A change of climate is a good thing: invest in a sustainable Africa

[Ada Amadi is a research funding officer working within higher education. She was a student on the City, University of London Writing for Business short course in October-December 2019. Ada wrote this blog as part of a homework/in-class exercise on that course.]

If headlines are to be believed we are currently in a climate emergency.

Rising temperatures, floods and potentially irreversible environmental damage are but a few of the known effects of climate change.

Climate change is the 13th UN sustainable development goal (SDG) and over the past year it has made regular headlines.

Developing countries, like those on the African continent, have been hit the hardest. Government policy makers agree that something needs to be done. Surely now is the time for us to act.

Coal is the past

Business leaders and policy makers in Africa have already included renewable energy programmes in their development strategies. According to Devex, Akinwumi Adesina, president of the African Development Bank (ADB), told the audience at the UN Climate Action Summit in September 2019:

Photo by Riccardo Annandale on Unsplash

Coal is the past; renewable energy is the future… For us at the African Development Bank, we are getting out of coal… What we should be focusing is on a lot of clean energy, renewable energy.

Akinwumi Adesina, ADB

In fact, the last coal investment the bank made was in 2015. In early 2019 they committed to doubling their climate financing to $25 billion by the year 2025. Nearly half of this will be devoted to climate adaptation.

Africa has the potential to generate clean renewable energy. It has the landscape and natural resources at its fingertips. The continent has river basins to produce large- and small-scale hydropower. As well as strong wind to power local business and homes. Let us not forget that it has the power of the sun to drive solar energy. Yet roughly 600 million people still lack access to electricity.

Entrepreneurship and innovation

For Africa as a continent to unlock its potential, investment and partnership is needed. Historically its economic development has been made difficult by poor infrastructure, inadequate access to capital and limited if no access to affordable reliable energy. But this is changing. Mini-grid and off-grid electricity has become more available, and there has been rapid growth in tech and mobile telecoms. And companies such as Ovamba Solutions Inc and Ovid Capita are now filling the access to capital gap.

The continent as a whole is seeing a rise in entrepreneurship and innovation. Nigeria for example could be a potential business leader and is already one of Africa’s largest economies. Africa’s own silicon valley in Kenya is on the rise; founder Elo Umeh of the Terragon Group, a global marketing and data technology firm, is aiming to build an African digital powerhouse. And the recent visit of the CEO of Twitter to Nigeria and Ethiopia shows that businesses outside the continent are taking notice.

Continual investment is still needed, however, to ensure the continent’s steady growth. Communities in rural areas must also be remembered, since they exist outside of Africa’s megacities and many of them are still without access to clean reliable energy sources.

The green economy

Climate change has undoubtedly affected the way we think about food production and waste, fast fashion and energy consumption. Sustainability is the new buzzword.

Many businesses are now buying into the green economy and looking for ways to reduce their carbon footprint. Supermarkets are responding to consumer demand for local farmed produce, plastic free food packing and reduction of single use plastic bags.

Even the energy giants Shell and BP have adapted their portfolio to include low emission renewable energy.

Some African countries have already banned plastic bags. Kenya for example has banned plastic bag production and import and imposes fines on its illegal importation. This has driven the production of bags made from natural material including paper, which has in turn created new job opportunities.

Others are putting in place sustainable farming practices. And there are plans to restore land that has been degraded due to deforestation. They are also working to preserve the ecosystems of peatlands and savannas.

Access to affordable, reliable, sustainable and modern energy for all along with climate action is a priority. Government agencies, policymakers and business leaders need to show a greater commitment to meet these sustainable development goals.

Renewable energy commitments

The UK government has already committed £100 million for renewable energy projects in Africa to provide electricity to 2.4 million people a year. In their press release published on 11 December 2018, they outlined that the funding will be used to support small-scale solar, wind, hydro and geothermal projects.

The electricity generated is expected to provide 2.4 million people a year with new or improved access to clean energy. For many this will be the first time they would have had access.

Former UK Energy and Clean Growth Minister Claire Perry said:

This £100 million will help communities harness the power of their natural resources to provide hundreds of thousands of people with electricity for the first time. Building these clean, reliable sources of energy will also create thousands of quality jobs in these growing green economies.

Claire Perry, former Minister of State for Energy and Clean Growth, UK Department of Business, Energy and Industrial Strategy, 11 December 2018

The growth in and consumption of off-grid renewable energy in Africa has been increasing steadily over the past two decades. This has helped power homes and local businesses in Africa’s more rural and remote communities.

Photo by Tim Foster on Unsplash

Progress has been made

Since 2004 wind energy production has risen worldwide with wind farms already being installed in Egypt, Morocco and Tunisia.

Morocco has also been a pioneer of concentrated solar power. Its 580 megawatt Noor plant was partially funded through a green bond issued by the Moroccan Agency for Solar Energy. Cape Verde has four wind farms, a product of public-private partnership, and in 2019 Kenya opened Africa’s largest wind farm; plans for this began in 2014. Kenya is reportedly in the process of transitioning from one renewable energy source, hydro power, to another, geothermal.

