FSD Africa makes $3m investment in carbon market startup
FSD Africa Investments (FSDAi) has committed $3 million to support Carbon Value Exchange (Cavex), a groundbreaking digital platform focused on transforming the voluntary carbon market. Cavex facilitates direct sales of carbon credits from small-scale producers, such as farmers and small businesses, to corporate buyers. The platform's ambitious goal is to channel more than $500 million in carbon financing toward small-scale green projects by the year 2030.
Cavex leverages cutting-edge technology to remotely collect real-time data on the activities of these projects and accurately calculate the amount of carbon displacement or removal. This approach ensures complete transparency for buyers, assuring them that the information they receive is trustworthy and precise.
FSDAi's investment is a crucial component of Cavex's seed funding round, which aims to secure a total of $6 million. This funding will be instrumental in advancing Cavex to a commercially viable stage, including support from FSD Africa's Digital Innovation team, along with other co-grantors, for the core development of the platform by 4R Digital.
Key Takeaways
Carbon credits—instruments that allow individuals, firms, and governments to fund projects that reduce emissions (instead of reducing their own emissions)—offer an opportunity to unlock climate finance for the African continent. But the region currently accounts for just 2% of trading on the global carbon markets valued at over $2 billion. With the demand for carbon credits expected to increase by a factor of 15 or more, and be worth over $50 billion by 2030, it’s clear why investors are moving to increase their share of the booming market. More so, Africa may need an almost tenfold increase in climate adaptation funding—from current flows of about $11 billion a year in 2020—to $100 billion a year if it’s to buttress its infrastructure, improve weather early warning systems, and shield its agriculture from climate change, per a report from the Global Center on Adaptation.
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