Twenty years ago, in 1992 in Rio De Janerio, world leadership acceded to the fact that economic development incongruous with the environment would, eventually, lead to its own doom. World leaders accepted the model of ‘sustainable development’ by spelling out goals and guidelines to achieve harmony between development and the environment. Whether the Rio ’92 goals have been met is debatable but the single most important achievement of the Rio Earth Summit, formally the United Nations Conference on Environment and Development, was to bring the importance of ‘development in tandem with environment’ into mainstream public policy discourse. Thenceforth ‘Climate Change’ has been on the international political agenda.

In June 2012, Rio+20 marked 20 years of human striving to develop compatibly with the environment. Although some progress has been made, there are still appalling stories to be told about on-going environmental degradation through human activity. Whether Rio+20 was a success is highly contentious. The buzzword in Rio+20 corridors was ‘green economy’, the concept which Rio+20 hoped to steer, but which was met with reservations (some well-founded) from the world’s developing countries.

This CAI paper explores the implications of green economy for the African continent, the opportunities it presents and the concerns it entails.

What is green economy?

A green economy, as defined by the United Nations Environment Programme (UNEP), is one that “results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities” or, simply put, one that is low carbon, resource-efficient and socially inclusive.⁽²⁾ Thus green economy is an alternative approach to development which seeks to integrate economic development with environment, human well-being and socially-inclusive growth, thereby mitigating the risks, such as climate change, which arise from environmental degradation.

According to a recent UNEP report, in a green economy “growth in income and employment should be driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource efficiency and prevent the loss of biodiversity and ecosystem services,” positively impacting on poor people whose livelihoods are dependent on nature.⁽³⁾ Practically, following the green economy path to development entails reduction in carbon emissions, increasing the efficiency of resource utilisation and promoting socially inclusive growth.

The concept of green economy has further questioned the conventional measures of development, such as gross domestic product (GDP), for being ignorant of the environmental dimension of development. Nations throughout the world have strived toward aggressive economic development, very often at the expense of environment. Dramatic changes in climate and the extensive ‘ecological footprint’ of development clearly illustrate that such lopsided growth is unsustainable. Hence for nations big and small alike, if they do not want to reverse the gains made in the previous century, green economy is less of a choice and more of an imperative. Environmentally inclusive measures of growth like Green GDP and Genuine Progress Indicator (GPI) have now been devised to supplement the conventional GDP as an indicator of growth.

Africa’s green economy imperative

All nations - developed, developing and emerging - will eventually evolve into green economies, but why is transition towards a green economy model of growth imminent in Africa? The answer may be deduced from the fact that all major African economies are heavily dependent on natural resources as their engines of growth.

Agriculture, forestry and fishing, mining and quarrying, and oil and natural gas are crucial contributors to the GDP of major African economies. These sectors are entirely dependent on natural resources and activities related to industries operating in these sectors, like deforestation in timber industries and large-scale drilling in mining for instance, often lead to environmental degradation. According to the United Nations Food and Agriculture Organisation (FAO), Africa has had the second highest net annual loss of forest in the world: 3.4 million hectares between the years 2000 and 2010.⁽⁴⁾ In the past four decades, there has been a decline of almost 40% in Africa’s biodiversity, according to the Africa Living Planet Index.⁽⁵⁾

An important indicator of the environmental cost of development is the ‘ecological footprint’, referred to as humanity’s demand on the world’s living resources. The ecological footprint of all African countries has increased by 240% between 1961 and 2008.⁽⁶⁾ Africa’s natural resources support its social and economic systems and there is evidence that Africa’s resources are depleting fast, probably faster than in any other region of the world, illustrating the negative impact Africa’s economic dependence on its natural resources is having on its environment.

Africa’s growing population is further increasing the pressure on its natural resources due to the ever-increasing need for development at the expense of natural environment. The urban population in Africa grew by an average of 3.5% from 1990 to 2010, and will continue to grow rapidly as a result of intrinsic growth, displacement and migration.⁽⁷⁾ Total population grew at an average of 2.4% over the same period.⁽⁸⁾

While African economies are still heavily dependent on natural resources, they have started to appreciate the incentives of diversification. Domestic industries in most of these economies depend on natural resources (e.g. mining), and International trade is also heavily natural resource-centric (e.g. Oil in case of Nigeria). Incessant depletion of these resources, even under the pretext of development, can seriously disrupt economic growth in the long term. If not handled cautiously, Africa’s natural resources blessings can turn into a curse.

