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Africa Renewal Blog

Africa’s trade under a cloud of changing climate

Africa’s trade under a cloud of changing climate

The devastating effects of climate change are already being felt across the planet, including in Africa. The 2011 drought-induced famine in the Horn of Africa affected more than 10 million people, claimed 257,000 lives and cost over $1 billion in damages. The recent Africa Adaptation Gap Report by the UN Environment Programme warns that climate change could reduce total crop yields in sub-Saharan Africa by as much as 20% by 2070. Worse still, it could begin to affect Africa’s trade potential. For example, a projected sea-level rise in Tanzania of 70 centimetres by 2070 could devastate the port city of Dar es Salaam, its largest and richest city and a major player in East Africa trade, and cost the country about $10 billion in property damages and related losses. Environmentalists warn that rising sea levels could cause severe flooding, submerge land and destroy coastal ecosystems. 

Is Africa under a climate change siege? Can the region expand its trade under current conditions? Experts say yes to both questions, but, in addition to reducing barriers to new and existing trade, countries will have to use their ecosystems to protect the continent’s productive sectors from the negative impact of climate change. Resilient ecosystems are required to promote the wise use of biodiversity and natural inputs; such wise use will preserve the natural environment from degradation and ensure that it remains productive and continues to contribute to economic development. 

Barriers, blocks and blows

With the World Bank stressing that food production for rapidly growing urban and rural populations will be the largest growth opportunity for African farmers, the agricultural sector must come up with climate-proof strategies. While Africa currently produces staple food worth $50 billion per year, the bank has found that the region could add an extra $20 billion annually if it dismantles trade barriers in agriculture. For example, West Africa could cut its transport costs in half in less than a decade if its agricultural trade policies were designed to serve as building blocks rather than as roadblocks to economic growth, says the bank.

Additionally, as climate change worsens, industries and agriculture will need to respond. Experts recommend increased production of Environmental Goods and Services (EGS) as a viable option. The EGS are benefits that can be derived from healthy ecosystems and include clean air, fresh water, purification of air and water from forests, pollination of crops and groundwater recharge through wetlands. Valued at $690 billion in 2006, increasing global demand for EGS could be worth $1.9 trillion by 2020, according to UNEP. To boost trade, therefore, experts stress the need to diversify exports beyond commodities and for governments to initiate policies that allow more people to participate in trade. But does sustainable use of ecosystems accomplish this goal?  

Boosting trade through ecosystems 

“Rethinking possibilities” is the phrase development experts use to reinforce the point that it is possible to use natural resources as productive assets. By using ecosystem services properly, Africa could protect its natural resources and increase its trade volume within the continent and with the rest of the world. And such protection comes with minimal or no additional costs. 

A few ecosystem approaches, such as the use of “native pollinators,” are already gaining popularity. Also referred to as “the farmer befriending the bee,” this approach presumes bees’ habitats are protected when farmers minimize tillage, allow crops to flower, plant hedgerows or windbreaks with flowering shrubs, reduce or eliminate pesticide use and work with surrounding land owners to protect natural areas. By investing in the protection of bees’ natural habitats, farmers are investing in their crops. Bees and the sustainable use of other management techniques can increase crop yields by as much as 5%, according to the Proceedings B journal, published by the Royal Society of Biological Sciences.

Moreover, these techniques reward farmers with better-quality produce to sell. For example, in Burkina Faso, where shea nuts are the second-most-exported cash crop (after cotton), ecosystem-based techniques could improve the quality of shea nuts and ensure sustainable production methods. This was the case recently when one ecosystem-based approach (EbA) project trained 120 women to produce high-quality shea butter, which led to increased sales and an extra $18 per month for each woman on average. An EbA is a farming method that promotes conservation and sustainability through integrated management of land, water and living resources. The women now have an even greater motivation to protect their five hectares of shea trees and associated ecosystem (which is part of their production chain) from destruction and deforestation. 

Across West Africa, between 4 million and 5 million women depend almost entirely on shea nuts for their livelihood, according to the Food and Agriculture Organization. Applying EbAs widely could increase production for local consumption and for exports. 

