UNDP Africa Sustainable Finance Hub: “Preparing governments to become carbon market ready”

Exclusive interview with Maxwell Gomera, Resident Representative of UNDP South Africa and Director of the Africa Sustainable Finance Hub. The UNDP is the official host partner of the upcoming Carbon Markets Africa Summit.

Maxwell Gomera, Head of the UNDP Sustainable Finance Hub, South Africa

Thank you for joining us. Please can we start with some background about you and your role at the UNDP.
Thank you for having me. My name is Max Gomera and I'm the head of the UNDP Sustainable Finance Hub based here in South Africa. I've been in this role for a year now, and I guess it's enough time for me to reflect on where are we going, where the country is going and on what the UNDP's role is in that transition.

Perhaps I can start with an anecdote about my time here. When I first came into this country, I met three young people who live very close to where I'm staying right now. It was in a bar. Two of them were very pessimistic about the opportunities that they saw in this country. “It is what it is,” they told me. “How can you expect us to have any form of hope in a country where unemployment is hovering anywhere between 30% and 60%, depending on which statistic you are using.”

One was very optimistic. She refused to accept that “it is what it is.” And these are the young people that give me hope for Africa, that give me hope for South Africa. Because our job here is important, we want every South African, every young South African to believe that tomorrow is worth fighting for. So, as the UNDP Sustainable Finance Hub, our work here is to work with the government of South Africa and partners alike to ensure that the opportunities for those young people are clear and achievable.

How does the UNDP Africa Sustainable Finance Hub (ASFH) work? Where on the continent are you active?

As a hub, we are active on the whole continent, and it is quite remarkable what we are finding on the continent. If you look at the differences of where African countries are, Botswana, for example, long held as a beacon of good governance, is currently struggling with a shrinking fiscal space. In South Africa, the economy itself is stagnating around 1% growth, 0.8–1% growth. If you look at Nigeria, it's struggling with inflation of over 20%. This is a story that you find across the continent. On the one hand, governments are running out of fiscal space to finance development. On the other hand, this is an economy that's also full of opportunity. It has got a burgeoning young population. It's got SMEs, small medium scale enterprises, that are thriving and innovating, but they are not growing.

The question has to be, why are we not able to grow the African economy so it can meet the needs of many Africans? And this is where we come in. We've been working with governments to ensure that we expand the fiscal space and the fiscal opportunities that are available to them to be able to do so. But we also work with private sector, with banks, with the finance industry to ensure that the resources that are needed to power small medium scale enterprises, which are the backbone of Africa's industry are available.

How can the ASFH accelerate the SDGs and the African Union Agenda 2063?

The problems are real and very varied across the continent. I spent some time in Rwanda, and there I met a woman called Marie José. Marie José was telling me about how she wakes up every day and walks over five kilometres to look for firewood. And on her journeys to look for firewood, she comes across young women who are on the same journey and young men who are twice her size who are also looking for firewood. She mentioned to me that some of the young women who had babies on their backs were actually raped on the way to find firewood. This is outrageous. How is it possible that in 2025, when we are able to send people to the moon, when we are able to create driverless vehicles, we've not been able to solve the problem of cooking energy in Africa's rural areas?

This is something that is within our means. And as UNDP Sustainable Finance Hub, we are now working with governments across Africa, the government of Rwanda included, on how to solve such problems. It is both a financing problem, but it is also an engineering and architectural problem in that particular example. We've not been able to come up with the technology for cooking that is affordable in that income setting for rural Africans. Because if we have that technology, people will adopt it as long as it's within the income setting that they face. This is not something that's beyond the realms of possibility. And at the African Sustainable Finance Hub, we are working with governments, with private sector, with universities to make sure that this is solved. We have started with deploying over 17 innovation hubs that are unleashing the power of innovation and showing what is possible across the continent. We're doing this across all the Sustainable Development Goals and trying to solve them and to ensure that these risks of our time do not undermine the prospects for Africans.

What tools does the ASFH use to inform and transform financial systems and to build sustainable and resilient economies?

We are adopting several tools in order to achieve the African dream. If you look at the problem of small medium scale enterprises, for far too long, these have remained locked outside capital markets. African capital markets do not see the potential that is within small medium scale enterprises. They receive less than 5% of the capital that's available, yet they employ over 60% of Africans. How is that possible? How is that anomaly being allowed to persist?

First, existing capital markets see SMEs as a risk, and as such, they do not invest in that. Our job has been to work with governments, with banks, with the finance industry, to de-risk those aspects that investors see as risks on small, medium-scale enterprises. So, for example, if you are here in South Africa, we are working within many of the townships to develop what the government has rightly identified as a very promising township economy. When we talked to banks about why are you not financing such promising businesses in the townships? Well, they outlined many of the familiar issues: First, we don't know who these people are. Second, well, they're risky. They will need them to put some collateral to it. Third, they cannot give us any of their financials. If we ask for three to six pounds financials, we cannot understand them, and so on and so forth.

