JO ANDERSON: How carbon markets can drive sustainable development in Africa

African nations face a triple threat: a widening climate finance gap, unmet sustainable development goals, and now the cancellation of USAID funding. This is a call to action. We need to move beyond unpredictable aid and embrace market-based approaches that finance sustainable development while protecting our invaluable natural resources.

Carbon markets can, and must, play a powerful role in driving sustainable development across the continent. With human-development-focused nature conservation projects funded through carbon markets, the reduction of carbon emissions is, in a sense, a secondary benefit albeit a crucial one for the global community. The primary outcome is sustainable development — the creation of thriving rural economies based on the responsible management of natural resources.

Traditional development aid and philanthropy, while valuable in certain contexts, are not the ideal tools for long-term nature conservation and restoration. These funding streams are often short-term, project-specific and subject to shifting priorities. They lack the consistent, results-based incentives necessary to drive sustainable land use practices at the scale required to truly impact both climate change and community wellbeing.

Sustainable land use requires long-term, recurring revenue streams aligned with conservation outcomes. This is precisely what well-designed carbon projects offer. They represent a shift from unpredictable aid flows to a market-based approach, where financial commitments are renewed annually based on demonstrable results.

It is essential to clarify that carbon finance is not a panacea. It will not single-handedly fill the vast finance gap facing African nations. Nor will it single-handedly get us to net zero. However, it can be a significantly larger part of the solution, especially given that Sub-Saharan African nations are so rich in natural carbon sinks. The key is to move beyond scepticism and embrace the potential of this market with honesty and ambition.

Nature-based carbon projects, such as reducing emissions from deforestation and forest degradation, offer a compelling model. These projects incentivise communities to protect and manage their forests, generating carbon credits that can be sold on the international market. The revenue generated is then reinvested in the community, supporting livelihoods, education, healthcare, and other vital development initiatives. 

Sharing carbon credit revenue with community funds is fundamental to the success and ethical integrity of these projects. When communities directly benefit from conservation they become active and invested stewards of their natural resources. This creates a positive feedback loop, ensuring the long-term sustainability of both the project and the environment.

This model offers a paradigm shift from traditional extractive economic models. Instead of depleting resources for short-term gain, communities are paid to preserve them, creating a long-term, equitable flow of capital from the Global North to the Global South. This transfer of capital is predicated on verifiable results — rigorous carbon accounting ensures that payments are tied to genuine emission reductions, fostering accountability and transparency. 

However, this approach is dependent on Global North governments and corporations recognising their responsibility to pay for these emission reductions as part of their commitment to achieving net-zero targets. The constant debate and hesitation surrounding the voluntary carbon market in Europe and North America must give way to decisive action and investment in credible projects.

The recent USAID funding cuts, while concerning, should serve as a catalyst for a broader conversation about the future of development finance in Africa. It is time to move beyond reliance on unpredictable aid flows and embrace socially responsible, market-based mechanisms that empower communities, protect natural resources, and contribute to global climate goals. 

Carbon Tanzania and many others in this growing space are demonstrating that this model works. We are creating tangible, positive effects on the ground, improving livelihoods, and reducing carbon emissions. The challenge now is to scale these efforts, to move from small-scale projects to widespread adoption.

This requires a concerted effort from governments, the private sector and the international community to create a supportive regulatory environment, foster transparency, and — most importantly — invest in the potential of Africa’s natural capital. The opportunity is there, it is time to seize it. 

• Anderson is cofounder of Carbon Tanzania, an impact-driven social enterprise making the protection of forests and biodiversity valuable to Tanzania and its people.