On behalf of IE University, I participated as a delegate and discussant in last week’s Africa Green Investment Gateway. This event was held under the patronage of the United Nations and the African Union, intending to match African business and governments with investors from outside the continent. Africa has been receiving a substantial and increasing stream of investment from abroad in recent years. Obviously, not all of this investment is “green”. The intention of this particular event was to encourage a meeting of minds to explore green investments that could mitigate climate change without impeding national economic growth and development.
Upon returning from the event, the main thoughts and ‘takeaway’ messages are briefly presented below.
The twin challenges of poverty alleviation and climate change are undoubtedly relevant to many places around the world. In fact, Lord Nicholas Stern called these the main challenges of our century.
Africa has experienced both poverty and climate change in the past and is expected to be severely affected by higher temperatures (increases ranging from 3.2ºC to 3.6ºC), variability in rainfall (variations ranging from -12% to plus 7% depending on the area) and more frequent and extreme weather events in the future. As an example it is worth mentioning that 1/3 of all water-related disasters over the past 10 years have occurred in Africa. In addition to this, Africa is only marginally responsible for GHG (greenhouse gas emissions), compared with for example the EU, China or the US.
Africa’s heavy reliance on natural resources and agriculture for its economic growth and survival can spur the interests of policy makers in climate change challenges and opportunities. The business sector is also well aware that along with challenges, opportunities tend to arise. In fact, the expected doubling of electricity demand by 2030 in Africa and the current widespread lack of access to electricity coupled with a significant potential to exploit Renewable Energy Sources (RES), were a repeatedly discussed topic at the Green Investment in Africa Conference held last week in London. Companies such as GE, Vestas (where one of the IE alumni, Borja Gari, is now Senior Sales Director) and LDK discussed their views, solutions and recommendations for facilitating future green investment in Africa.
Although further methodological discussions, cases of failed initiatives from which to learn and analysis of novel research areas would have been desirable from an academic standpoint, the conference was most interesting in terms of revealing the demands and recommendations of the private sector to make future green investment happen. It was also interesting to see that, as is the case in many other places around the world, it is the talk about growth and jobs and not the climate talk what opens minds and, most importantly, wallets. Despite the fact that this is not a comprehensive table, the following elements were mentioned as green investment challenges and opportunities:
| Challenges | Opportunities |
| Political stability, rule of law, evolving regulatory framework and corruption | Building small electricity grids |
| Lack of integrated electricity grids | Experienced firms can help with due diligence processes |
| Higher risks in the business development environment compared with other countries | Step up existing efforts on planned and proactive adaptation initiatives that are aligned with mitigation efforts |
| Increase Africa’s energy generation capacity and ensure it is sustainable | Exploring the possibility of developing small hydro power provided that Environmental Impact Assessments (EIA) do not advice against it |
| Improve power transmission and distribution limiting power outage episodes | Explore the potential for implementation and improvement of differential tariffs to encourage energy consumption that can help the penetration of Renewable Energy Sources (RES). |
| Improve climate modelling | Investments in human capital to develop appropriate business plans that can compete for funding. |
| Engagement with local communities that have access to forestry resources | Improve the marketing skills and techniques so that climate resilient products such as Matooke (long green banana) are demanded internationally. |
| Increase Africa’s share of Clean Development Mechanisms (CDM) projects | Explore the dual track of recent reforms of the CDM initiative (especially relevant for coal dependent South Africa and oil producing states such as Nigeria) and pursue greater access to voluntary CO2 markets. |
| Poor water management and infrastructure | Enhance natural resource property rights regimes, invest in micro water supplies and micro irrigation systems and ensure affordable and equitable water pricing. |
| Lack of data as regards: adaptation costs, climate and hydrology in transboundary river basins, fisheries, etc. | Partnerships between governments, firms, civil society and universities to tackle existing knowledge gaps. |
Further information on the conference can be found at: http://www.corporate-africa.com/
