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Beyond policy and public investment: the SDG imperative for business

February 21, 2020

By Karnika Yadav *

Karnika Yadav is Associate Partner - Business Consulting & Research, Intellecap Advisory Services Private Limited
Karnika Yadav is Associate Partner - Business Consulting & Research, Intellecap Advisory Services Private Limited

There is only one road left to achieving the Sustainable Development Goals (SDGs) set for Africa for 2030 and that’s through sustainable businesses. For the sluggish progress to date has been primarily a consequence of ‘putting all our eggs in one basket’ and expecting the state to deliver the SDGs, which it cannot.

A prime obstacle in that is finance. The SDG Center for Africa estimates the financing gap to achieve the SDGs is running at between $500bn and $1.2tn a year. That is simply beyond the reach of the public sector, with the Center estimating that delivering basic state functions of health care, education, water, energy, and road infrastructure requires more than 50 per cent of the GDP of most African countries.

However, for the private sector, pursuing the 2030 goals of eradicating Africa’s hunger, poverty, and inequality and improving healthcare will deliver its own rewards, creating business opportunities worth more than a trillion dollars a year, according to United Nation estimates.

In the absence of that private sector mobilisation, progress remains achingly slow.

The 2019 Sustainable Development Goal Three-Year Reality Checker Report found only five countries in Africa - Seychelles, Mauritius, Morocco, Egypt and Algeria - that had met the SDG target of three per cent poverty by 2015.

Yet the problem is substantially one of mindset. For, while achieving the right policies and public investment is necessary for delivering the SDGs, we need to abandon the idea that it is enough and focus more rigorously on developing SDG aligned businesses.

It is not viable to expect nation states to achieve a tax take, or a debt load, of 50 per cent of GDP to deliver basic services when the continent is home to a vast informal sector that contributes no government revenue at all. That ‘basic needs’ bill is just unmeetable without a leap forward in business and GDP growth.

And just as public sector SDG success depends on private sector take-off, so too does the private sector’s success.

Investing in SDG-focused businesses, calculates the UN, would create over 85 million jobs in Africa by 2030, which would in turn create new consumers and new markets.

Indeed, even relatively small investments in SDG-focused businesses can produce huge returns. For instance, investing in agriculture technology to reduce food waste could generate $57bn a year in additional revenues, based on evidence from Rwanda, where small metal silos or plastic crates have reduced post-harvest losses by over 60 per cent and increased smallholder farmers’ incomes by more than 30 per cent.

If private businesses collaborate with local governments to provide larger infrastructures, such as ports, oil and gas extractives, power plants and automotive, shared revenue of over $296bn could be generated and nearly 16 million jobs, according to the UN’s estimates. There could be further benefits too from using local materials for such works.

Likewise, providing affordable housing, clean water and sanitation, infrastructure and energy solutions, such as solar lanterns and improved cooking stoves to urban dwellers, has a potential revenue value of $214bn a year and could create over 32 million jobs.

Such growth is typical for businesses focused on achieving SDGs. Indeed, research conducted by the Business and Sustainable Development Commission (BSDC) shows that business that is focused in SDG areas also achieves more value locally.

For instance, reports the BSDC, 71 per cent of the value of food and agriculture businesses is retained in developing countries, 60 per cent of health and wellness businesses, 54 per cent of energy and materials, and 54 per cent of the value of upgrading and developing new cities.

Overall, business models that are directed towards achieving Africa’s SDGs have proven to work to the benefit of both consumers and businesses, which is why thy lie at the heart of all we are doing at Intellecap and at next week’s 7th Sankalp Summit for entrepreneurs in Nairobi.

Our initiatives to support private sector SDG initiatives include research, partnerships and projects spanning ideal adaptive technologies, such as rural solar mini-grids; private sector capacity building among communities displaced by projects such as the Olkaria geothermal plant; and assisting small producers into value addition and niche markets, in tea, in bamboo, and multiple other high potential areas.

We have no doubt that without a recalibration of our private sector SDG efforts, the 2030 goals for Africa will go unmet, whereas if we now see and seize this opportunity, no African will be left untouched by the benefits borne of SDG-focused entrepreneurs.

*Karnika Yadav , Associate Partner - Business Consulting & Research, Intellecap Advisory Services Private Limited

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