Increasing trade in Africa 

In a number of ways, Africa could boost trade by exploiting its vast natural resources using ecosystem-based approaches. First, EbAs can increase agricultural trade volumes through higher crop yields. In Zambia, farmers increased crop yields by 60% by switching from monoculture practices to intercropping and other sustainable methods. Second, greater use of EbAs will encourage a shift from traditional to sustainable farming methods because the global market for EGS is growing rapidly. EbA practices could potentially help Africa reap the benefits of EGS.

Third, due to the diverse crops being produced, EbAs will provide Africa with access to new markets. Through agroforestry (intercropping, barrier crops and nitrogen-fixing crop use), smallholder farmers can produce more diverse crops. And finally, better-quality or more environmentally friendly products will give Africa access to higher-quality markets. As with the shea butter project in Burkina Faso, EbA products can enter “sustainable” markets, where they fetch higher prices.

Introduce trade reforms 

Even if Environmental Goods and Services lead to increased trade opportunities, barriers to trade in Africa will persist. The World Bank’s primary recommendations are reforms in the trade sector and the strengthening of institutions that design and implement regulations. The bank wants African countries to reduce the cost of trading across borders. According to the bank, costs associated with trading in sub-Saharan Africa are twice as high as those in East Asia and the Organization for Economic Cooperation and Development (OECD) countries. It advocates for the removal of a range of non-tariff barriers to trade, including restrictive rules about origin of goods, import and export bans and costly licensing. In the sub-Saharan African region, notes the bank, it takes an average of 38 days to import and 32 days to export goods across borders—two of the longest wait times in the world. However, while new EGS products may get caught up in these barriers, experts believe that mobile banking and other innovative cross-border systems could improve the situation. 

Already environmentalists are saying that ecosystem services should cease to be seen as free and limitless; rather, they should be protected against the effects of climate change. The consensus, however, is that EGS in African economies could bring greater economic, social and environmental benefits to the continent. This is the triple win. 

Paris Agreement on climate change: One year later, how is Africa faring?

Paris Agreement on climate change: One year later, how is Africa faring?

Several African countries have begun implementing climate resilience activities

 

Since December 2015, when 195 countries signed the Paris Agreement on climate change, several countries in Africa have begun implementing climate resilience activities that will allow them to better absorb and adapt to harsh climatic changes.

However, an assessment of the continent’s progress in combating climate change brings to mind a popular African proverb: “A large chair does not make a king”—in other words, huge implementation challenges remain. Africa’s policy makers, however, are eager to meet these challenges, believing that achieving the objectives of the climate change deal could unlock the continent’s socio-economic potential.

Signed in late 2015, the Paris Agreement entered into force on 5 October 2016. One month later, at the COP22 (Conference of the Parties to the United Nations Framework Convention on Climate Change UNFCCC) in Marrakech, Morocco, world leaders formally adopted the Marrakech Action Proclamation, which recommitted parties to full implementation of the Paris Agreement. And implementation has since started.

As of April 2017, of the 143 countries that have so far ratified the agreement, 33 are in Africa, including Benin, Burkina Faso, Cameroon, Chad, Ethiopia, Gabon, Gambia, Kenya, Nigeria, Somalia, Tunisia, Uganda and Zambia. That is 60% of the total number of African countries.

Beyond the ratifications, many countries have also fulfilled a key requirement in the agreement by formulating their Nationally Determined Contributions (NDCs). The NDCs are the countries’ individual efforts to achieve climate change goals. In their NDCs, the majority of African countries indicated plans to prioritize climate proofing development activities, especially in economic sectors such as agriculture and energy.

An example of climate proofing in the agriculture and energy sectors is the restoration of ecosystems, a development that is already gathering steam on the continent. Agenda 2063—a set of aspirations formulated by the African Union (AU) to point the way to prosperity on the continent—also highlights ecosystem restoration as a way to catalyze socio-economic development.

The AU maintains that by applying ecosystem-based adaptation  in the agriculture sector in combination with clean energy, countries can add agro-value chains, spur food security and increase economic opportunities along the value chain, while simultaneously lowering carbon emissions and conserving ecosystems. 