Apart from the environmental and economic arguments in favour of African countries’ need to adopt a green economy model, there is a strong social argument too. A large portion of the African population, especially the rural population, is directly dependent on the natural environment (effectively on natural resources) for their sustenance and livelihoods. Thus the preservation of the continent’s natural resources is of paramount importance to these populations. Africa’s transition to green economy thus has economic as well as social dimensions and implications.

Africa’s unique opportunity

The situation is not entirely dismal for Africa though, at least not in comparative terms. While a wholesale shift in current development models to a green economy approach is still to take place in African countries, in terms of environment, Africa still fares much better than other regions, as the following figure illustrates.

Figure 1: Ecological footprint by geographic grouping, 1961 and 2008 ⁽⁹⁾

The graph shows the combined effects of change in per capita footprint (vertical axis) and population (horizontal axis) on the total ecological footprint in different regions of the world. Africa’s ecological footprint, measured in billion global hectares (gha), was the lowest in the world in 2008. Between 1961 and 2008, Africa’s per capita footprint has remained stable at about 1.8 gha while the population has grown substantially. Per capita footprint has increased in all regions except Africa. While Africa’s overall ecological footprint has almost trebled (observe the increase in the area of the orange bar in the graph) as a result of population growth, its cumulative ecological footprint is still the lowest in the world.

Thus the African continent is in a unique position. Even though its major economies are heavily dependent on natural resources for their growth, its ecological footprint remains comparatively low. Although this is partly attributable to low levels of electricity generation and industrialisation, with their relatively low footprints, African nations are well-placed to fashion new development pathways that are more sustainable than those taken elsewhere. This is Africa’s unique opportunity, to opt for green and sustainable paths to development today to avoid regret tomorrow.

Going green

How can African economies make a transition to a green economy model? The answer to this question involves finding alternative ways to achieving sustainable development; alternatives which are not only conceptually favourable but also feasible for implementation. Deciding upon alternatives necessarily involves appreciation of the fact that most African economies are dependent on natural resources. Although each economy may have a different approach and method to adopting a green economy model, a broad framework can be created for the same. Such a framework could be analysed on three fronts: capitalising on natural capital, embarking on green industrialisation and creating enabling policies and institutions.⁽¹⁰⁾

Capitalising on natural capital:

The African continent’s Governments need to realise the economic importance of natural capital in wealth creation, employment, livelihoods and poverty reduction. Natural capital assets, both renewable and non-renewable, are estimated to account for 24% of total nonhuman wealth in sub-Saharan Africa.⁽¹¹⁾ Agriculture is of particular relevance to a green economic transformation in Africa owing to its importance in sustaining livelihoods, reducing poverty, and contributing to economic growth and development. In Africa croplands provide employment to 64% of the active population and contribute on average 34% to GDP.⁽¹²⁾

Enhancing natural capital in agriculture involves new approaches to production that reduce externalities such as water pollution and soil erosion, maximise the use of organic inputs and deliver high productivity and better incomes for farmers. It seems that the current characteristics of African agricultural production systems lean towards what could be a model for sustainable farming in the future. Small scale ecological farming systems, limited use of chemical fertilizers and pesticides, and labour-intensive production systems currently used on the continent could provide a basis for a green transformation of African agriculture, as is exemplified by agricultural developments in Uganda.⁽¹³⁾

Biodiversity is a term used to describe the variety of life on Earth. It refers to the wide variety of ecosystems and living organisms: animals, plants, their habitats and their genes. Industries based on bio-diversity, directly or indirectly, are referred to as Bio-diversity based industries. Forestry, as an industry, is directly dependent on the forest ecosystem which is an important part of the biosphere. Although bio-tourism entirely depends on biodiversity the tourism industry in general is indirectly linked to it, as flora and fauna could be lucrative tourist attractions. In Africa such industries can also make significant contributions to enhancing natural capital and exploiting it most beneficially. Forestry contributes 6% to the GDP of Africa,⁽¹⁴⁾ while tourism, which relies primarily on the continent’s natural and cultural wealth, directly and indirectly contributes an estimated 8.3% to GDP and 5.9% to employment in Africa.⁽¹⁵⁾ This contribution to tourism, employment and GDP makes the protection of the continent’s biodiversity an imperative for Africa’s Governments and one worth ensuring.

