Africa is without doubt one of the areas most susceptible to the impacts of local weather change (African Improvement Financial institution Group, COP 25, December 2019) regardless of comparatively low contributions to international emissions. It faces monumental collateral harm that poses substantial dangers to its economies, meals methods and livelihoods. Important challenges going through African nations on account of local weather change embrace:
- the impression on meals safety and livelihoods of decreased agricultural manufacturing and productiveness
- restricted entry to capital, know-how and abilities for financial adaptation and transition
- restricted governance and institutional capability to deal with conflicts associated to useful resource shortage and displacement ensuing from excessive local weather occasions
Whereas these challenges are critical, African nations have the chance to be an necessary a part of the answer to the local weather change problem and contribute to the worldwide Internet Zero objective. This could imply unlocking the potential of renewable power, climate-smart agriculture and sensible manufacturing, for instance. The UK, as a number one supplier of inexperienced services, is in a powerful place to assist Africa seize the chance to construct sustainable, inexperienced, inclusive and resilient companies to drive the transition, which has turn into more and more necessary within the context of local weather change.
Inexperienced companies haven’t any unfavorable impression on the setting, economic system or group. They use environmentally sustainable assets and keep socially accountable insurance policies (Harvard Enterprise College, What does “sustainability” imply in enterprise? October 2018).
Supporting the expansion of those companies has the potential to spur the creation of climate-smart jobs, enhance financial development and obtain sustainable improvement.
This quick Progress Gateway venture thought of 8 thematic areas and over 30 sub-sectors throughout the broader inexperienced enterprise house. Three dimensions have been used to pick out the focused sub-sectors:
- Africa’s structural benefit: is the continent’s commerce potential already confirmed or are the circumstances proper?
- UK comparative benefit: do UK firms have a powerful proper to play and a proper to win?
- impression potential: what’s the potential environmental, social and financial impression?
Inexperienced commerce and funding alternatives
From this overarching panorama of over 50 alternatives, the venture has recognized 8 high-potential areas which have the clearest potential for commerce and funding between the UK and Africa. These are primarily within the areas of fresh power, agriculture and inexperienced finance. Alternatives exist particularly in 6 nations – Nigeria, Ghana, Kenya, Ethiopia, Egypt and South Africa.
These alternatives are typically much less technologically superior (e.g. waste discount vs. carbon discount), are at completely different ranges of maturity and principally in areas the place Africa has a powerful benefit. in pure assets. The potential for environmental impression within the Alternative Pipeline covers a variety of outcomes from lowering carbon emissions, to enhancing adaptation and resilience, to lowering waste.
Areas with the very best alternatives embrace:
Clear power
| Funding alternatives | Nations |
|---|---|
| inexperienced hydrogen | South Africa, Egypt, Morocco, Namibia |
| Onshore wind farm consultancy | Egypt |
| Improvement of onshore wind farm initiatives | South America |
| Residential and Business and Industrial (C&I) Photo voltaic Techniques | Nigeria and Kenya |
| Utility photo voltaic initiatives | South Africa and Egypt |
Agriculture
| Funding alternatives | Nations |
|---|---|
| Sustainable animal feed | Kenya |
| Know-how-enabled micro-storage | Kenya and Nigeria |
| Technological chilly storage | Egypt |
Inexperienced financing
| Funding alternatives | Nations |
|---|---|
| Technology of carbon credit (e.g. forestry, gasoline switching) | Kenya, Tanzania, Namibia and DRC |
| Recommendation and issuance of inexperienced bonds | South Africa and Egypt |
Inexperienced hydrogen manufacturing
That is anticipated to achieve round 25% of worldwide power sources by 2050, with Africa having the potential to take a big share – significantly in South Africa, Egypt, Morocco and Namibia. UK firms are effectively positioned to take part throughout the continent by offering capital to factories, in addition to consultancy companies.
