Climate change, conscious consumers and climate action: The role of fintech payments in unlocking Africa’s carbon market potential

The situation is urgent—without immediate and significant action, the continent’s ability to sustain its growing population and economic development is at risk.

One major way to tackle these environmental challenges and achieve net zero is to decarbonize by making operations clean and green. The other is through the carbon credits market. Simply put, carbon credits are permits that allow a company to emit a certain amount of carbon dioxide. Companies can buy these credits to offset their pending emissions and achieve net zero by funding projects that remove or reduce carbon from the atmosphere. This system not only helps mitigate climate change but also generates revenue for sustainable development projects in Africa.

Africa has a unique opportunity to harness the global carbon markets to advance both climate and development goals. The voluntary carbon market holds the potential to contribute to global net-zero efforts while supporting local development objectives and generating significant revenue. Projects that issue carbon credits in Africa are already making a noticeable impact. For example, Gold Standard accredited projects have delivered $16 billion worth of co-benefits across the continent, considering factors like biodiversity, employment, livelihood, and health impacts.

Notable African climate action projects funded by carbon credits include The High Atlas Forest Project in Morocco, which focuses on reforestation and sustainable land management practices in the High Atlas Mountains. By planting native trees and promoting biodiversity, the project aims to sequester carbon, improve water retention, and support local communities through sustainable agriculture and ecotourism. The carbon credits generated from this project help finance its activities and contribute to global carbon reduction efforts.

The Kasigau Corridor REDD+ Project in Kenya is also helping to keep the continent green. Also funded by carbon credits, this initiative aims to protect over 200,000 hectares of dryland forest between Tsavo East and Tsavo West National Parks. By preventing deforestation and promoting sustainable land use practices, the project helps sequester carbon and preserve biodiversity. It also supports local communities through initiatives such as education, healthcare, and sustainable agriculture. The carbon credits generated from the project finance its conservation efforts and contribute to global climate mitigation goals.

Another significant sustainability initiative is the Nile Delta Biodiversity Restoration project, which aims to restore wetland ecosystems, enhance biodiversity, and improve water quality in the Nile Delta region. By implementing sustainable farming practices and rehabilitating degraded lands, the project helps sequester carbon and support local livelihoods. The carbon credits generated provide financial support for the ongoing restoration efforts and contribute to Egypt’s environmental sustainability goals.

While the carbon market presents enormous opportunities, it also faces significant challenges. The market remains largely unregulated, and there are concerns about the quality of some credits being sold. Additionally, the current carbon credit infrastructure is fragmented and lacks standardisation, making it difficult for companies to access and utilise these credits effectively. However, emerging climate focused technology can help overcome these obstacles, enabling companies and consumers to take meaningful action towards sustainability.

Fintechs in particular play a major role in democratising access to climate action because they hold the key to simplifying the process of offsetting carbon emissions through something that people do every day – making purchasing decisions.

By leveraging the reach of ecommerce and mobile technology, companies can contribute to carbon reduction by adding an integrated fintech payments processing and infrastructure solution that calculates the emissions of goods and services. Presenting these calculations to consumers at the point of sale allows them to think about the carbon footprint of their purchase – and empowers them to do something about it by giving them the option to offset emission by purchasing carbon credits. This innovation can encourage merchants to influence consumer behaviour, promoting conscious shopping habits that incorporate sustainability into daily life.

Consumer Carbon Offsetting is the future of payments

This trend is taking off in Africa too, given its mobile-first populations and eagerness to embrace new payment innovations.

As younger, sustainability-conscious consumers gain purchasing power, the demand for carbon offsets is likely to grow, creating new opportunities for climate action across the continent – and soaring demand for fintech payments infrastructure that can provide this option to consumers with just a few clicks from a mobile device.

Personalised and Relevant Carbon-Offset Opportunities in Africa

One of the great things about fintech innovation is its agility and flexibility to offer more personal and bespoke offerings that tailor to individual tastes and preferences. While this is often thought of as a benefit to curating shopping ideas for consumers – imagine if the same personalised approach could be applied to carbon offsetting?

For me, this is the future of conscious-consumerism – where individuals at point of sale will have the option to decide which climate change mitigation project will benefit from their carbon offsetting. I predict that this decision will be based on what project offers the biggest co-benefit and greatest personal impact.

Over time, these carbon transactions can turbocharge local economies. Popular restaurants might recommend carbon credits that help nearby farmers adopt regenerative practices. Cities could link ticket sales for sports events with projects that restore local habitats. Universities could execute or verify these projects, enhancing trust in the carbon-offset market as consumers see benefits in their own communities.

Financial institutions can also facilitate carbon-credit financing behind the scenes. For instance, telematics apps could reward safe driving behaviours with carbon credits to offset car emissions. Fintech-enabled platforms like food delivery or ride-sharing services might offer premium tiers with environmental benefits. This approach mirrors successful initiatives like Kenya Airways’ “Green Flight” programme, where passengers can pay a little extra to fund reforestation projects and reduce their carbon footprint.

The enthusiasm for this initiative is mirrored across industries and markets in Africa, where sustainability-conscious consumers are making a real impact with every purchase they make.

Of course none of this can work without verifiable proof. Transparency is paramount for climate-conscious consumers, who are adept at spotting and rejecting greenwashing tactics that falsely portray a company as eco-friendly.

These consumers demand genuine sustainability practices and substantiated data on environmental impact.

Blockchain technology, a component that should be key to any credible payments infrastructure player committed to climate change – can provide the transparency these consumers seek by ensuring immutable and traceable records of a company’s sustainability efforts and where carbon offsets are making a difference.

Each transaction or action recorded on a blockchain is transparent and tamper-proof, allowing consumers to verify the authenticity of a company’s claims. This transparency fosters trust and ensures that businesses genuinely committed to sustainability are recognised and supported, while those employing deceptive practices are held accountable.

Africa stands at the threshold of a transformative opportunity to leverage the carbon credit market for climate and development benefits. By addressing current challenges and maximising the potential of carbon credits, Africa can make substantial strides in reducing emissions and promoting sustainable development. With the help of fintech payments innovation, Africa can transform consumer habits and turn them into conscious shoppers.

By simply giving consumers the facts about the true cost of their purchases from an environmental perspective, they can help mitigate the damage by opting to offset their carbon emissions and make a difference on a local and global scale.

Through innovative payment solutions and strategic participation in the carbon market, African countries can lead the way in global sustainability efforts and to create a blueprint for meaningful and impactful climate action.

Nameer Khan is the founder and Chair of the MENA Fintech Association, which recently launched a chapter for Africa. He is also the Founder and CEO of Fils, a ground-breaking global fintech enterprise dedicated to embedding sustainability into the fabric of digital transactions. With its innovative API-driven platform, Fils enables businesses of all sizes to integrate climate-positive solutions seamlessly into their operations, fostering environmental stewardship and corporate responsibility. Leveraging the latest fintech innovations and blockchain technology, Fils is committed to facilitating the transition to a sustainable economy, empowering organisations to make a positive impact on the planet with every transaction.