Charting a Path for Africa. African Business and Policymakers Should Outline Energy Transition and ESG Policies at African Energy Week in Cape Town
By Tobi Karim*
Last year marked the 25th anniversary since the execution of the ‘Ogoni Nine’, the group of activists led by Ken Saro Wiwa, that campaigned against environmental pollution, the exploitation of natural resources and the lack of development in the Niger Delta. Yet in the decades that followed the Niger Delta has remained the textbook example of the resource curse. The paradox, made famous by economists Jeffrey Sachs and Andrew Warner, posits that countries rich in natural resources tend to exhibit worse developmental outcomes. As we reflect on the years passed and the plan for the years to come, we can see that the plight of the 30 million people living in the Niger Delta remains unchanged: creeks and rivers intertwine with networks of aged pipelines, the stench of crude pervades from the oil spills, wetlands and waters are tainted black while biodiversity and livelihoods are lost in the hunt for black gold.
Situated in Nigeria’s south-south geopolitical zone, the Niger Delta is both the bedrock of Nigeria’s oil economy and a representation of potential that has not been allowed to materialize. Prior to entering the world, a child in the Niger Delta is at risk of a life unlived. A 2017 study found that living in the vicinity of oil spills before conception was responsible for around 16,000 infant deaths within the first month of their lives. Contamination from the seepage of petroleum products into the soil, water and air affect fetal and child health through the parents’ exposure before conception, during the pregnancy and the child’s exposure after birth.
As billions are being extracted from the ground below, the belt of mangrove forest, which protects vast areas of freshwater swampland in the Inner Delta – the Delta’s life force – withers. An entire ecosystem destabilized by what should have been its key to prosperity. Fishermen are left with no fish, as aquatic life chokes on the chromium, lead and mercury found in crude oil. One resident said “our lives in Bodo (a village in Ogoniland, Niger Delta) depend largely on the sea and seafood. Today almost all the seafood is gone. [There is] poverty in terms of food, in terms of cash, even in terms of the necessities of life – [there is] no water here”.
The Niger Delta ecosystem is a tapestry. Its constituent parts – forests, creeks, meandering waterways, wildlife, sons, daughters, mothers and fathers, their customs, their culture and a way of life – are tightly woven together. However, as time passes the tapestry unravels. The forests and the life within it are being pushed into the memories of those who have lived to see days when forests, farmland and waters were pillars of communal subsistence. The days before soil turned black. Lazarus Tamama, a resident in Ogoniland, described this phenomenon, saying: “I remember as a child, when we’d come back from primary school, we’d run to the creek which was just about 500m away and, with our bare hands, we’d catch so much fish. Then we’d go back home and would have something to eat and something to keep for our families when they came back from farming. The whole household could eat as a result. Now, this is history. Children that are born now don’t know these things. They don’t exist anymore. Our history has been destroyed as a result. Our heritage is forgotten, it can’t come back”.
The story of the Niger Delta is part of a global struggle. In all four corners, governments and businesses are being confronted with the economic, environmental and social ramifications of the industrial, consumptive and extractive economic model that has governed the way of doing business since the 18th century. It is within this context that sustainability takes center stage. In the face of climate change and its associated risks, staying competitive, creating and delivering long-term value requires new practices. Over the last few years, there has been increased emphasis on decarbonization and integrating environmental, social and governance (ESG) into corporate and investment strategy and decision-making.
As nations commit to their various net-zero targets and limit global warming to “well below” a 2°C rise from pre-industrial levels, as stated in the Paris Climate Agreement, the need to accelerate the global transition to clean, renewable and sustainable energy sources has never felt more pressing. The quest for global reduction in greenhouse gases has put pressure on emerging market economies, where a high proportion of economic activity is tied to extractive industries. In Sub-Saharan Africa, 89% of countries are commodity-dependent, meaning that more than 60% of exports by value comes from fossil fuels, minerals or agricultural products. This reality coupled with the fact that Africa has very low current and historic per capita emissions, has given rise to a debate over where the burden of decarbonization must lie – emerging markets should be allowed to pursue their developmental ambitions.
This framing places Africa at a crossroad, trapping the continent between the need for development and our collective duty to climate mitigation. However, it assumes that emerging economies cannot grow or develop while reducing their greenhouse gas emissions. It ignores Africa’s unique position. While it is true that Africa only accounts for 4% of global CO2 emissions, climate change threatens our key industries, putting the future of our development at risk. The 2021 Global Climate Risk Index showed that in 2019 five out of the ten countries most affected by climate change were African, with cumulative absolute losses of US$ 7.5 billion USD. The top two most affected countries were Mozambique and Zambia. Moreover, a rise in sea levels is a top climate change risk, given Africa’s 30,500 km coastline. The World Bank estimated that costs of environmental degradation from coastal flooding and erosion in four west African countries – Benin, Côte d’Ivoire, Senegal and Togo – was USD2.4 billion a year.
