Climate change has a devastating impact on the African continent – creating food insecurity, stressing water resources, harming human health, displacing populations and hindering socio-economic development. As elsewhere on the planet, its consequences will be felt most by those who can afford it.
To better understand these challenges, the Hoffman Global Institute for Business and Society cooperated with African Business Club to host Climate Change: Impact on Africa on 3 November as part of SDG Week 2022. This is a timely event, because – just a few days ago – COP27 examined how the development of the African continent will affect global development in the next decade. This year’s United Nations climate change conference introduced initiatives such as Friends of Greening National Investment Plans in Africa and Developing Countries, Africa Just & Affordable Energy Transition and African Women’s Climate Adaptive Priorities, while also Check out the finer points on the effects of climate change in Africa.
The INSEAD panel, featuring four experts from different industries, examined the impact of climate change on Africa and possible solutions. Its impetus is to identify actions and innovations coming out of Africa that will benefit the continent, as well as providing ideas to other parts of the developing world that are struggling with similar problems. The panellists’ conversation led to some important takeaways, as highlighted below.
Climate challenges are linked to development challenges
The panellists began by discussing how Africa’s climate challenges are linked to local and global development challenges, and how potential solutions to these challenges must take this connection into account. For example, climate-resilient and environmentally sustainable development has a positive impact on the development of the world and the planet.
Hania Dawood, Manager for Climate Finance & Economics at the World Bank, pointed to many statistics that prove the links between climate and development. In Africa, he said, 50 million people are on the verge of falling below the poverty line due to factors connected to climate change, 100 million people are at risk of losing their homes. -anan due to climate change, etc 600 million people lack access to energy. Forty-five African economies depend on commodity exports, including fossil fuels. At the same time, more than 30 percent of the continent’s population lives in extreme poverty.
“As we think about tackling and supporting countries on their climate change journey, ensuring a low carbon and sustainable path for development is critical,” said Dawood. While there are “opportunities to tackle climate change on the continent,” he said, development challenges are holding back progress. These include barriers to private sector investments due to weak business environments that cover property rights to dispute resolution in bankruptcy and insolvency law.
Climate change is also increasing challenges to Africa’s economic development and worsening socio-economic inequality. Africa contributes only 3 percent of the world’s greenhouse gases, and yet it experiences some of the worst effects of climate change, such as drought and desertification that leave 20 million people in brink of death due to hunger and thirst. By 2050, the continent’s population will double, exacerbating the problem unless remedial actions are implemented immediately.
James MwangiExecutive Director of the Dalberg Group and Founder of the Climate Action Platform for Africa, explained that Africans have been driven into survival mode in part because they are so close to the starting line.
“I cannot think of a global product value chain where Africa receives raw materials and participates in value addition, where a lot of value and wealth is created for the citizens, and then it is exported,” explained he. “It all flows the other way. Until that is true, the poverty trap continues. “
Mwangi argued for the transfer of greater amounts of value addition to the continent to help transform Africa into an engine of economic growth. “What we need is commercial investment in Africa that is good for the planet and good for the continent,” he said. “That translates into stability and progress that we need.”
Addressing climate challenges for Africa and the world
Rather than focusing on Africa as a victim of climate change, the panelists highlighted Africa’s potential to serve as a provider of climate solutions that benefit the continent and the wider world.
With a young and growing population, a large workforce, vast land, abundant natural resources and untapped renewable energy, Africa has an opportunity to lead the way. away from business-as-usual and green from the start. Seizing this opportunity can encourage global capital to drive decarbonization, enable Africa to produce value-added products for the world, raise the continent for its climate competitiveness, and create jobs for of the world’s largest workforce. Perhaps most importantly, it will help Africa deploy its workforce “towards governance, environmental support and developing new methods of sequestering and capturing carbon at scale,” Mwangi said.