But these are issues that we can de-risk. So working with the government of South Africa and other institutions, we've now developed a way of using digital tools to give people a digital identity that everybody can use. We now, in 2025, know more information about each individual on the planet almost, that there is almost no excuse for any bank to say, we cannot extend a loan to you, because we don't know who you are. There is almost no excuse. In the digital era right now, we almost can pinpoint where a person is at any one point in time. Second, we are using digital tools to enable such businesses to be able to do seemingly mundane things like recording their inventory using the tools that are available. You now need to use AI to just throw it what you have and it will tell you with an amazing level of accuracy what you have and do with the recording of your inventory.

At the same time, we're also using digital payment platforms that we are deploying to SMEs so that as they sell, the city is also collecting data on their sales. And with that, they are able to produce their financials every month and able to say to any investor and to a bank that this is who I am and this is the potential that my business has got; here is the reality of what I am actually achieving. The results are amazing.

How is UNDP’s Africa Sustainable Finance Hub catalysing private sector

participation in Africa’s carbon markets under Article 6, and what opportunities should businesses expect?
Well, we have seen what has happened with the Africa's carbon markets. On the one hand, there have been mixed signals about whether or not this is a market that is thriving globally. We've had many big participants retreating from their commitments on carbon markets with BlackRock rolling back on their commitments for carbon. We had easyJet moving away from their commitments. And so if you are a player on the African continent, this can get very confusing. But the reality is that this is a huge market, almost $1 trillion. And Africa's share on it remains very minuscule. Why? Several reasons.

First, what the global negotiations have done is they have created a new asset class, a new carbon market in which buyers and sellers can interact. The rules have been organised and we were very delighted to see the progress that was made in the last UNFCCC meeting where governments agreed on Article 6, many of what is now called Article 6 under the carbon markets. What that does is it establishes rules and any functional market needs well-functioning rules.

But that is not enough. There are these rules, but African governments themselves also have to be aware of what is it that we have that we can bring to the market? How much of it do we have? Who is buying out there? So they can get a good price for their carbon and establish the institutions that are needed for that? That's where we come in. We are working with governments to set up a registry of how much carbon they have, what are their commitments under nationally determined contributions. And of that, how much can players within a country take to voluntary markets or to more regulated markets? And what price are they getting for that? And helping them to establish the rules under which each of the actors within each jurisdiction can interact with buyers and sellers who are outside of that jurisdiction.

The results are promising at the moment, and we are very happy that we have achieved a lot of things in domesticating what has come from the international discussions, but also helping countries to set things like, as I said, like registries, but also look at their own capabilities, their taxonomy to ensure that when we say one cubic meter of carbon here, it's the same language that someone else will understand from across the world. This is important work because these markets function more efficiently if buyers and sellers are able to interact using the same rules.

Part of the ASFH’s goals is to enhance carbon market access and energy financing to lower carbon emissions. How is this done?

Well, there are many examples of where we have had to work with governments to ensure carbon market access. One has to ask oneself, what has been the barrier to accessing carbon markets for African governments? First is just sheer availability of information. And we have worked to ensure that the information around “what is this carbon market?” is available. How do governments prepare themselves? How do they become carbon market ready?

We've also worked on ensuring that the institutions and the rules and regulations that are needed in each country in order to participate in carbon markets are available and are understood by everyone. We've also had to ask ourselves which sectors of the economy are carbon intensive or are producing a lot of carbon and require intervention?

If you are in South Africa, that sector is the energy market, we generate a lot of our energy using fossil fuels. So it is self-evident that this is an area that's got lots of potential. So we've spent a lot of time understanding how much carbon is being produced in that sector and how do we offset it. Now, there are two ways of reacting to it. One is to offset that, say, reduce using available technology. Therefore, we offset it somewhere else. And that's what we are working with the government on.

The other one is to say, how do we transition to renewable energy options? What we've seen happening across countries like South Africa, Rwanda, and Nigeria, where the massive transitions to renewable energy are very promising. Namibia is another one. We're working with the Namibian government right now on their ambition for hydrogen-powered energy sources. And that is very promising. We are seeing a lot of innovation across the African continent. And that is showing us that we can transform this economy. Without such transformation, our hopes of even transforming the small medium scale enterprises and industrialising Africa come to nothing. Because without energy, without that transition, we are not able to industrialise this continent.

Any specific success stories you can share so far regarding carbon market development on the continent.

