A green path to industrialisation

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Africa’s policy wonks are already on the green bandwagon, having identified “green industrialisation” as the Holy Grail of the continent’s socioeconomic transformation. They believe infusing green initiatives into value-chain activities — during the sourcing and processing of raw materials, and the marketing and selling of finished products to customers — can cure economic stagnation.

At recent economic forums in N’Djamena in Chad, Addis Ababa in Ethiopia, Abuja in Nigeria, Rabat in Morocco, even New York in the United States, and elsewhere, Africa’s experts have been expressing their support for green industrialisation.

“Green industrialisation is the only way for Africa … it is a precondition for sustainnable and inclusive growth,” highlights the Economic Report on Africa 2016: Greening Africa’s Industrialisation, published by the United Nations Economic Commission for Africa (ECA).

Green initiatives will move Africa from the periphery to the centre of the global economy, said Fatima Denton, director of the ECA’s Special Initiatives Division, during the African Development Week in Addis Ababa, in April.

Africa’s green industrialisation advocates have borrowed from the Sustainable Development Goals (SDGs) adopted by world leaders in September 2015, and the Paris Climate Change Agreement of December 2015 — both promote green initiatives.

Given that energy production and use contribute up to 87% of overall carbon dioxide emissions generated by humans, curtailing the exploitation of fossil fuels is at the centre of green advocacy. The burning of fossil fuels like oil, coal and natural gas generates carbon dioxide, methane and water vapour, which in turn contribute to global warming.

However, it may be tough to sell Africa’s oil and natural gas exporters, like Angola and Nigeria, on limiting fossil fuel drilling. For both countries, oil accounts for more than 90% of exports and at least two-thirds of the national budget. The price of oil dropped from a peak of $100 a barrel in 2015 to about $50 by mid-June 2016. Before the oil price crash, even countries just discovering oil — like Ghana, Liberia and Sierra Leone — had anticipated a financial windfall from the sector.

These countries fear that limiting fossil fuel investments may severely damage their economies, although green advocates continue to insist that renewable energy, including energy generated by sun, wind, rain, waves and geothermal heat, all of which Africa has in abundance, is the way to go.

African countries must take advantage of “new innovations, technologies and business models that use natural resources optimally and efficiently”, notes the 2016 ECA economic report.

Kandeh Yumkella, who formerly held the title of special representative of the UN secretary-general for Sustainable Energy for All (a global initiative), offered a middle-of-the-road approach, recommending that Africa adopt an all-of-the-above energy strategy. “Why should we burn gas? Why shouldn’t we use gas for energy production?” Yumkella asked rhetorically, in an interview with Africa Renewal.

Grudging acceptance

Globally, countries have been slow to embrace green technology “because of the lingering belief that environmental regulations erode competitiveness”, wrote Harvard University business professor Michael E. Porter and his co-author, Claas van der Linde, in an article for the magazine Harvard Business Review.

And in October 2011, Salifou Issoufou and Nama Ouattara, economists with the International Monetary Fund and World Bank respectively, presented a paper based on their research, titled “Does Green Investment Raise Productivity?” to a packed house at the African Economic Conference in Addis Ababa. Green investments lowered productivity growth, they told a shocked audience that included some of Africa’s top policymakers. Africa must adopt “a cautious approach in attempting large-scale investments in green technologies”, the researchers recommended.

The main problem with green investments, the 2011 paper showed, was that costs, made worse by regulations, further stifled interest. Investing in environmentally friendly agricultural equipment, for example, “requires heavy upfront costs and the transition from the existing mode of production to the new one requires complementary technical innovation”, wrote Issoufou and Ouattara at the time.
There is also the argument that since Africa contributes the least of all continents to global warming, it should not be compelled — or expected — to adopt policies that mitigate global warming.

Cost effective

Since 2011, when Issoufou and Ouattara’s research findings lowered expectations for green industrialisation, the green economy train has been running at full speed due to several factors, including innovative technologies, which are bringing down the cost of renewables considerably. In addition, a crash in commodity prices, particularly in extractives, is sending some of Africa’s economies — such as Angola, Nigeria and South Africa — spiralling into chaos, forcing many countries to explore opportunities in green industrialisation.