The Covid pandemic exposed the true extent of our human and economic vulnerability. It highlighted our need to make sustainability a primary focus – a need to “build back better” to make our economies more resilient in the face of future shocks. With global efforts focused on fighting the pandemic and investors becoming more cognizant of the impact their investments have on the wider society, experts believe that this may be a long term catalyst for ESG investing. Africa still needs $256 billion a year until 2030 to achieve the Sustainable Development Goals (SDGs). ESG and sustainability-focused financial products can provide the capital to fill these gaps. For example, Ghana aims to raise $1 billion through the sale of sustainable bonds, including Africa’s first social debt.
Africa’s future competitiveness rests on sustainability-focused growth. Energy companies and energy policy have a crucial role to play in the realization of this future. A reliable and affordable energy supply is one of the main drivers of economic and human development. Even though energy access is only directly referenced in SDG 7, at least eight others would be impossible to achieve without it. 2019 figures show that the continent-wide access rate to electricity was 43%, which was half of the global access rate of 87%. The energy sector is also the source of around ¾ of global greenhouse gas emissions. With an abundance of solar, geothermal and wind resources, Africa has a comparative advantage in renewables and falling costs of green technologies provide the impetus for Africa’s energy transition. This unique transition story needs to support the 2.5 billion people projected to inhabit the continent by 2050. By leveraging our resources more effectively African nations will be able to shift their energy systems away from traditional biomass (wood, charcoal, and dry dung) towards a mix of both on and off-grid solutions that incorporate renewables and minimize exposure to fossil fuels.
The African reality is marked by the dominance of extractive industries, high exposure to climate change and pressing developmental needs. As such, it is important that African countries take charge in global conversations centered around sustainability. By taking the backseat, the continent risks falling prey to the ‘one size fits all’ approach that ignores our nuances. For example, the International Energy Agency (IEA) released a Net Zero by 2050 scenario in May which called for no new investment in oil, gas or coal. This ignores the role gas can and needs to play as a lower-emissions alternative to traditional fossil fuels and in promoting economic growth in key areas such as petrochemicals, refining and manufacturing. It also misses the opportunity to foster a market for carbon-neutral or green LNG in Africa’s energy transition. The cost of not understanding these dynamics is that Africa will continue to lag in an area where it can and should lead.
Furthermore, as Africa takes a backseat, the world continues to underestimate how much there is to be learnt from the continent. Collectively, we fail to appreciate the many ways sustainability is woven into cultures across Africa. The concepts ‘repurpose and reuse’ are second nature – think of the newspaper turned into food packaging when wrapped around grilled plantain, the kitchen drawers filled with plastic bags, which seems to be a staple in an Africa home or the bustling second-hand markets such as, Katamanto market in Ghana. Think of how traditional building techniques place an emphasis on the natural. The Floating School in Lagos, the African Centre in KwaZulu-Natal or the Eastgate Centre in Harare serve as just a few examples of the ingenuity of architects across the continent, who have leaned on traditional techniques and paired them with modern engineering technologies. Whether its favouring natural materials such as wood, mud, bamboo and eucalyptus poles or using techniques to enhance natural ventilation, the concept of ‘green’ architecture is not new to the African landscape. While we may not instinctively attach terms such as ‘sustainability’, ‘ESG’ or ‘green’ to our everyday occurrences or lived experience, we must learn to be more vocal and share our knowledge because Africa has a lot to bring to the table.
We have the opportunity to ‘reconceptualize’ and redefine what development looks like. Our development story does not need to and should not go through the same cycles as the West’s – that model is no longer fit for purpose. To unlock Africa’s growth story, governments and companies must leverage new and emerging technologies, make more efficient use of current capabilities and tap into innovative and sustainability-focused financing. Delivering the benefits of tomorrow’s world requires reflection, collaboration and the implementation of future-oriented strategies that reconcile economic growth and sustainable impact.
- Source African Energy Chamber.Tobi Karim is an ESG Associate at KKS Advisors. Prior to joining KKS, Tobi worked in Real Estate Private Equity. She also worked with University College London (UCL) on two innovation-focused projects – the African Innovation Ecosystems Study (AIESyS) and Project OVERCOME. Tobi holds an MPA in Energy, Technology and Climate Policy from UCL.