Improvement of onshore wind farms
Wind power is predicted to extend from 2 Gigawatts in 2013 to 80 Gigawatts in 2030, with alternatives in South Africa and Egypt particularly. The UK is a worldwide chief within the sector and there’s a robust alternative for UK firms to additional enhance their funding in Africa for the institution/extension of wind farms.
Distributed Photo voltaic Energy Options
Photo voltaic power is poised to play a significant position in Africa’s electrification journey. The UK is effectively positioned to spend money on residential and industrial and industrial (C&I) options, significantly in markets equivalent to Nigeria and Kenya.
Improvement of utility photo voltaic initiatives
UK firms have the chance to leverage their robust photo voltaic experience to guide participation in utility photo voltaic initiatives in nations equivalent to South Africa and Egypt. UK buyers can present capital to arrange and develop photo voltaic utility initiatives to capitalize on the rising significance of solar energy in Africa’s whole power combine and assist drive common electrification.
Sustainable animal feed manufacturing
UK demand for sustainable meals (e.g. insect-based) is predicted to develop considerably over the subsequent 30 years and Africa presents a superb alternative for buyers. For instance, black soldier fly larvae, consumed agricultural waste, present necessary meals for the aquaculture trade. This presents a superb alternative for UK buyers to offer development capital to native producers in nations like Kenya.
Know-how-enabled micro-storage
Urbanization and inhabitants development are driving the demand for micro-storage know-how in markets equivalent to Nigeria and Kenya, and the rising demand for chilly storage from the aquaculture sector in Egypt. UK buyers can present development capital to firms in these markets.
Initiatives producing carbon credit
Initiatives in Africa may be rather more worthwhile than within the UK, the place the associated fee per tonne of carbon credit score era is 24 occasions increased than the worldwide common. UK buyers can finance such initiatives (eg forestry, gasoline switching) in markets equivalent to Kenya, Democratic Republic of Congo, Namibia and Tanzania.
Issuance of inexperienced bonds
The inexperienced bond market may develop to £10-15bn by 2030 as demand for sustainable finance grows. A constructive improvement in South Africa and Egypt can function proof of idea. The UK is the worldwide market chief in inexperienced bonds, and UK banks and councils can assist issuance in Africa.
Really helpful Options to Increase Inexperienced Enterprise Participation in Africa
- serving to UK buyers join with high-potential African initiatives and companies, speed up enterprise schemes and publicize alternatives and success tales
- governments and firms may co-create venture aggregation mechanisms and joint funding rounds to enhance scale and danger mitigation, to reply to the small-scale nature of alternatives and markets in Africa
- multilateral organizations and improvement finance establishments (DFIs) can discover low-cost native foreign money loans and inexpensive foreign money hedging merchandise
- assist information trade applications and scalable pilot initiatives and provide technical help to African governments to assist develop a coverage and regulatory framework
- UK firms, incentivized by the federal government, may spend money on catalytic infrastructure (e.g. pipelines and community infrastructure), to enhance the viability of alternatives and unlock them at scale
Activating this chance pipeline has the potential to unlock lasting features in improvement impression throughout Africa, whereas advancing the enterprise pursuits of African and UK companies. Crucially, it will additionally play an necessary position in vindicating the UK’s ambitions to be a worldwide chief in local weather motion.
To activate the pipeline, data sharing and focused matchmaking for companies, coverage advocacy, technical help and catalytic investments (from companies, and probably additionally from the UK authorities) are wanted to unlock alternatives.
This may assist enhance commerce and funding within the inexperienced sector. Early successes will show the worth to extra UK and African gamers of alternatives that drive constructive environmental and social outcomes, and drive new offers organically. Progress Gateway will facilitate this via focused dissemination of data and engagement in enterprise networking occasions with different UK authorities organizations offering export recommendation and finance, and thru advisory assist continued.
To seek out out extra about Progress Gateway and the way your small business can become involved in these UK inexperienced enterprise and funding alternatives in Africa, contact [email protected] or go to our web site at growthgateway.marketing campaign.gov.uk.
See instrument for visualizing inexperienced commerce and funding alternatives between the UK and Africa recognized by the venture.
