Economic & Social Transformation
For most of the past decade, Africa's carbon market was a story told in projections. Framework agreements were signed, registries were promised, and headline estimates spoke of billions of dollars in climate finance flowing to a continent that contributes little to global emissions but suffers heavily from their consequences. In 2026 the story has changed in an important way: the question is no longer whether African governments want carbon markets, but whether they can run them. Last week's Carbon Markets Africa Summit in Kigali (13–15 October), hosted by Rwanda's Ministry of Environment with UNDP and the African Development Bank, captured that shift. Rwanda's Environment Minister, Dr Bernadette Arakwiye, told delegates that "the question before us is therefore no longer simply whether Africa is ready," while Tanzania's environment minister, Hamad Yusuf Masauni, declared that "the era of potential is giving way to the era of execution."
This article examines what that execution looks like in practice: how Kenya, Ghana, Zimbabwe and Rwanda are converting forests, rangelands and cookstoves into tradable financial assets, what has gone wrong, and why the economic stakes now extend to national budgets, investor confidence and the livelihoods of rural communities.
Why carbon has become an economic policy question
Under Article 6 of the Paris Agreement, countries can trade emissions reductions with one another. When a host country authorises a credit for export, it must apply a "corresponding adjustment" — removing that tonne from its own national inventory so the reduction is not counted twice. That accounting rule transforms carbon credits from a niche voluntary product into a sovereign asset with a fiscal and strategic dimension. Every tonne sold abroad is a tonne a government can no longer use towards its own climate target (its Nationally Determined Contribution).
Africa's ambitions are large. The Africa Carbon Markets Initiative (ACMI), launched at COP27 in Sharm el-Sheikh in November 2022, set a target of 300 million credits retired annually by 2030 — a level it said could unlock about US$6 billion in annual income and support 30 million jobs — rising to 1.5 billion credits a year by 2050. Critics noted at the time that the entire global voluntary market issued roughly 279 million credits in 2022, meaning ACMI's goal implied Africa alone surpassing the whole world's then supply. Four years on, that gap between ambition and delivery is the defining feature of the market.
The pipeline is growing
The architecture is now visibly being built. According to the UN Environment Programme's Article 6 pipeline tracker, by June 2026 African countries had signed 35 bilateral cooperative agreements under Article 6.2, involving 12 countries. Kenya, Ghana, Zambia, Senegal, Tunisia, Rwanda and Morocco each have multiple agreements. Uganda introduced National Climate Change Mechanisms Regulations in 2025; Mozambique opened public consultation on a draft carbon-markets regulation in December 2025; and South Africa is considering reforms to clarify the legal status of credits and build a domestic market.
Ghana has moved fastest. It recorded 44 Article 6.2 activities by July 2026. Its national Carbon Registry had onboarded 17 of 69 project requests in its 2024 progress report, and the country completed what it described as the largest volume of Internationally Transferred Mitigation Outcomes (ITMOs) to the Swiss Emission Registry in 2025, after an initial transfer of nearly 12,000 units under its bilateral deal with Switzerland. By March 2026 Ghana had granted Letters of Authorisation covering about 47.1% of its ITMO budget to 2030; by September a government report put cumulative authorisations at 12.7 million tonnes of CO2 equivalent (MtCO2e) — more than half of its Article 6 budget.
Rwanda, which established a National Carbon Market Framework in 2023 with the Rwanda Environment Management Authority as regulator, opened applications with Singapore in January 2026 for Article 6 projects. Under that arrangement, eligible Singaporean companies liable for carbon tax can use qualifying international credits against up to 5% of their taxable emissions — a concrete example of compliance-market demand reaching African projects.
Kenya: the caution of a sovereign seller
Kenya illustrates the opposite instinct: restraint. In August 2026 the government published its National Carbon Registry Rule Book and set a ceiling of 10 million tonnes of CO2 equivalent for international transfers through 2030, released in annual tranches of about 1.67 million tonnes. The logic is that of a careful sovereign: if too many reductions are exported, Kenya could be left short of the reductions it needs to meet its own Paris commitments, potentially forcing costlier domestic abatement later.