Green industrialisation:

Africa has the world’s largest technical potential for renewable energy power generation, through its vast solar, biomass and wind resources.⁽¹⁶⁾ This potential could drive economic growth, with significant job creation and environmental gains. Setting clear goals and establishing dedicated and authorised agencies responsible for promoting, initiating and financing renewable energy projects and programmes by Governments, could assist in creating private investor confidence in Africa’s renewable energy industries. Governments, by guaranteeing the purchase of electricity from renewable energy sources at a predetermined price that is sufficiently attractive, can stimulate new private investment in the renewable energy sector.

In addition, ‘feed-in tariffs’ are an effective policy instrument to stimulate investment in renewable energy generation. Feed-in tariffs achieve this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology. Technologies such as wind power, for instance, are awarded a lower per-kilowatt hour (kWh) price, while technologies such as solar PV (photovoltaic) and tidal power are offered a higher price, reflecting higher costs. Kenya, Mauritius, South Africa, the United Republic of Tanzania and Uganda have successfully implemented this strategy and have produced impressive results.⁽¹⁷⁾ However, in relative terms (i.e. when compared to other continents), investments in clean energy remain negligible in Africa ⁽¹⁸⁾ pointing to the need to enhance the capacity of institutions and people and to significantly leverage increased financing.

Creating enabling policies and institutions:

A green economic transformation will require enabling policies and institutions, which include a critical role for the state through public investment; fiscal policies; regulations; Government procurement; market creation at national, regional and international levels; and the active participation of non-state actors. Government regulations and standards will provide the overall policy framework to encourage a transition to a green economy.

In Africa, Governments have stressed the importance of seizing opportunities provided by a growth and development model that embraces the green economy and the need to articulate conditions that will encourage greater public and private investment in green sectors. The central role of the state, however, should preclude neither effective partnership with the private sector nor active civil society participation.⁽¹⁹⁾ Other Government instruments include encouraging green private investment; ensuring markets are open for clean products and reforming extant environmentally harmful policies and strengthening institutions and processes.

If green investments and growth are to become effective and are to be promoted on a wide scale, investment barriers must be identified and tackled by Governments. Transformation into a green economy would require a repositioning of the state, setting the course of social and economic progress through a reconfiguration of public investment, as well as adoption of regulations, standards and incentives that can motivate the private sector and civil society within the green economy model.⁽²⁰⁾

Africa’s response and concerns

The importance of adopting a green economy model is understood by African nations. At the 2009 African Ministerial Conference on Financing Development, African ministers of finance, economic planning, and environment recognised the importance of placing the environment on centre stage in Africa’s development process.⁽²¹⁾ In June 2010, the 13th Session of the African Ministerial Conference on the Environment adopted the Bamako Declaration, which stressed the need to “take advantage of the opportunities provided by a growth and development trajectory that embraces the green economy model.”⁽²²⁾

Although it is evident that the green economy model of growth for Africa is an impending requisite, certain concerns cannot be ignored. How will Governments incorporate the voice of indigenous people while legislating/strategising to adopt the green economy model? Indigenous people often reside in rural Africa and their livelihoods are directly dependent on the environment. To what extent would green policies for development actually be implemented? How would the ‘leakages’ of financial resources deployed for transition to green economy, especially due to corruption, be plugged? What time frame would be suitable for making a transition to green economy? How would the gains made by adopting a green economy model be equitably distributed? These are a few of the concerns which must be duly analysed and addressed while embarking on a green economy transition.