So continued financial investment is key to maintaining the progress already made. Continued flow of money will mean Africa can leapfrog the typical route of dependence on fossil fuel for development. The same route taken by developed nations.

But questions remain

I’m in no doubt that access to reliable clean energy will enable the economy to grow.

And I’m convinced that the benefits are twofold. Here is why. Firstly, a nascent business that starts to grow becomes an opportunity for further investment. Secondly, a booming economy creates a new market to buy and sell goods and services.

Even with all this potential the commercial sector is still slow to invest.

Understandably it has been hard for them to find thier way around the current renewable energy landscape in Africa. Trying to work out how much solar power, wind or hydro energy is being consumed? How much does it cost? What resources are available and what is the infrastructure like? What are the financial risks?

Photo by Cytonn Photography on Unsplash

It may feel like uncharted waters for those new to development. But we can overcome this by finding the right investment opportunities, forming partnerships, collaborations and joint ventures with those agencies conversant in the development narrative. This includes development banks, research organisations, NGOs and charities, and providing funds via small business grants and loans.

Forging synergies and partnerships

Shell Foundation’s work with Absolute Energy, the African Mini-grid Developer’s Association (AMDA) and BBOXX in Africa are good examples of successful joint ventures.

Since 2000 the charity has supported social enterprises and institutions at different stages of growth: creating and scaling business solutions; deploying $310 million in grants to early-stage businesses and new market builders.

They have successfully developed long-term strategic partnerships with UK and US international development agencies such as DFID and USAID as well as other non-profit and for-profit ventures. They provide business support, grants and market connections to help pioneering social entrepreneurs prove new business models.

Evidence from Shell Foundation

Absolute Energy is an independent investment platform and principal investor focused on renewable energies. They are driving mass adoption of clean low-cost energy and have connected roughly 650 homes in low income communities to the mini-grid. Shell Foundation have supported them since 2015 with fundraising, networking as well as strategic planning.

Shell Foundation have also successfully partnered with AMDA on a joint DFID funded pilot project.

AMDA is a pan-African association comprising 22 member companies. Operating in Kenya, Tanzania and Nigeria with members across six countries, it works to improve political and financial understanding of, and support for, the mini-grids sector and the rural communities they serve.

Shell Foundation provided AMDA with an initial start-up grant to complete the pilot phase of their business model. And they continue to support AMDA’s goal of having in-country and/or regional representation in up to 12 key African markets by 2020.

AMDA focuses on promoting best practice in policy, regulation, finance and by sharing market knowledge they aim to attract $1bn into the sector by 2021.

BBOXX designs, manufactures, distributes and finances solar energy systems to improve access to energy across the developing world. These systems provide electricity to 600 new households daily.

Its partnerships with Shell Foundation have allowed them to scale to 11 markets in West and East Africa and improve its product mix. In 2017, Shell Foundation supported BBOXX to expand into the Democratic Republic of the Congo (DRC) through an innovative distributed service company (DSCO) model.

The expansion was so successful that the DSCO model was used to gain access to the multinational telecommunications and energy markets in West Africa.

Looking into the future: supporting small businesses

The private sector is getting more involved in development. But much more is needed from them.

Right now a large number of homes and small local enterprises in remote areas really need their support. These include small holder farms, shea butter producing female cooperatives in Ghana, tea and coffee producers, basket weavers and shoe and clothing manufacturers. All of whom need electricity to power processing plants, water pumps for irrigation and machinery for manufacturing.

But instead they have to rely on petrol and diesel generators and biomass, such as fuel wood, charcoal, agricultural waste and animal dung to meet their energy needs for cooking. Dependence on these traditional biomass poses serious health risks to the local population.

Ingenuity and will: harnessing the wind

I’m a firm believer that working at a local level is the best way to help communities. Supporting entrepreneurs with small loans and grants means that they can focus on solving the problems that affect them. Also this results in sharing the benefits with their neighbours.

But support doesn’t always have to be financial.

Solar Sister for example is a women-led clean energy enterprise working with women entrepreneurs in Nigeria, Tanzania and Uganda. They recruit, train and mentor women, and build women-to-women networks to achieve what they call “last mile” distribution for solar devices and clean cookstoves. Solar Sister has a network of over 2,500 entrepreneurs providing services to over 350,000 people.

There are so many African start-ups, entrepreneurs and innovators who are already trying to find solutions to their problems. An injection of private capital would help them to realise their dreams sooner.

The ingenuity and will exists on the continent of Africa; the right support is all people need.

Remember the story of William Kamkwamba who at the age of 14 achieved something amazing. [His true story was made famous in the film The Boy Who Harnessed The Wind.] He built a wind turbine using only a book he found in his school library and the tools he had to hand. Now imagine what else he could have achieved for his community if he had the financial support he needed.

Engaging with local groups, supporting start-ups, enterprises and cooperatives, harnessing Africa’s already booming entrepreneurship. These are the best recipes for success. Above all climate change is a global problem and we all need to do more to protect our environment, and to fight poverty.

[Feature photo at top by Samson on Unsplash]