Just take a moment and imagine what losing 75% of your investment and capital accumulated over years of painstaking work would mean. It could mean closing down businesses and thousands of job losses that could plunge millions into poverty. This is the projected threat of climate change to the African economy – which over 1.2 billion people depend on. These impacts are unfathomable but also present potential opportunities. “Prepare now for the solutions of tomorrow”, this African proverb summarises why we are gathered here today - to prepare ourselves as a continent to seize unfolding opportunities for transformative development.
Since the arrival of mass media on the continent, Africa’s development has continued to be a hot subject of discussion. And just as “money is sharper than the sword”, financing this development has always been a dominant theme of discussions. But in no time have we been closer to catalytic impact as we are now. While challenges have escalated, the capacity for solutions have grown even more. And at the centre of this capacity for solutions, have been some foundational enabling factors to build on. Among them is the growing global consensus, on the need to embrace Innovative financing models, that integrate and bring to par social, economic and environmental aspects. From the ground-breaking Addis Ababa Action Agenda on Sustainable Financing, to the UNEP inquiry into a more sustainable financing model for the future, to the UNEP Africa Adaptation Gap Reports, the message has been unanimous and two-pronged. That to sustainably finance development, first, we must divest from reliance on international public finance alone and embrace more innovative approaches that balance public and private, domestic and international sources. The cost of implementing all the Sustainable Development Goals (SDGs) for Africa is estimated at $1.2 trillion each year. The cost of implementing climate action commitments is estimated to be $2.5 trillion. If this cost were to be divided across all the 54 African countries, we are talking of each country raising $60billion per year – an amount exceeding the GDP of nearly 70% of African countries.
Second, we must divest from socially driven financing to investment financing. Where returns transcend the traditional social benefits to include environmental benefits and financial dividends that are critical for longevity. We must therefore answer the question of how finances currently being raised can be invested in areas that offer these maximum returns. This consensus has not just been in financing models, but also on what transformative development, should look like. The AU Agenda 2063 as well as the Sustainable Development Goals (SDGs) paint a clear picture. One where the misery of 257 million people who go to bed hungry every night, is replaced by the joy and dignity of having adequate food on every table in the continent. One where the disenfranchisement of youth unemployment is no more. One where stagnating economic performance is replaced by vibrant, globally competitive economies.
“one who loves the vest, also loves what is inside”. In the context of our discussion, this African proverb reminds us, that consensus on these key areas is not the only enabler. Indeed, a most crucial factor is the quality of people- because we know that a skilled person, capable of turning challenges, into enterprise opportunities is 4 times the value of produced capital and 15 times the value of natural capital. Here, Africa has made notable strides. An increasingly youthful and tech savvy population is being augmented by an increasing ease of accessing and sharing knowledge and information globally, to favourably position Africa towards transformative development.
In actioning the above key enabling factors, we must remember that just as “no one tests the depth of a river with both feet”, we cannot afford to gamble with the threat of climate change. Which left unaddressed, threatens to shrink Africa’s incomes by a monstrous 75% and wipe out the gains made over many decades. We must therefore action the above within the context of building a net-zero emission economy and seize the opportunities such a trajectory presents.
In doing all this we must remember that “that a man does not wonder far from where their corn is roasting”. Throughout the globe, the shortest routes to gaining a competitive edge, is to leverage on areas of comparative strengths. This is the roasting corn. As we discuss here today, our discussions must start with this question – what is Africa’s roasting corn? Africa has the best solar resource in the entire planet and the majority of the global uncultivated arable land. The question is how can we tap into this abundance in a way that lifts people from the button of the pyramid? The answer is just two words – “value addition” powered by clean energy. For example, right here in Kenya, rice farmers in Mwea lose as much as 50kg of rice per farmer whenever there are heavy downpours because they dry their rice in the open sun. But decentralising solar driers will not only reverse these losses but ensure better quality and cleaner rice that fetches more in the market. At a minimum, it will create income opportunities for actors involved in fabricating the driers and create demand for financing from both the rice and solar drier value chains. And use of clean energy will ensure all this will be at no risk of emitting carbon that drives climate change. This is just a simple example – but passes the message – that the first step to sustainable financing of transformative development is to maximise on the comparative advantage sectors and build globally competitive enterprise out of them. These are the engines of development that can unlock accelerated progress for people, create financial dividend and guarantee environmental sustainability.