Currently, Africa’s development challenges are many. One serious disadvantage is that more than half of its 1.2 billion population lives on less than $1.25 per day—the standard threshold for absolute poverty. Also, about 60% of Africa’s unemployed are youth. Food security is also a problem: a quarter of Africa’s population goes to bed hungry, while more than 200 million Africans suffer from severe malnutrition.

Africa’s strengths

To respond to these challenges while implementing the Paris Agreement, experts say African countries should maximize the potential of key sectors capable of boosting socio-economic development. In other words, the focus should be on agriculture, food production and clean energy, among other sectors.

Africa’s strengths lie in its immense natural resource potential and other ‘sweet spots’, including having 65% of the world’s arable land and 10% of its inland freshwater resources. The continent’s renewable energy potential can be realized through hydro as well as solar power. Harnessing these resources in a sustainable way will boost Africa’s development.

Agro-value chains in Africa, if properly harnessed, can reduce poverty two to four times faster than any other sector, according to the World Bank. The agricultural sector’s projected value by 2030 is $1 trillion, and this sector could potentially provide 17 million jobs, says the Bank.

The Paris Agreement accentuates the opportunities in Africa’s economic sectors; what remains is for countries to implement the agreement with full attention to domestic development needs.

Ecosystem-based adaptation

The UN Environment, which promotes sustainable environment through sound policies and practices, is providing technical and other forms of assistance to African countries implementing the Paris Agreement to enable them to adequately address socio-economic challenges, particularly food insecurity and unemployment, as well as macroeconomic growth. 

The Ecosystems Based Adaptation for Food Security Assembly (EBAFOSA) is one of the initiatives to power sustainable agro-industrialization. EBAFOSA is facilitated by the UN Environment supported by the AU and state and non-state actors, including private-sector partners. Ecosystems-based adaptation for food security consists of methods of agricultural production that promote conservation and sustainability through integrated management of land, water and living resources.

Many of the 40 African countries implementing EBAFOSA are successfully using a combination of policies and other operational interventions to address socioeconomic priorities, offset carbon emissions and protect ecosystems.  

In the Democratic Republic of Congo, for example, a group of young agri-preneurs (agricultural entrepreneurs) are using clean energy to process cassava (an indigenous climate resilient crop) into flour. They then package and standardize the flour before selling it. An agri-preneur can rake in up to $4,000 weekly. This business model reinforces the overarching argument for green initiatives, which is that it can be a win-win: protecting the environment can also benefit the bottom line.

A boost for SDGs

A green initiative such as that of the Congolese agri-preneurs will contribute to Sustainable Development Goal (SDG) 13 (combating climate change), SDG 7 (affordable and clean energy), and SDGs 1 and 2 (tackling poverty and boosting food security).

In Kenya, the use of information and communications technology to garner pertinent information for financing purposes is increasing agricultural production and promoting a clean energy value addition. Through EdenSys, an end-to-end agri-business management app for mobile phones and computers, enterprises engaging in EBA and clean energy agro-business activities can post their financial records online and use them to apply for loans. A number of microfinance institutions are providing these loans, which indirectly contributes to the SDGs pertaining to climate change, clean energy, the elimination of poverty and food security.

In Makueni County in eastern Kenya, the UN Environment is helping local authorities create a climate change fund. The plan is to make the fund a financing pool for climate resilience activities, particularly those focusing on ecosystems-based adaptation for food security. The fund will be the first of its kind in Africa.

Makueni County’s climate fund goal is to set aside 50% of its portfolio as collateral for loans of up to 10 times the security sum. Enterprises engaging in ecosystems-based, adaptation-driven agriculture and clean energy value addition could benefit from such loans.

While Africa may have lagged in development in the past decades, the Paris Agreement provides an opportunity to accelerate socioeconomic development. Instruments such as the global SDGs, the AU’s Agenda 2063 and the Paris Agreement are creating the policy framework and operational paths to sustainable development, experts say. 

