Comment: Africa can lead the world on tackling climate change but it needs finance

NobuthoThethani, a local farmer works the land at Lawley informal settlement in the south of Johannesburg, South Africa, February 21, 2019. Picture taken February 21, 2019. REUTERS/Siphiwe Sibeko

December 19 - At COP27, a historic agreement by almost 200 countries was reached to establish a fund - raised from wealthy, high-emitting countries - covering the “loss and damage” that “particularly vulnerable” nations are suffering due to climate change.

African and other Global South leaders celebrated the agreement, some even describing it as an “investment in climate justice". This makes sense.

Of the inhabited continents, Africa has contributed the least to climate change, accounting for only 2.7% of global carbon emissions from 1751 to 2017. Even in 2020, while China generated 23% of the world’s greenhouse gases, the U.S. 19%, and the EU 13%, Africa produced just 3.8%, and five nations ‒ South Africa, Egypt, Algeria, Nigeria, and Morocco ‒ accounted for 75% of those.

Even so, a fast-warming planet will hurt Africa the most. The continent is expected to heat up 1.5 times faster than the rest of the world, with 35 of the 50 countries that are most vulnerable to climate change located there.

Having done almost nothing to create the crisis, African countries find themselves facing increasing physical and socio-economic risks from climate change.

But what if this is only part of the picture? Following COP27, climate change resilience and adaptation has dominated the discourse. What seems to be featuring less prominently is the vast opportunity set for economic growth that is available to Africa as the world moves towards to a low-carbon future. We hear less about how climate change presents Africa with a chance to aggregate enormous economic and social gains for the benefit of its people and the world by decarbonising for good.

If you think of natural assets being the biggest tool for decarbonising, at least until we come up with better technologies, the continent of Africa has some of the greatest of these assets anywhere in the world.

Souloukna Mourga, 50, who has been a farmer for more than 35 years and lost two hectares of cotton and one of millet due to flooding, plods through his submerged red millet field in Dana, Cameroon October 25, 2022. REUTERS/Desire Danga Essigue

But how do we make sure that Africa is on the winning side, acting as a catalyst for that change and benefitting from all the opportunities it will create?

First, we know Africa is capable of leapfrogging outdated technologies. It has already shown this in bypassing fixed-line telephony, and in traditional finance, where customers have moved straight to mobile banking.

It has also shown this in distributed energy solutions, such as solar-powered irrigation systems and solar-powered battery-swap stations, where a customer can access pay-per-use solar-powered batteries without being locked into inflexible and, often unaffordable, credit arrangements.

The same is happening with telemedicine, where pharmacies and clinics can combat the continents’ desperate shortfall of doctors by connecting otherwise self-medicating customers to doctors in call centres via remote devices, thereby dramatically improving health outcomes. This transformation just requires a joining of the dots between the source of the technologies on the one hand, and the most appropriate implementation of those technologies on the other.

Second, if we can innovate around agricultural practices and food production for a population that is growing exponentially, at the rate African countries are, while preserving its biodiversity, then the whole world will benefit from the nature-based engine that is embedded in the African system.

And while the nature of agriculture in the Global North is hyper-industrialised, Africa’s agriculture is still fundamentally small-scale and human-powered. If you were able to democratise down to the individual small-scale farmer the benefits of biodiversity, soil health and carbon capture by using permaculture, silvopasture, intercropping etc‒ all the things that have been part of indigenous practices for millennia ‒ that would effectively power up a system of agriculture that would never be replicable in the Global North.

A woman walks past a sign advertising the mobile banking service Airtel Money along Lumley Street in the Sierra Leonean capital Freetown, January 15, 2011. Mobile banking is expected to grow into a $22 billion industry across Africa by 2015 on the back of skyrocketing cellphone use and growing demand for financial services, according to consultancy Juniper Research. Picture taken January 15, 2011. REUTERS/Simon Akam (SIERRA LEONE - Tags: BUSINESS)

But Africa cannot play this role without social justice. You cannot ask someone who is surviving on $2 a day to do something now that is against their interests tomorrow, for the sake of the world 20 years’ hence. We have to find clever ways to encourage behaviour change towards climate-positive practices by making it financially worthwhile for everyone, otherwise we will also see increasing levels of mass displacement and migration.

That is precisely where disrupters, entrepreneurs, people who scribble outside the lines can, and do, play. Whether it is companies reforesting degraded lands, providing fridges in places without power, transforming waste into nutrient-rich fertilizers and animal feed, enabling fleets of electric buses, or producing regeneratively grown organic vegetables and herbs ‒ we know there are entrepreneurs in Africa who are able to take this on.

However, to unlock the opportunities and protect against the physical and transition risks posed by a warming climate, Africa will need to attract substantial amounts of additional capital. The current climate funding gap for adaptation and mitigation on the continent is estimated to be in the region of $200 billion per annum. Developed countries have pledged $100 billion per annum for decarbonisation and adaptation initiatives in the Global South, although only a fraction of this is currently flowing.

Africa has huge potential to harness its natural assets for the good of its young, growing population and to make sure it is part of and contributing to the global transition towards net zero, but it needs the capital to do so.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Sustainable Business Review, a part of Reuters Professional, is owned by Thomson Reuters and operates independently of Reuters News.

Andrew Carruthers is co-founder and managing partner at Novastar Ventures, an Africa-focused venture capital firm with offices in Nairobi, Lagos and London. It has over $200 million of assets under management and has invested in 26 companies across a range of industries.