Yes, there are many promising stories, but some of them show the agency and reason why we have to make this transformation. By some reports, the people living in the Middleburg area of South Africa are suffering from respiratory related diseases, and some of them actually die from it. What value do we put on one human life that dies as a result of something that is preventable? They are not the only ones. We've seen farmers who are in agony because rainfall patterns have changed across this continent. We've seen many who have had to see their whole livelihood upended. But I also talked about the story of Marie-José, who goes around five kilometres every morning to look for firewood in order to be able to feed her family.

Such stories abound in Africa, but we've also got the solutions to it. If you look at the transformations that are happening in countries like Rwanda, which are shifting the whole motorcycle economy, they are called “motos.” The city of Kigali is full of motos, and most of those motos are powered by fossil fuels. The government has taken a decision that they want to transition this to electric battery powered motorbikes. But how do you finance that? If you are an individual motorcycle owner, how do you finance that? Where do you get the capex that's needed to make that transition? Well, the government of Rwanda could introduce subsidies or could say, we are reducing the import duties on it. That's one way, but it's not enough to incentivise an industry that will transform the whole economy. And indeed, in some instances, they have done so.

Or we could continue trying to develop the technology and ensuring that the technology costs go down. But we also have a carbon market which can help us to buy down the risk and to buy down some of the costs of the transition from fossil fuel powered motorcycle industry to an electrically powered motorcycle industry. And that is significant. If we get the math right, the cost of transition will be as painless as possible.

Now you could think of it and scale that to industries that are in more mature and sophisticated markets like South Africa, where we have people who are employed by the coal industry. If we're going to transform and transition that coal industry to renewable energies, there are consequences and job losses that we will face, but also there are opportunities. How do we buy down that risk? Carbon markets offer us that opportunity. If we are able to establish effective and well-functioning carbon markets, we can use the revenue from carbon markets to reduce the pain and cost of transition for most African countries.

You are the official host partner of the upcoming Carbon Markets Africa Summit. Why the decision to join this climate change journey with VUKA Group?

The upcoming Carbon Markets Africa Summit is a great opportunity for us to reflect on where are we going and what are we achieving. It is almost unimaginable that we can even think of industrialising Africa today without thinking about how do we react to the problem of our time? How do we adapt to climate change and how do we mitigate our own contribution to climate change? This is a policy problem but an industrialisation opportunity that we all face as Africans. So summits, such as the Carbon Markets Africa Summit, are a good signpost along the journey that we are all facing. And it is a time to get in touch with people like the VUKA Green Economy Group and ask those questions. What role can we play to accelerate the transition? Because this transition will not happen because there's a story of a transition that's happening in Mpumalanga. One story here, one story there. It will happen more effectively when like-minded people can partner and take these ideas to scale. As such, this is why we are very proud to be associated with the VUKA Group, Go Green Africa, Africa's Green Economy Summit, and everyone who is playing a role in ensuring that this summit succeeds to give Africa the tools that Africa needs to make the transition.

What will be your message at the event?
The message for this summit has to be: Tomorrow is worth fighting for. And every young African must feel that Africa has the possibilities. I am reminded of the story of the three young people that I met when I started my journey here in South Africa. If two-thirds of young people feel hopeless, it is our duty to show them that actually, there is reason for optimising in this country and across the continent. In fact, South Africa offers us many possibilities, but we just have to show young people that this is possible.

And that story, I have seen it happen. At the University of Johannesburg, we have set up what we call a university innovation pod. And that university innovation pod is enabling young African researchers to look into what are the possibilities for innovation. We put 3D printers that are enabling 3D fabrication of material. One young man came and said, look, I am worried about the growing trend of people who are spiking people’s drinks in night clubs, and using artificial intelligence I am now able to enable people to use their handheld device, point at a drink, look at the composition of whatever is in that drink, and say with reasonable confidence whether or not their drink has been spiked. This is a real problem. We all know that across the continent this is happening.

It is such examples that give me hope that given the tools to innovate, young Africans will do so. Because the only difference from where I'm standing between an innovator in Silicon Valley and an innovator in Africa is that the cost of innovation in Africa is quite high, but the cost of innovation in Silicon Valley is low because the ecosystem is joined up. This is why events such as Carbon Markets Africa Summit matter, because we bring together like-minded people to strengthen the ecosystem around a problem that we all share and give solutions to a problem that we all share. So the message has to be: Tomorrow is worth fighting for. Tomorrow is worth the fight.

Anything you would like to add?
The opportunity that Africa gives to the world is one not to be missed. But it will only be a realistic opportunity if we do something about it. It is not enough to recognise that we have potential. When the gap between potential and reality widens, we call that failure. We cannot continue talking about Africa's potential. We must make that potential a reality. And Africa's young people today, with their innovation skills, with their energy, with their hope and dreams, offer us the best chance for ensuring that Africa rises as an industrial giant for the world, because that's the place we deserve.