So far Africa’s climate change implementation activities are encouraging. The questions are how much longer countries can maintain the momentum and how much support, especially financial, will come from abroad. On these, the jury is still out. 

Light at the end of the tunnel

Light at the end of the tunnel

Environmental sustainability is crucial to Africa’s development. As the target date for achieving the MDGs comes to a close, achieving environmental sustainability remains a challenge.

While African countries made great efforts to reduce  greenhouse gas emissions and the use of ozone-depleting substances while strengthening the protection of their territorial and marine areas, more forest cover in the region was lost — either through devastation by natural causes or because the land was converted to other uses. 

As for ensuring safe drinking water, the rest of the world met the target by 2010, but 45 countries — 18 of them in Africa — did not meet the 2015 deadline. Still, improvement was registered. According to the 2014 MDGs report, by 2012, 69% of the African population had access to an improved drinking water source, up from 48% in 1990, and about 14% of countries that met the water target in 2012 were in Africa, while a further six countries, Benin, Cameroon, Ethiopia, Guinea-Bissau, Liberia and Morocco, were on track.

Urban areas tended to have better access to water distribution than rural areas, although with exceptions. For example, in Angola, Chad, Niger, Djibouti and Guinea-Bissau, access to safe drinking water has increased more in urban areas than in rural areas, while rural coverage has increased faster than urban coverage in Burkina Faso, Ethiopia, Ghana, Malawi, Namibia, Swaziland and Uganda.

Enhancing access to piped drinking water on premises has been the strategy applied globally to   ensure safe drinking water for the population. Only 16% of the population in Africa is connected to piped water on their premises — the lowest in the world.

On sanitation, Africa was off track. Between 1990 and 2010, sanitation coverage increased by just 4%, to reach about a third of the population. The number of Africans without an improved sanitation facility increased by almost 200 million people — to 612 million. In most rural areas of Africa, sanitation coverage is still below 50%. Even in urban areas, where coverage is better, the expansion of slum areas continues to pose a challenge to achieving this goal.

Thirty-two countries reached the target of having at least 10% of their territorial and marine areas protected, compared to 19 countries in 1990. Guinea-Bissau, Guinea, Republic of Congo, Morocco and Namibia registered the most remarkable progress.

Although Africa’s emissions are negligible, the region accounts for 20% of global net annual CO2 emissions derived from land use — that is CO2 emissions resulting from changes in the use of land. Africa registered remarkable progress in reducing the use of ozone-depleting substances, such as commercial and domestic refrigerants, domestic air conditioning, motor vehicle air conditioners, and non-medical aerosol propellants and solvents. The MDGs report observes that in the period 2000-2011, more than half of African countries achieved reductions in ozone depletion of over 50%. Algeria, Equatorial Guinea, Libya, Mauritius, Seychelles and South Africa emitted the most CO2, while Lesotho emitted the least. Countries that reduced their CO2 emissions were the Democratic Republic of the Congo, Gabon, Guinea, Mauritania, Rwanda, and Zambia, while significant emission increases were registered in Algeria, Angola and Nigeria.  

To avoid trading off productivity for degradation, Africa has to harmonize industrial development with environmental sustainability, contrary to taking the “pollute first, clean up later” approach that most industrialized countries took.

Finally, as Africa transitions with the rest of the world to the Sustainable Development Goals, its priorities should centre around environmentally sustainable and socially inclusive industrial development.   

Trading while caring for people and planet

Trading while caring for people and planet

Ratifications are moving ahead, if slowly, on the newly signed African Continental Free Trade Agreement (AfCFTA)—the world’s largest free trade agreement (with the most member countries) since the founding of the World Trade Organization.

The African Union and its member countries hope that, among other benefits, a free trade area will improve Africa’s economy.

For the 49 African leaders who have signed AfCFTA’s framework agreement (by end of July), a free trade area offers hope for improving socioeconomic conditions on the continent. Africa’s current economic indicators are not exactly stellar—low economic productivity, estimated to be 2000% lower than that of developed regions, is compounded by a lack of value addition to commodities in which the region holds a comparative advantage.

