One of the most frequently repeated narratives when it comes to rolling out any green initiatives in Africa is that doing so puts much-needed growth at risk. During the COP 28, which is taking place in the United Arab Emirates (UAE) it’s an argument that will likely crop up again.
Historically, it hasn’t been one without merit either. African countries are, after all, reportedly
responsible for just four percent of global emissions. Given that they’ve contributed so little to
the climate crisis, the argument goes, why should they be expected to slash their emissions, potentially at the cost of growth and development, even as developed countries continue to
push large amounts of greenhouse gases into the atmosphere?
Such arguments miss out on one big point, however. And that’s that green initiatives, incentives, and policies don’t have to come at the cost of development. In fact, the opposite is true. The right green projects, particularly in the renewable energy space, can fuel growth and drive development. Moreover, such projects can sit at the heart of green communities that fuel
further, sustained growth.
Before looking at how that might happen, it’s worth looking at how big some of the green
opportunities in Africa are.
Take the agricultural sector, for example. According to a study by the UN Environmental
Programme (UNEP), adopting things like organic farming, precision agriculture, and
agroforestry could help enhance productivity, minimise human impacts on nature, and avoid
food insecurity. The study additionally reveals that there is a US$1 trillion opportunity in digital agribusiness technologies across the continent and combating soil erosion and nutrient
depletion can unlock US$62.4 billion in value annually.
Perhaps the biggest green opportunities for the continent, however, lie in renewable energy.
One obvious opportunity lies in the solar space. Africa is, after all, home to 60% of the world’s
best solar resources but just one percent of installed capacity, according to the International
Energy Agency. In addition to the cheap, renewable energy that making more extensive use of
those resources would offer, launching extensive solar programmes would also unlock immense value in areas like skills development and job creation.
When those solar resources are combined with other untapped renewable energy sources such
as wind, hydro, biomass, and geothermal resources, the potential value is even greater.
According to the UNEP, they could increase the continent’s GDP by 6.4% from 2021 to 2050
and generate anywhere from 100% to 400% of current global energy demand. Even with
Africa’s predicted population growth, that means there’s a significant opportunity for Africa to
become a net exporter of clean energy.
There are also significant opportunities to build the circular economies that many believe are
crucial to humanity’s future survival and welfare. Circular economy initiatives could help reduce plastic waste and pollution, unveil new forms of sustainable packaging, and enhance recycling, including for eWaste.
Fortunately, more and more role players across Africa are realising the positive impact that
green initiatives, policies, and practices can have. More than 40 African states, for instance,
were revising their national climate plans in 2022 to be more ambitious and outline greater
commitments to climate adaptation and mitigation measures.
Additionally, several major African cities have embraced sustainability. The Arcadis Sustainable Cities Index 2022, which measures urban sustainability across cities, ranks Nairobi at 96 out of 100 global cities. The country’s Vision 2030 roadmap has sustainability at its core in making the country achieve middle income status in the next seven years.
Further down in South Africa, Cape Town has been a leader in exploring biofuels for transport,
renewables in public facilities, and preparing its power grid for a surge in electric vehicles.
Abidjan’s Cocody suburb, meanwhile, has committed to cutting its carbon emissions by 70% by 2030 through the extensive use of solar power and energy-efficient stoves.
While such commitments and initiatives are vital, governments cannot fund them on their own. In fact, it’s estimated that Africa requires US$2.8 trillion to fulfil its commitments under the Paris Agreement. That makes the role of investors absolutely critical.
But those investors cannot simply provide funding and hope for the best. Communities must
always be at the heart of their investments, with their long-term welfare given equal footing at
least to profit. To do otherwise is to risk failed projects, lose community buy-in, and ultimately
give in to the narratives that claim green projects don’t benefit ordinary Africans.
As one of those investors, we recognise that understanding and responding to climate change is a journey that requires ongoing learning, training, and a revision of our current investment
process and ESG screening processes to ensure climate change is not only priced into our
investments but also factored into our impact monitoring and management process.
As investors in Africa, we need to be agile and equip our clients with the necessary skills and
resources to implement climate adaptation and mitigation measures that ensure the
sustainability of their businesses and create the desired impact.
Ultimately then, it should be clear that there’s little merit to arguments that Africa cannot develop unless it uses the same carbon-intensive methods as other global regions. In fact, a
sustainability-focused shift can unlock massive amounts of value that drive growth and
development. And, if the green projects driving that shift are community-oriented, the impacts
can be even bigger.
By Kuda Mukova, Head of Impact and Sustainability at Norsad Capital