Africa has experienced a
negative 5.1% GDP growth,
up to 7.8% contraction in smaller economies, a 5% loss in public revenue, a
17% decline in exports,
a 50% increase in food losses, and a loss of
up to 50% of all jobs due to the COVID-19 global pandemic. Compared to previous years, about
93% of firms
experienced a sales decline at the enterprise level. Innovative Environmental solutions and climate action stand out as a bastion of these much-needed new opportunities that are impossible to ignore, especially now that Africa is already
heating up twice as fast as the rest of the world and this escalation only implies a compounding of socio-economic misery, which is already at a breaking point.
But we know that every
$1 invested in ecological restoration creates
$30 in economic benefits. Any investment that returns
30times is a high-value catch. But this benefit goes beyond the socio-economic dimension, as science tells us. For example, Investments in Ecosystem-Based Adaptation (EBA) will adapt food systems to climate change with a
return of investment of
400%. Healthy
pollinators have increased yields by up to
180% in Africa and incomes by
$168 per farmer per season. These benefits go beyond theory.
As we speak today, there is a
growing market segment of consumers ready to pay
up to 3 times the price of conventional foods for certified organic, healthy, and environmentally compliant food. One does not have to be a farmer to tap these opportunities. Whether a trader, a hotelier, a transporter, a banker – all can tap into a
“chain reaction” of opportunities that start with ecological food production. As a
hotelier, you can charge more for organic diets. A food trader can sell organic produce at a premium. A transporter can charge more for transporting higher valued food products – and the chain goes on. As a
banker, you can target entrepreneurs engaged in this area as a target niche market. But this is not the only example. More broadly, integrating sustainability in three socio-economic production and consumption systems that underpin nearly every business – food, infrastructure, and energy – can
create business opportunities worth more than 10 trillion dollars globally and create
395 million jobs. For example, prioritising using paving blocks and tiles made out of recycled plastic waste instead of conventional concrete blocks will see you pay
up to 30% less for a product that is five to seven times
stronger than concrete and much cheaper to transport. This means you can save more and put your money in key revenue centres of your enterprise. Switching to
solar power from grid power is good for the environment and your income statement. On
average, firms cut up to 30% of their power bills by switching to solar. These are a cross-section of business opportunities from the environment and climate action available to enterprises in Kenya and Africa to drive their business growth. But doing this calls for some fundamental tenets that I will share today as follows:
First, align your investments with national & global climate policy signals. In November 2021, COP26 concluded with a road map to the full ambitious implementation of the Paris Agreement, the global compact governing climate action. One of the critical aspects covered is under Article 6, which sets forth market mechanisms to implement this agreement. Article 6.2 provides cross-border collaboration in implementing the agreement through the “Internationally Transferable Mitigation Outcomes (ITMO)” system. It means that corporations anywhere across the globe are now permitted to collaborate with corporations and invest in actions that lower global emissions while creating business opportunities. It is an opportunity for firms to prioritise partnerships that green their operations while creating tangible income opportunities. From energy transition into solar to energy efficiency, all these are areas where capital can be raised through collaborations with corporations from anywhere across the globe.
Second,
maximise finance. It is estimated that Kenya has invested
up to $2.4billion annually in climate-related activities. This is one-third of Kenya’s financing annually to meet its
NDC targets. Of this amount, private sector finance represents up to
41%, which is
$979 million, with about
34% originating domestically from Kenyan companies. The focus should be on investing these monies in areas that maximise financial returns.
Third,
tap the informal sector. The informal sector accounts for up to 80% of informal employment. For example, right here in Kenya, the informal sector
accounts for 83.6% of employment.
Up to 70% of Kenya’s retail shopping is done in informal outlets. Considering that markets are people, the private sector in Kenya will not drive climate action without directly engaging the informal sector. The estates’ small kiosks, also called the
“kidogo economy”, are the primary market for business-to-business trade.
Up to 90% of sales in Africa’s major economies come through informal channels like markets and kiosks. Therefore, the primary market and private sector success in driving climate action will hinge upon how best they collaborate with these informal sector players to provide climate-proof products and services. This sends a clear message that the opportunities for market growth are in the informal sector. Partnerships and collaborations between the corporate and informal sectors can go a long way to tap both demand & supply markets and grow businesses.