For example, because of low value addition, Africa earns a mere 10% of the total value of its agro-value chains. In the cocoa value chain (Africa produces 70% of the world’s cocoa), only a dismal $2 billion out of the more than $100 billion in chocolate revenues annually returns to the continent.

Similarly, up to 90% of income from coffee goes to rich consuming countries, according to the Economic Commission for Africa (ECA). And the domino effect of job loss worsens the situation.

Low productivity exacerbates unemployment. About 12 million African youths join the labour market every year to compete for just three million new jobs. A huge population of jobless youth is a ticking time bomb, warns Alexander Chikwanda, Zambia’s former finance minister, alluding to its potential to fuel unrest and political violence.

With few prospects for economic security, many young Africans have been risking their lives crossing a dangerous Mediterranean Sea in search of better opportunities overseas. Many have died on the way, some are detained, and recent reports claim others are sold in modern-day slave markets.

Still, the huge and obvious problem is climate change, which is projected to shrink average income in the poorest 40% of countries (most of them in Africa)by a whopping 75% by 2030, according to a 2015 study by the University of California, Beckley, USA.

The study focused on the relationship between temperature and economic activities in countries, and found that climate change will exacerbate global inequality, which will be harmful to particularly poor countries.

Africa’s “machete”

“The path does not close for a man with a machete,” says an African proverb, suggesting the AfCFTA could be the machete that catalyzes Africa’s economy. If all 55 countries join, the free trade area will consolidate a market of 1.2 billion people with a combined GDP of $2.5 trillion, according to ECA. The US business publication Bloomberg estimates the combined GDP at over $3 trillion.

A free trade area could boost intra-Africa trade to 52%. That percentage could rise to 70% by 2022, a figure higher than trade within the European Union, currently at 65%.

The AfCFTA also includes a protocol for the free movement of people that will consolidate labour opportunities across the continent and put a brake on brain drain. Currently about 33% of Africa’s skilled workforce is seeking greener pastures overseas.

At a glance, AfCFTA looks likely to create unprecedented demand that will drive local manufacturing and industrialization, particularly in the agricultural sector. An industrialized agricultural sector could become Africa’s strategic growth engine and a tool to rapidly expand its middle class, currently estimated at 300 million.

Africa could rake in $150 billion annually of value-added agro-produce, expand its economy, create thousands of jobs for the youth, mitigate carbon emissions and enhance its ecosystems’ resilience to climate change, states the New Partnership for Africa’s Development, the implementing arm of the African Union.

Overall consumer spending amounted to $1.4 trillion in 2015, according to McKinsey & Company, a global management consulting firm, and business-to-business spending, including in agriculture and its ancillary sectors, would be $3.5 trillion by 2025.

In a 2013 World Bank report titled Growing Africa: Unlocking the Potential of Agribusiness, the bank projects Africa’s agribusiness could be worth $1 trillion by 2030 if it expands Africans’ access to capital, electricity, better technology and irrigated land to grow high-value nutritious foods.

But how do CFTA and its market opportunities ensure food-secure homes and increase economic productivity, wealth and the income of the ordinary citizen? How does it address climate vulnerabilities?

Compliance standards

To achieve AfCFTA’s goal of opening market opportunities, Africa needs to adopt compliance standards, experts say. Africa’s disproportionate vulnerability to climate change underscores the need to ensure that the process of producing, marketing and supplying products meets certain standards and that it does not damage the ecosystems.

A compliance standard could ensure, for example, that attiéké, processed cassava from Côte d’Ivoire, is marketed to Kenyan shoppers as pure, natural and grown without GMOs, chemicals or pesticides. A compliance standard could also ensure that ecosystems are not damaged during production and that processing and marketing create no harmful emissions.

At the 16th African Ministerial Conference on the Environment (AMCEN) in Libreville, Gabon, in June 2017, African ministers and policy makers called for increased investment in innovative environmental solutions and urged countries to adopt compliance standards on economic activities in environmental, energy and health sectors.