That caution has had real costs. KOKO Networks, a bioethanol clean-cooking company with more than one million Kenyan customers, collapsed in early 2026 after the government declined to issue the Letter of Authorisation it needed to sell credits into compliance markets such as the aviation sector's CORSIA scheme. Trade Cabinet Secretary Lee Kinyanjui defended the decision, questioning what the state would tell other firms if one company absorbed most of the national quota. But KOKO's investment had been insured by the World Bank's Multilateral Investment Guarantee Agency (MIGA) for US$179.6 million (about KSh23 billion) — the world's first carbon-linked political-risk cover, explicitly including government breach of contract. Business Daily reported in February that Kenyan taxpayers could ultimately face the bill if the claim succeeds and MIGA seeks recovery from the state. The episode is a warning that regulatory uncertainty in carbon markets is not costless: it can translate directly into contingent liabilities on the public balance sheet.
Zimbabwe: rebuilding credibility
Zimbabwe's trajectory is one of repair. In 2023 the government threatened to cancel existing projects and proposed taking 50% of future revenues, after controversy surrounding the Kariba REDD+ project and a reported US$1.5 billion deal with a Dubai-based firm covering 7.5 million hectares — a scale that prompted accusations of a new form of land grab. Since then Harare has published an Article 6 strategy and advanced a Climate Change Management Bill. In October 2025 a cookstove project run by Cicada Carbon became, by its account, the first private-sector project to receive a corresponding-adjustment designation from the Gold Standard registry, covering about 112,000 credits with up to 3 million projected over five years. Zimbabwe's rules require one-third of proceeds to go to state levies — a reminder that governments increasingly see carbon revenue as a fiscal stream to be shared, not merely a private return.
The integrity problem
Africa's carbon economy will only be worth what buyers believe its credits represent. Here the record is mixed. In February 2026 the UN issued the first credits under the new Article 6.4 mechanism — the successor to the Clean Development Mechanism — but they came from a cookstove project in Myanmar, not Africa. Notably, that project generated about 40% fewer credits than it would have under the old CDM, reflecting stricter baseline rules. As of September 2026, no African project had yet received Article 6.4 credits.
Tighter methodologies matter because over-crediting has been a recurrent concern. A Swiss non-profit has alleged that a Ghanaian clean-cooking project under the Ghana–Switzerland agreement uses assumptions that inflate issuance. In northern Kenya, Verra reinstated the two-million-hectare Northern Kenya Rangelands Carbon Project for a second time in June 2026, despite a 2025 court ruling that two associated conservancies, including Biliqo Bulesa (roughly one-fifth of the project's credits), had been established unconstitutionally. Pastoralist leaders in Kajiado and Narok counties have also complained that carbon-project restrictions interfere with traditional grazing and livestock mobility.
At Kigali, international regulators drew the obvious lesson. Perumal Arumugam of UN Climate Change warned that "Africa should not compete simply by offering the cheapest tonnes," while European Commission officials stressed that additionality and permanence are non-negotiable for future demand. Minister Arakwiye put it more bluntly: "Trust is the currency of this market."
Who captures the value?
The social question at the heart of the market is distribution. Credits are generated on land used by farmers, herders and forest communities, and in households that switch to cleaner cooking fuels. Yet value often accrues to project developers, intermediaries and offshore buyers. The African Union's 2025 Africa Action Plan on Carbon Markets and AUDA-NEPAD's African Principles for Equity and Integrity in Carbon Markets both call for stricter benefit-sharing rules. Zimbabwe's one-third state levy, Kenya's community benefit requirements and Ghana's registry-based oversight are early attempts to codify a fairer split, but enforcement capacity remains thin.
Finance is the other bottleneck. Development Bank of Southern Africa CIO Greg Fyfe stressed at the summit the need for patient capital and risk-sharing to bridge feasibility gaps that deter private investors. Rwanda's minister set out three priorities: methodologies adapted to African conditions, project-preparation and readiness finance, and long-term demand at fair prices.
Outlook: three tests for 2027
Africa's carbon markets now face three practical tests. First, the continent needs its first Article 6.4 issuance to demonstrate that African projects can clear the UN's stricter bar. Second, governments must show that authorisation regimes are predictable — the KOKO collapse showed that unclear rules can destroy companies and saddle the state with liabilities. Third, communities must see tangible benefits; without social licence, projects on contested land will continue to attract litigation and reputational damage that lowers prices for every African tonne.
If those tests are met, carbon finance could become a meaningful complement to concessional climate finance at a time when official aid budgets are shrinking. If they are not, the gap between ACMI's 300-million-credit ambition and the continent's actual output will remain a measure of lost opportunity. The shift visible in 2026 — from memoranda to registries, rulebooks and real transfers — is genuine progress. Whether it becomes transformation depends on integrity being treated not as a compliance cost, but as the product itself.
