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Developing Inclusive Climate-Resilient Economy for Sustainable Wealth Creation in Africa

Economic development historically has resulted in an increase in greenhouse gas emissions as well as other environmental impacts. Enactment of policy reforms that recognize the realities of climate change, will strengthen economic recovery and promote long-term growth.

The climate challenge cuts across every priority poverty reduction, agriculture, job creation, women’s empowerment, fragility, and more. Countries therefore have to tackle it in multiple ways, including by helping cities develop in clean ways, making climate smart agriculture practices the norm, improving clean, green, and affordable energy, and putting people and communities at the forefront in order to improve lives and protect the future.

Adopting an inclusive green economy (IGE) approach to structural transformation could enable African countries to ensure efficient, equitable and sustainable use of their natural resources and reduce the adverse impacts of economic growth.

Africa’s main challenge is to adapt to climate change by investing in more resilient agriculture and food systems, building infrastructure that resists extreme weather events, protecting its coastal cities, and enhancing disaster preparedness systems. Ramping up climate action on both the resilience and clean energy fronts is critical to address climate change and poverty in Africa, as the window of opportunity to counter the climate crisis is rapidly narrowing.

The disruption of socio-economic systems and exclusion of vulnerable populations, biodiversity loss and the irreversible degradation of water and land resources that support economic activities and human welfare. Land concentration, smallholder displacement, and resource contamination occurs in settings with low planning and regulatory capacity to prevent or curtail these effects.
The notion of green economy does not replace sustainable development, but creates a new focus on the economy, investment, capital and infrastructure, employment and skills and positive social and environmental outcomes.

Moreover, the continent is already seizing the opportunity to make a transition to the green economy, providing jobs and social benefits as well as protecting vital natural resources in order to leapfrog into greener development pathways. The impact of the economic transformation of the environment, thus warrants special attention. Economic transformation and growth tend to increase demands on natural capital, especially as countries move from low-income to upper middle-income status.

Green economy and investment

The Green economy provides a macro-economic approach to sustainable economic growth with a central focus on investments, employment and skills, economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services.

Africa has a huge potential in its green growth, such as in the renewable energy field while the investment in this field is increasing. In the area of climate change, many countries on the continent have already designed their own development strategy in order to meet various needs of development based on their specific circumstances, development priorities and other social and cultural elements. But country-level action is not sufficient and regional cooperation has also been developed in Africa to deal jointly with common issues. Such regional/cross border cooperation needs to be further enhanced both in areas of adaptation and mitigation.

These green investments need to be enabled and supported through targeted public expenditure, policy reforms and changes in taxation and regulation. Governments must implement pricing policies and regulations that create appropriate market incentives for green processes and products. These include, for instance, incentives for more efficient energy and water use. Without such incentives, private green demand will be less than socially desirable due to environmental market failures.

Authorities need to strengthen, firm capacity, performance and entrepreneurship, taking into account the very different features of the various major types of firms that exist in the industrial sector of most African economies. Of these types, typically three prevail: elephants or a small number of large formal firms that dominate their sectors; gazelles representing about 10-15% of all micro, small and medium enterprises (MSMEs) with relatively high productivity and capacity to grow; and survival entrepreneurs or other MSMEs with very low productivity and growth capacity.

Because of limited technical capacity in many African economies, some entrepreneurs who introduce green processes and products may initially be importers and distributors working with foreign suppliers. With growing domestic capacity and skills, African entrepreneurs have more and more opportunities to enter domestic green markets and to indigenise aspects of green processes, services and inputs, as some are already doing for climate smart agricultural equipment, water, sanitation, waste management, and in the delivery and installation of rooftop or off-grid solar energy systems.

Green entrepreneurs develop and serve markets for new processes, technologies and products that make the economy more efficient in its use of the natural environment and more resilient to environmental impacts, such as climate change. Green markets can be for new intermediate processes or inputs in production, or for new consumer goods and services.

Take the case of energy efficiency. New markets emerge to supply businesses with technologies or inputs that increase the energy efficiency of their production process. New markets also emerge for energy-efficient consumer goods and services, such as more energy-efficient household appliances.