In response, the UN Environment, through its Ecosystems Based Adaptation for Food Security Assembly (EBAFOSA) policy implementation framework, established and adopted by AMCEN, is providing technical assistance to countries adopting its compliance standards.

The EBAFOSA compliance standards are adapted from the International Organization for Standardization, a body that promotes worldwide proprietary, industrial and commercial standards to ensure that certified products are exported to other countries.

Evaluation criteria

Under EBFOSA’s compliance standards, experts evaluate agro-products along the entire supply chain—from on-farm production, processing and distribution to marketing—based on three criteria. The first is “climate and environment compliance,” a measure of the extent to which production relies on nature-based approaches that enhance ecosystems. The goal is to protect and enhance ecosystems.

“Climate and environment compliance” also involves powering processing with clean energy and using ICT-enabled marketing and supply chain activities to reduce high carbon emissions.

The second criterion is “health compliance,” meaning nature-based approaches are used in production.

The third criterion is “quality and safety compliance” along the production process and value chain.

Several African countries, including Benin, Cameroon, Democratic Republic of the Congo, the Gambia, Ghana, Uganda and Zambia, are at various stages of adopting the EBAFOSA compliance standards, which will be a step toward creating an open market for healthy, high-quality and environmentally friendly agro-produce across the continent.

As Africa moves toward full ratification of AfCFTA, the EBAFOSA-promoted compliance standards represent a key item in the agreement’s implementation toolbox. Socioeconomic transformation need not come at the expense of people or planet.

How smart policies can lessen effects of climate change

How smart policies can lessen effects of climate change

According to a famous African proverb, “When the music changes, so does the dance.” This adage illustrates the continent’s current position amidst opportunities for, and challenges to, development and governance as the 21st century unfolds. 

In recent years, national leaders have pursued many new development initiatives. Among them are the Addis Ababa Action Agenda on sustainable financing, the 2030 Agenda for Sustainable Development, the Paris climate agreement and the World Trade Organization’s Nairobi Package. 

 These frameworks could fast-track the continent’s development, and even fulfil the promise of the Sustainable Development Goals (SDGs) over the next 15 years. The initiatives dovetail with the African Union’s (AU) Agenda 2063, a set of aspirations for a more prosperous continent. 

 At the same time, Africa confronts chronic problems of poverty, food insecurity, ballooning youth unemployment, mounting debt, climate change and environmental degradation. These problems have been exacerbated by falling commodity prices, which have dropped over 40% from their peak in 2011. This translates to a loss of over $63 billion, which has left a trail of economic devastation for commodity-dependent nations such as Angola, Nigeria and Zambia. Commodity revenues make up more than half the total of Africa’s gross domestic product (GDP). 

 Africa must make a concerted effort to address these long-standing obstacles to growth, and seize available opportunities to get on a path to sustainable development.

 Natural capital losses

Africa currently loses $68 billion annually from environmental degradation, according to Agriculture for Impact, an independent group that advocates for smallholder farmers in sub-Saharan Africa.

 In addition, key environmental sectors such as forestry, wildlife, fisheries and mining suffer losses worth billions to illegal logging, illegal trade in wildlife, unaccounted and unregulated fishing and illegal mining practices, the UN Environment Programme (UNEP)
has found. 

 Without investments to eliminate inefficiencies in the agro-value chain resulting from farming on degraded lands, Africa loses between $4 billion and $48 billion in food worth annually. This is in addition to 6.6 million tonnes of potential grain harvest lost to degraded ecosystems. 

 Consequently, countries in Africa spend $35 billion annually on food imports, which is hardly sufficient, as more than 200 million Africans still go hungry, says the UN Food and Agriculture Organization. Yet with appropriate government policies, Africa could recover that $35 billion and be able to finance development projects and boost food security. 

Targeted policy interventions 

Africa’s current precarious ecosystem situation can be addressed by promoting environmental sustainability. A good first step is to sustainably harness Africa’s natural capital, advises UNEP.     