Concluding remarks

Decision-makers and other stakeholders in African nations are beginning to comprehend that past models of development have not achieved promises of sustainable growth and development, and have inflicted severe harm on the environment. Africa’s future economic and development strategies should be based on a green economy model. This will help ensure that accelerating economic growth and the structural transformation required to achieve development goals are consistent with environmental sustainability.

There are many opportunities for the African continent to achieve an economic transformation that can build on its vast resource potential, fast-track a green industrialisation and contribute to employment creation and poverty reduction. Adopting green alternatives is easier for many African economies, as compared to the developed nations, as they are in earlier stages of industrialisation. This presents a historic opportunity for African countries, individually and collectively, to bring sustainability to centre stage and to forge a new path towards sustainable development by adopting a green economy model. African economies must learn from the mistakes of other nations, which on their way to economic development removed environment from the development equation. Let us accept the indispensible dependence of development on environment, without which it cannot sustain itself.

Written by Sudhanshu Sharma ⁽¹⁾

NOTES:

(1) Contact Sudhanshu Sharma through Consultancy Africa Intelligence’s Finance & Economy Unit (finance.economy@consultancyafrica.com).
(2) ‘What is Green Economy?’, United Nations Environment Programme Green Economy website, http://www.unep.org.
(3) ‘Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication – A synthesis for Policy Makers’, UNEP, 2011, http://www.unep.org.
(4) ‘Africa Green Economy Initiative: Building Capacity to Promote Green Growth in Africa’, United Nations University Institute for Natural Resources in Africa (UNU- NRA), http://inra.unu.edu.
(5) ‘Green Infrastructure for Africa’s Ecological Security’, Africa Ecological Footprint Report, World Wide Fund for Nature and the African Development Bank, June 2012, http://www.afdb.org.
(6) Ibid.
(7) Parnell, S. and Walawege, R., 2011. Sub-Saharan African urbanisation and global environmental change. Global Environmental Change (article in press), http://www.bis.gov.uk
(8) UN data, http://data.un.org.
(9) ‘Green Infrastructure for Africa’s ecological security’, Africa Ecological Footprint Report, World Wide Fund for Nature (WWF), 2012, http://wwf.panda.org.
(10) ‘Governing development in Africa: The role of state in economic transformation’, Economic Report on Africa, UN Economic Commission for Africa and African Union, April 2011, http://www.un.org.
(11) ‘ Where is the Wealth of Nations? Measuring Capital for the 21st Century’, World Bank, 2006, http://siteresources.worldbank.org.
(12) ‘Agriculture for Development’, World Development Report 2008, World Bank, http://web.worldbank.org
(13) Ibid.
(14) Gumbo, D., ‘Regional review of sustainable forest management and policy approaches to promote it: Sub-Saharan Africa’, Background Paper for the UNEP Green Economy Report, 2010.
(15) ‘Travel and Tourism’s Economic Impact: Sub-Saharan Africa’, World Travel and Tourism Council, 2011, http://www.wttc.org.
(16) ‘Renewables Global Status Report’, Renewable Energy Policy Network for the 21st Century, 2010, http://www.ren21.net.
(17) ‘The Role of Feed-in Tariff Policy in Renewable Energy Development in Developing Countries’, AFREPREN/FWD, 2009, http://www.e-parl.net.
(18) Ibid.
(19) Uyigue, E., et al., ‘Strategies to Scale-up Renewable Energy Markets in Africa’, Pre-Dakar NGO Position Paper, Community Research and Development Centre in Nigeria for the International Conference on Renewable Energy in Africa, 11 April 2008, http://www.internationalrivers.org.
(20) ‘Governing development in Africa: The role of state in economic transformation’, Economic Report on Africa 2011’, UN Economic Commission for Africa and African Union, April 2011, http://www.un.org.
(21) Third edition of the African Ministerial Conference on Financing for Development – Climate Change: Financing Opportunities and Challenges to Achieve the MDGs in Africa, AfDB-UNECA, 2009, http://www.afdb.org.
(22)‘Bamako Declaration on the Environment for Sustainable Development’, 13th Session of the African Ministerial Conference on the Environment, UNEP, 2010d, http://www.unep.org.