The country of Gabon, designated as a High Forest, Low Deforestation (HFLD) country, serves as a model for aligning climate action and development to promote socio-economic development. By preserving its rainforests, Gabon effectively protects the Congo Basin, also known as the world’s largest carbon sink or the “thick of Africa”. The Congo Basin captures 140 million tons of CO2 annually, contributing to an ambitious, global goal: According to the National Academics of Sciences, Engineering and Medicine, approximately 10 billion tons of CO2 must be removed from the atmosphere each year to limit global warming in 1.5°C.
Gabon’s carbon credits program is also considered a model of environmental policy. The program stems from over 50 years of investment and commitment to environmental protection; Gabon created its first Ministry of Environment in 1960, its first environmental law in 1992, and a network of national parks in 2006.
In 2010, the country banned the logging industry from exporting unprocessed logs, which has had a positive impact on the economy, the environment and the well-being of citizens for the next decade. Within eight years, Gabon has reduced its annual deforestation rate to 0.1 percent and significantly reduced its emissions. Meanwhile, workers who once served as lumberjacks moved up the industrial value chain and improved their livelihoods. Now, the Fog has 90 million carbon credits – that is, credits for the emitted CO2 saved in it – that it currently in the process of selling.
“We are able to monetize carbon credits, and we absorb more carbon than we emit every day,” explained Akim DaoudaCEO, Fonds Gabonais d’Investissements Stratégiques (Sovereign Wealth Fund of Gabon), adding that Gabon emits only 35 million tons of CO2 per year.
A market fit for purpose?
Daouda warned that the carbon market is still in its infancy and the development of carbon capture has not yet accelerated. Dawood, however, is more optimistic. “I believe a high-integrity and transparent carbon market has the potential to unlock capital for climate action,” he said.
He pointed to recent estimates about the expected growth of voluntary carbon markets, driven in part from corporations meeting net-zero goals. Voluntary commitments by corporations in addition to the progress made in Article 6 of the Paris Agreement have the potential to drive significant growth in carbon markets. He also noted the creation of Frontier Climatean advanced market commitment aimed at accelerating the development of carbon removal technologies, as a good example of how the demand for emission reduction credits can unlock investments in new areas of mitigation such as carbon removal.
Mwangi agreed that carbon markets should work better, citing the problem of excessive intermediation. “By some estimates, for every dollar spent to buy carbon credits on world markets from Africa, 20 cents could go to local communities or to the people on the ground doing the work. ,” he said. Young Africans, he added, should consider starting carbon verification businesses to address this problem.
In fact, there is both risk and opportunity at hand, Daouda said. “Centuries ago, somebody put a price on dead wood, and that was the beginning of the timber industry,” he said. “Now, we have to make sure we put a fair price on live wood so we can keep the trees alive.”
Bringing together solutions
To create impact, climate action and development solutions must meet another key criterion: They must be inclusive – involve the entire population, and leave no one behind.
In Africa, women and youth are often overlooked in business and society, he said Pauline Koelbl, CEO of AfriProspect GmbH, and Founder and Managing Partner of ShEquity. “We are excluding the majority of the population that can contribute to solving the challenges,” Koelbl said. “They are the future of the continent, but we are not looking at them.”
The impact investor cites research showing that climate change affects women more negatively than men, and the fact that female entrepreneurs face an unfair disadvantage when trying to raise capital. “African women on the continent face a US$ 42 billion gender funding gap,” said Koelbl. “At the same time, they drive 40 percent of SMEs (small and medium enterprises) in continent.”
To help close this funding gap, ShEquity invests in women-led businesses that address environmental and sustainability issues. One company produces insect protein and organic fertilizer, another company helps reduce the number of cars on the road by creating a bus pool for professionals, and yet another develops a superfood that grows only in desert areas like the Sahara.
“African women are motivated to solve a challenge, and their businesses intersect with [problem of] climate change,” Koelbl said. Collectively, we can lead solutions that are good for Africa and good for the planet. We don’t need to follow the narrative from the rest of the world. “
