeted and embedded within strategic value chains that have the potential to expand industrial capacity. Existing regional initiatives can be harnessed to design pilot projects that are scalable.
The scale and nature of financing mechanisms and investments play a crucial role in targeting and shaping green pathways. To be successful, there must be access to sufficient, highly concessional and patient capital, which is essential for a sustainable green industrialisation agenda.
A path forward: Local strength, global partnership
Green industrialisation in Africa must begin with sectors where the continent has clear comparative advantages and potential for value addition: renewable energy, transition minerals, green fertilisers and low-carbon construction materials like cement, for example. But building competitiveness in these areas is not simply a matter of targeting sectors; it requires deliberate investment in industrial ecosystems.
This includes infrastructure; access to affordable and clean energy; skills development and strong institutions. It means creating industrial clusters where firms, technology providers and research institutions co-evolve around shared innovation. Public-private partnerships, as well as 'climate-smart' PPPs, hold the potential to bridge technical and financial gaps in critical infrastructure and new industrial sectors.
At the same time, Africa cannot industrialise in isolation. The scale of transformation required depends on deep and equitable global partnerships with capital, technology and know-how flowing in ways that preserve sovereignty and generate mutual benefit. African countries must work together. Local development strategies must be aligned with regional trade frameworks like the African Continental Free Trade Area to scale up demand and anchor value chains within the continent. Cross-border cooperation holds significant potential to open up opportunities for advancing green industrialisation
Financing the future
One of the biggest barriers to Africa's green industrial transformation is finance. Green investments, whether in grid infrastructure, hydrogen production or decarbonised manufacturing, are costly, risky and long-term. In a context of rising debt burdens and constrained fiscal space, few African governments can shoulder this alone.
The G20 must prioritise reforms to the global financial architecture that unlock concessional, patient capital for green industrial development. This includes expanding the mandates and capital base of multilateral development banks, enhancing their ability to take on early-stage risk and developing blended finance instruments that can crowd in private capital.
Crucially, financial support must be channelled through platforms that align with country-led strategies. Models like the Türkiye Industrial Decarbonisation Investment Platform, driven by the EBRD and the World Bank, offer promising templates. Regional banks like Afreximbank also have a critical role to play in facilitating green trade finance and scaling African-driven solutions.
From technology transfer to knowledge partnerships
Technology needs to be approached differently. Traditional models of 'technology transfer' often imply a one-directional, donor-recipient relationship. But building green competitiveness demands a more collaborative approach. It is one where technology is co-developed, adapted to local contexts and accompanied by institutional and human capacity building.
Initiatives like the Industrial Transition Partnership between India and Sweden, facilitated by the Leadership Group for Industry Transition (LeadIT), show how structured, multi-stakeholder collaborations can produce strategic decarbonisation projects that reflect shared interests. African countries should be supported to participate in — and lead — similar arrangements.
Major economies that impose carbon pricing or border adjustment measures should channel a portion of revenues into co-innovation and green technology diffusion funds. These funds should be earmarked for developing countries. This would not only help mitigate trade imbalances but also build trust in global climate cooperation.
The G20's responsibility
For the G20, the challenge is clear — align global trade and investment rules with a just, inclusive green transition. That means putting developing countries, not just as aid recipients, but as equal partners in global production, at the heart of climate-compatible growth strategies.
It means recognising that industrial development is not incompatible with climate goals; if done right, it's the very pathway to achieving them. Green industrialisation can deliver cleaner economies and more resilient, diversified and dignified livelihoods across the Global South.
Africa stands ready. But readiness without partnership is not enough. The G20 must rise to the moment by enabling the policies, incentives and institutions that allow all regions to thrive in the green economy, not just a few.
The cost of inaction is not just lost opportunity, it's deepening global fragmentation at a time when cooperation has never been more critical.
Maria Nkhonjera is a senior policy officer: public finance at African Future Policies Hub and Shimukunku Manchishi a senior policy officer: trade also at the hub.