Government leadership has been playing a key role in driving the growth of renewables, particularly wind and solar, in the power sector including many in Africa. As of early 2016, 173 countries had renewable energy targets in place and 146 countries had support policies. Cities, communities and companies are leading the rapidly expanding “100% renewable” movement, playing a vital role in advancing the global energy transition.

Additional growth factors include better access to financing, concerns about energy security and the environment and the growing demand for modern energy services in developing and emerging economies.

Carlos Lopes, executive secretary of the Economic Commission for Africa, expressed optimism: “We have the potential to access renewable energy at a time when the price of producing this energy is comparable to fossil fuel production.”

Triple bottomline

According to Professor Mark Swilling of the Centre for Renewable and Sustainable Energy Studies at Stellenbosch University in South Africa, the added value of renewables is their positive impact on the “triple bottomline”, a term that refers to a company’s profit, its social responsibility activities and its environmental responsibility.

Africa’s capabilities for “leapfrogging” — another buzzword at economic forums — constitute a significant economic advantage for the region. Simply put, African countries implementing green initiatives won’t have to go through every intermediary stage of technology, but
instead can directly access the latest available on the market. Africa can therefore be expected to take a giant developmental step: the leapfrog. Industrialised countries, on the other hand, will have to retrofit older infrastructure, said Lopes, a burdensome expense.

The ECA 2016 economic report states that Africa’s population is expected to hit 2-billion by 2050. The rapid growth of the working-age population (aged 25–64), increasing urbanisation and the dominance of informal employment have weighty implications for the continent’s structural transformation. While young people provide a valuable resource to be harnessed in national development, they can also drive green industrialisation if they have green jobs in various sectors.

Many African countries are planning or already implementing green projects. In March 2014, an intergovernmental committee of experts from Central African countries (Angola, Cameroon, the Central African Republic, Chad, the Democratic Republic of the Congo, Equatorial Guinea, Gabon, the Republic of the Congo and São Tomé and Príncipe) met in N’djamena to hash out a plan for transitioning to a green economies
Mariam Mahamat Nour, Chad’s minister of planning and international cooperation, said companies operating in the region must master production techniques based on low energy use.

Ethiopia in 2011 adopted a Climate Resilient Green Economy strategy as part of its ambitious plan to propel the country into middle-income status by 2025. The government is partnering with the private sector to help communities engage in sustainable farming.

In the Democratic Republic of the Congo, a tree-cloning project is enhancing afforestation (establishing forests on lands that have not been forested for a long time) and reforestation (establishing forests where they have been destroyed). Climate change experts consider afforestation and reforestation effective methods of combating global warming. Despite the DRC’s efforts, it is considering lifting the moratorium on logging that has been in place since 2002; this could threaten the forests, experts believe.

Last February the World Bank assisted Ghana in launching a Climate Innovation Centre in the capital, Accra, to support a green growth strategy. The centre is working with about a hundred local technology companies.

Nigeria’s Renewable Energy Programme is, among other things, executing a low-carbon development project to provide electricity for its capital city, Abuja, through improved insulation, energy-efficient devices for apartments and local power generation. The project, currently underway, is the first of its kind in Africa and the second in the world, after that of Masdar City in the United Arab Emirates, according to Nigeria’s environment ministry. Also, the Tata Group of India is planning to establish in Nigeria a mass transit system of compressed natural gas vehicles to reduce emissions.

The ECA economic report recommends a step-by-step “systemic approach”, with a focus on value chains in agriculture, energy extractives, manufacturing, transport and water. Countries must identify green industrialisation entry points, set policies that support green industrialisation and mobilise resources from the public and private sectors, recommends the report.

The report further stresses that investments in infrastructure and innovation are critical and that countries should share best practices, strengthen national institutions and constantly review their green industrialisation policies and activities.

Overall, a general belief among Africa’s development experts is that going green — and clean — is no longer a moral question; it is now a socioeconomic imperative. They view it as the new pathway to Africa’s industrialisation.

Article published courtesy of Africa Renewal.