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FINANCING THE MARITIME SECTOR IN AFRICA

What are today’s priorities & innovative financial solutions towards a sustainable transformation of the African maritime sector?

Organized by: EU-Africa Chamber of Commerce and Climate Champions Team.

Format: In-person event in Abidjan, Côte d’Ivoire

Date: 17-18 October 2024

Background
More than 90% of Africa’s trade with the rest of the world is carried by sea. This means that the maritime sector is critical to Africa’s economic development. Despite the sector’s importance to Africa, the development of the maritime sector in Africa has been suboptimal. UN Trade and
Development (UNCTAD) reports that African beneficial ownership accounts for less than 2% of the global fleet and that this fleet is mainly characterised by ageing ships. Older ships are less efficient and emit relatively higher amounts of greenhouse gases (GHG) than newer vessels and this exacerbates the problem.

UNCTAD further estimates that The African Continental Free Trade Area (AfCFTA) Agreement will lead to an increase in the demand for maritime freight by 62% with significant investment in transport equipment and infrastructure required including some 100 additional vessels.

The global drive towards decarbonisation of the maritime sector presents a much-needed impetus for Africa to both overcome the myriad challenges it faces in attracting financing for the maritime sector to boost its fleet with new low-to-zero emission ships; aligning with global climate goals while achieving sustainable development.

Key Challenges of the African maritime sector
The maritime sector on the continent faces the following challenges:

  • Limited Financing: Traditional ship finance is practically non-existent on the continent and investment in green maritime technologies and infrastructure is inadequate. Traditional commercial financing models often overlook the sector’s unique needs and potential for environmental impact.
  • Technological Gaps: There is a lag in adopting advanced, low-carbon technologies due to high costs and limited access to innovation.
  • Regulatory Hurdles: Inconsistent policies and lack of regulatory frameworks across African nations impede coordinated efforts for sectoral decarbonisation.