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The growing enthusiasm around carbon markets, particularly afforestation, reforestation, and emissions-trading schemes, has piqued the interest of investors, governments, and corporations across Africa. From Nairobi’s clean-energy bonds to Nigeria’s voluntary carbon offset initiatives, the market is expanding. But the question remains: beyond the shifting prices and soaring headline figures, who actually profits, and who pays the true cost?
Market winners, hidden losers
Carbon markets are often touted as a win–win: capital flows into projects that sequester carbon and help curb global warming. But the reality on the ground tells a harsher story. African countries, endowed with vast forests and rich biodiversity, are being monetised in ways that benefit global corporations far more than local stakeholders.
Take large-scale tree-planting or “offset” projects. Multinational carbon traders and investor-backed vehicles reap handsome returns, generating verified offset credits, some of which fetch tens of dollars per tonne on international platforms. Yet those same transactions seldom offer commensurate compensation to the people living in or near these forests. Corporations buy the credits, report lowered emissions and shield their ESG reputations, while communities see negligible benefit. Forests are touted as carbon banks, but the custodians, the communities and the indigenous peoples are sidelined.
Meanwhile, the ecological costs are significant. Monoculture plantations, commonly used in some offset schemes, don’t replicate the biodiversity of original forests. They may sequester carbon effectively, yes, but at what cost? Water tables fall, local livelihoods tied to wild-foraged fruits and medicinal plants collapse, and land that once nurtured life becomes a thin needle carpet. The environmental trade-off is real.
Indigenous rights and community costs
For many indigenous groups, forests are not just economic assets; they are ancestral spaces, cultural heritage, and everyday sustenance. When land is excluded from their use under carbon projects, whether through formal titling, unclear contractual terms, or registration of rights to credit revenue, they lose out on both intangible and direct rights.
Even well-intentioned projects falter. Community Benefit-Sharing Agreements often remain obscure, overly technical, and poorly enforced. Revenue trickles down, that is, if it trickles at all, while developers or brokers pocket the lion’s share. Projects must be co-designed with communities, that compensation reflects true opportunity costs, and that governance offers transparency and local participation.
Are African businesses locked out?
Despite the dominance of global players, there is great untapped potential for African firms to enter and benefit from carbon markets. Take Nigeria: its booming indigenous payment and fintech sector, budding green-technology startups, and even established agribusinesses have the capacity to curate carbon projects, especially at the local or regional level.
Local investors and businesses can play several roles:
– Project development and verification: Many local firms understand the terrain, customs, ecology and community dynamics better than foreign developers. Leading local registries, verification providers and consultants can rise to prominence, offering more culturally attuned, credible and cost-efficient services.
– Bundling small-scale layovers: Instead of chasing mega-forest carbon schemes, businesses could aggregate smallholder agroforestry, community-managed forests, or mangrove-restoration initiatives into credible credits. These micro-projects can be more resilient, more equitable and equally verifiable if done right.
– Green finance leveraging: Nigerian banks, pension funds and insurance companies can raise dedicated “nature-positive” finance lines, such as blue bonds, green bonds, or local offset instruments. If designed with stringent safeguards and community engagement, such instruments can supply responsible capital while generating returns.
– Corporate offsetting services: Peers in the banking, manufacturing, or oil-and-gas sectors may need local offset credits. A Nigerian business could create a platform offering local, verified offsets to domestic corporations seeking to credibly manage Scope 2 or Scope 3 emissions. This will help to keep those offset budgets within the continent.
Toward equitable carbon futures
It is time for African carbon markets to be shaped from the ground up – with equity, inclusion and long-term sustainability at their core:
1. Policy and regulation: Governments must enforce benefit-sharing rules, require independent oversight of projects, and mandate prior informed consent from communities. Additionally, tax incentives for genuinely inclusive carbon projects could boost local ownership.
2. Transparency and standards: Nigeria’s nascent carbon registries and project ratings can adopt participatory audits, publish revenue flows, and insist on environmental co-benefits and not just carbon sequestration.
3. Capacity building: International development partners, donors or multilateral institutions should invest in local technical expertise: community mapping, MRV (monitoring, reporting, verification), social impact assessment and project management.
4. Community centricity: Projects must be grounded in local knowledge: combining agroforestry that enhances livelihoods, preserving biodiversity, and protecting cultural rights. Compensation must extend beyond cash to investing in schools, health clinics, eco-friendly agricultural/alternative livelihoods and local governance structures.
5. Private sector leadership: Nigerian firms should lead responsibly. The ESG promise lies in demonstrable, measurable, and equitable impact. Profit-making cannot come at the expense of disenfranchising Africa’s forest custodians.
A new business paradigm
If African businesses seize the opportunity, carbon markets could become a new frontier for equitable green growth across the continent. But that will not happen automatically or magically. It demands integrity, regulatory teeth, accountability, and a reimagining of who the “customer” of carbon really is.
Beyond the market buzz and price-per-tonne headlines lies an ethical ledger that cannot be erased. African forests are living, breathing ecosystems, and the people who protect them deserve more than passive roles. They must be active architects and beneficiaries of the carbon economy. Only then can the true cost of carbon reflect both the price on exchange floors and the value in human dignity and environmental resilience.
Sarah Esangbedo Ajose-Adeogun is the Founder and Managing Partner at Teasoo Consulting Limited, a foremost ESG consulting firm. She is a former Community Content Manager at Shell Petroleum Development Company and served as the Special Adviser on Strategy, Policy, Projects, and Performance Management to the Government of Edo State. She is also the host of the #SarahSpeaks podcast on YouTube @WinningBigWithSarah, where she shares insights on leadership, strategy, and sustainable growth.
