Africa’s Carbon Potential Is Real, But the Market Is Not Built for African Businesses

The voluntary carbon market in Africa is not working. At least, not for the people and businesses it should be serving. Behind the glossy promises of climate finance and community development lies a market riddled with inefficiencies, opacity, and power imbalances that leave African actors on the margins.

This isn’t new criticism. A wave of recent reports and panels, including from FSD Africa, UNU-INRA, and the Africa Carbon Markets Initiative, have surfaced growing concerns. These include overstated emissions reductions (especially in REDD+ and cookstove projects), a lack of transparency and oversight, and the dominance of brokers and middlemen who extract value at every step. The result is a system where less than a third of the price paid for a carbon credit ever reaches the project on the ground.

In fact, Africa has issued just 13 percent of all carbon credits globally over the past decade, and most of these are still sitting unsold. Many of the carbon projects listed under Verra or Gold Standard in Africa are not African-owned, and in some cases, not even rooted in community needs. Foreign companies have signed sweeping land deals, sometimes covering millions of hectares, to generate credits. These arrangements raise deep moral concerns, especially where community consent is absent or where promises of benefit-sharing fall flat.

I work closely with small and growing businesses across the continent. These are African-led enterprises doing real climate work: regenerative agriculture, circular economy models, solar mini-grids, and sustainable forestry. They should be central to the carbon market. But increasingly, they are opting out. They have seen the numbers. To register a carbon project typically takes two years and up to $250,000 in upfront costs. For early-stage or growth-stage SMEs, this is simply unthinkable.

Carbon developers do exist who can help cover those costs, but at a price. Many take a significant portion of the credits sold, leaving the business with barely enough to reinvest, let alone deliver meaningful community benefit. This is even more troubling when you consider the declining price of credits and growing buyer skepticism. For the African SMEs I advise on carbon strategy, it is becoming harder and harder to justify participation in this space at all.

Recently, I attended a G20 private sector roundtable on carbon markets in Cape Town. It was a room full of governments, corporates, and financial institutions. I raised a question about how we are making the market accessible to African-owned SMEs. No one had a response. Not out of avoidance, but because right now, there simply isn’t a clear solution on the table. And that is a problem.

There is, however, an opportunity. Africa could lead the redesign of this market. We have the chance to build a new standard that works for Africa and for African businesses. A standard that is community-led, regionally owned, and inclusive by design. Governments and corporates operating in Africa could commit to sourcing from local projects. Intermediaries could be restructured or removed. The point is: we do not have to accept the status quo.

If we shift the structure of access, we change the integrity of the market. By removing the bottlenecks, we invite in higher-quality, locally embedded climate projects. We ensure that credits sold in the name of African carbon actually benefit African people. And we begin to rethink what a just and effective carbon market could look like. One that is built with the continent, not just on it.

References:

Ashraf, N. & Karaki, K. (2024). African voluntary carbon markets: Boom or bust? Discussion Paper 375, ECDPM.

Shah, K., Berman, A., Kimani, C., & Shamakamba, C. (2024). Unlocking Local Value: Rethinking Benefit Sharing in African Carbon Projects. FSD Africa.

Policy Center for the New South (Pagop & Savard) (2024). Voluntary Carbon Markets in Africa: A Deep Dive into Opportunities and Challenges.

Global Landscapes Forum / ThinkLandscape (2025). What Can Carbon Markets Do for Africa’s Landscapes?