 At the sixth African Ministerial Conference for the Environment, held in Cairo, Egypt, in April, Africa’s environmental experts identified three key ways to leverage natural capital opportunities. The first involves policies, actions and partnerships at national, regional and global levels designed to reverse current losses from degraded ecosystems, agro-value-chain inefficiencies, illicit financial flows and crimes involving wildlife, logging, fisheries and mining. 

 By reversing these losses, Africa could save up to $150 billion annually. Sectors such as health care and education, needing annual investments of up to $32 billion and $26 billion respectively, and infrastructure, for which investments of $93 billion are required annually, could potentially benefit. 

 The second way Africa can sustainably harness natural capital is by allocating, again at national and regional levels, a portion of current natural capital earnings to unlock the potential of natural-capital-based sectors. By so doing, the continent would be achieving the targets of multiple SDGs. 

 For example, investments in ecosystem-based, adaptation-driven agriculture and using clean energy for processing and other commercial chains can potentially support sustainable agro-industrialization. 

Clean energy can boost sustainable agro-processing in rural areas and, combined with affordable financing and market accessibility, enhance farmers’ incomes, boost food security by up to 128% and create up to 17 million jobs along the entire value chain. This is in addition to boosting an agro-sector expected to be worth $1 trillion by 2030, according to the World Bank. 

Investments in natural-capital-based sustainable agro-industry will contribute towards SDG 1 (poverty eradication), SDG 2 (an end to hunger), SDG 7 (affordable and clean energy) and SDG 8 (sustainable economic growth and employment), as well as promoting food security and improved nutrition. 

Investments can enhance climate adaptation and the health of ecosystems, and produce healthier food even as clean energy options reduce emissions and pollution—all of which would contribute to SDG 3 (good health and well-being for all) and SDG 13 on climate action. Healthy ecosystems would contribute to SDG 15 (protecting life on land). 

The World Bank reckons that a 10% increase in crop yields in Africa would translate to approximately a 7% reduction in poverty through agricultural growth, which is at least two to four times more effective in reducing poverty than growth in other sectors. 

The third way Africa can leverage natural capital opportunities is by targeting policies and actions to enable value addition of its natural capital exports, instead of exporting raw materials. This would enhance earnings. Policies prioritizing investment in rural transport and energy infrastructure to achieve sustainable agro-industrialization is a good starting point, experts believe. 

Unlocking agriculture potential 

Experts continue to praise key elements of the Paris climate agreement, the SDGs, and the AU’s Agenda 2063. What is lacking, however, are policies to ensure those elements are part of individual countries’ development frameworks and, most importantly, that their implementation is financed. 

Without such policies and financing, it may be difficult to achieve modern, climate-friendly and efficient food systems, and, by extension, inclusive economic growth. 

With regard to the critical financing need, one area of intense discussion is how to deal with illicit financial flows, mainly attributable to Africa’s natural capital. According to the Organisation for Economic Cooperation and Development (OECD), financial aid spent on improving tax administration could substantially increase tax revenue for African countries. For instance, a project assisting Kenya’s tax administrators returned a massive $1,650 for every $1 extra invested, while a programme in Mozambique was able to increase short-term revenues by 350%. 

The potential is huge, yet currently just 0.07% of OECD assistance to poor countries is used to improve tax systems. Building capacity of Africa’s negotiators with multinational companies and improving regulatory oversight in tax administration could help deal with illicit flows and recoup funds for sustainable development. 

African countries should make it a priority to implement the 2015 recommendations of the AU high-level panel on illicit financial flows headed by former South African President Thabo Mbeki. These include taking measures to deal with organized crime, including environmental crimes (which make up about 33% of all organized crimes) and the public sector corruption that plays a key role in facilitating these outflows.

Additionally, unnecessary tax expenditures such as incentives for natural-resource exploration constitute significant revenue losses, up to 4% of GDP, in addition to providing loopholes for fraud. Up to 65% of oil subsidies in Africa benefit the richest 40% of households and feed corrupt cartels, according to the African Development Bank. 

Africa’s huge natural resources can turn the dream of a prosperous continent into a reality. Countries need to act urgently and strengthen the governance structure and to enact and implement appropriate policies. The challenge is to make actions speak louder than all the fine words.   

 

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