Food security and green technology

New technology imbedded in a green economy and green agriculture could provide opportunities for development, but it could also have the opposite unintended effect. Africans rightfully ask if it is morally justifiable for the developed world to expect African countries to implement green technologies in order to reduce CO2 emissions while first world countries developed their economies with cheaper and well-known technologies.

In contrast, green technologies provide an opportunity for growth and job creation. This is especially true in the energy sector where renewables have become a source of clean and inexpensive energy, bringing the goal of universal access to electricity within reach.

The challenges in Africa are complex and not only centred on technology or the lack thereof. Governance and policy should be used to create an enabling environment for the implementation of new and green technology for economic growth and development. Examples of major infrastructural development projects in parts of Africa are evidence that African leaders in some countries already recognize its importance. Most of these projects focus on transportation, energy generation/distribution, and water related services.

While the food-water-energy nexus is critical for the future development in Africa and innovative technology should be utilized to increase access to education, unlock the potential of natural resources, increase the efficiency of transport systems, unlock markets, and to increase the efficiency of food production, food storage and food distribution.

55 African countries signed this five-point plan to increase the climate adaptation and resilience of the continent’s food systems. The five measures are:

  • To embed resilience and adaptation in national agricultural and investment plans
  • To scale up adoption of proven technologies
  • To target smallholder farmers as the key agents of change, with a special focus on gender and youth
  • To support market driven Research for Development (R4D)
  • To strengthen climate data analysis and reinforce Early Warning Early Action (EWEA) systems to protect livelihoods

The declaration is expected to support agriculture’s contribution to economic growth in line with Africa’s 2060 vision and agenda, the 2014 Malabo Declaration and the United Nations’ Sustainable Development Goals.

Green and resilient cities

In countries where public funds are constrained, however, green investment might not be the most pro-poor way of spending limited resources. Should ‘green growth be made a priority when there is a pressing need for poverty reduction? The evidence suggests that in many African countries, there needn’t be a trade-off between economic transformation, poverty reduction and action on climate change.

For instance, the rapid sprawl of many African cities hinders economic growth, as it increases infrastructure costs and results in toxic air pollution. A study noted that the population density in 12 African cities is only half that of Southeast Asian cities. Better urbanisation, more compact, connected and coordinated cities will provide benefits to residents and protect the environment.

These benefits have been recognised by African policy makers. Ethiopia’s Climate Resilient Green Economy strategy sets out its commitment to become a lower middle income country by 2025 with no net increase in emissions, while tackling climate risk.

The benefits of green investments tend to be felt over the medium-term, as the state of the environment improves and increases overall human well-being, making it essential to plan effectively for commonly desired development pathways.

Enabling conditions exist, and while implementation is not easy, a growing amount of evidence from villages to nations is showing that incorporating green economy principles in development planning is possible and is already happening offering lessons for the rest of the world as countries reflect on their growth and investment priorities.

Meanwhile, an inclusive green growth approach employs green economy principles to realize optimal economic, social and environmental outcomes. Policy makers across Africa have embraced industrialization and economic transformation as keys to accelerate inclusive growth. They also increasingly see the need for economic transformation to deliver green growth that does not endanger the Africa’s natural environment in ways that reduce the welfare of present and future generations.

Economic transformation and green growth depend on doing new things: making risky investments in new, unfamiliar sectors or products or adopting new, unfamiliar methods, processes, technologies, inputs or business models. All this depends crucially on the activity of entrepreneurs, who drive change through their innovation and risk-taking. Fostering entrepreneurship, including green entrepreneurship, is thus a key policy aim for African countries.

Interrelatedness of climate risks and opportunities

The state of the global environment and its impact on public health is closely linked to human activity. For instance, the growth in the global human population together with the corresponding economic development necessitates the use of energy at large. This growth has a tremendous impact on the use of fossil fuel. Excessive use of fossil fuel in turn pollutes the environment.

Such trend might have arisen partly from the ever increasing population size that could serve both as a source of cheap labour and as an appealing market for manufactured goods. Needless to mention, foreign investment has improved the quality of life in low-to-middle income countries through, for instance, creating jobs, improving social services and building infrastructure.

Green growth will mean pursuing inclusive economic growth through policies, programs and projects that invest in sustainable infrastructure, better manage natural resources, build resilience to natural disasters, and enhance food security in Africa.

 

 

 

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