Africa’s green business opportunities are abundant, UN study shows

ADDIS ABABA, 17 August 2023 – Africa’s private sector can bolster its green agenda and drive increased GDP, higher income per capita, create tens of millions of jobs, and foster collaboration between governments, businesses and local communities according to a comprehensive study published today by the UN Environment Programme (UNEP).

Fitsum Assefa Adela, AMCEN President & FDRE Minister of Planning and Development & Elizabeth Mrema, UNEP Deputy Director & Assistant Secreatry General.

The Africa Environment Outlook for Business is launched as 54 African ministers of environment are gathered in Addis Ababa for the 19th session of the African Ministerial Conference on the Environment (AMCEN). It recommends businesses adopt a holistic approach anchored in profit, people, planet, prosperity, peace, and partnerships.

Elizabeth Mrema, UNEP Deputy Executive Director, said: “This report shows that policymakers can create an enabling environment for investments that address the triple planetary crisis, by adopting robust regulatory frameworks, investing in research, innovation, and education; promoting public-private partnerships, and foster collaboration across governments, businesses and local communities.”

Rose Mwebaza, Representative and Regional Director UNEP Regional of for Africa.

The report showcases a range of success stories of green ventures today, as well as data on the potential for growth across sectors.

Agriculture and private sector investments in nature:

• Transitioning to sustainable agriculture, currently contributing about 17 per cent to sub-Saharan Africa’s GDP. Embracing organic farming, precision agriculture, and agroforestry are some of the approaches that can enhance productivity while minimizing negative impacts on ecosystems, avoid food insecurity and biodiversity loss.
• Digital technologies in agribusiness offer a US$1 trillion market towards feeding the continent's growing population, estimated to reach 2.5 billion by 2050.
• Combating soil erosion can have net benefits in nutrients, such as nitrogen, phosphorus, and potassium, worth US$62.4 billion annually.
• Restoring nature can unlock a business value of $10 trillion and create 395 million jobs by 2030.

The blue economy and ecotourism:

• The resilience of the blue economy – projected to generate US$576 billion and 127 million jobs by 2063 – must be sustained facing overfishing, pollution, and climate change, through research, innovation and managing aquatic ecosystems.
• Marine and coastal tourism presents tremendous opportunities for sustainable development in Africa, with potential value-added of over $100 billion by 2030.

Climate-smart opportunities for a net-zero transition:

• Africa can become a trailblazer in renewable energy solutions, with abundant solar, wind, hydro, biomass, and geothermal resources that may contribute to a 6.4 per cent increase in GDP from 2021 to 2050. Ocean renewable energy is a vast untapped resource for Africa, with the potential to generate between 100 to 400 per cent of current global energy demand.
•  Businesses in the energy efficiency sector can provide products and services, such as lighting systems, smart buildings, and efficient industrial processes.
• An annual funding gap in climate financing of $213.4 billion offers innovative investors a chance to make an impact by building Africa’s climate resilience.
• Significant reserves of critical minerals like copper, graphite, lithium, molybdenum, nickel, zinc, bauxite, cobalt, manganese and platinum, make Africa essential for electric vehicles, solar PV cell technology and wind turbines.
• ‘Cool roof paint’ can reflect up to 95 per cent of solar heat and the need for air conditioning; investments in clean cooking energy sources can support 900 million (resulting today in poor health and deforestation), and the African LED lighting market may almost double by 2028, reaching US$5.49 billion.

Lucrative pathways for circularity:

• Opportunities in promoting sanitation, tackling plastic waste, recycling infrastructure, sustainable packaging, e-waste collection and refurbishment.
• In the agro-food industry, efficient supply chains and food waste reduction can enhance resource utilisation while meeting growing food demand.
• Plant-based proteins and food safety systems can further drive growth and sustainable practices.

• The European Union-funded SWITCH Africa Green initiative and SwitchMed programmes, which exemplify the viability of turning to a circular economy in benefitting more than 3,000 MSMEs and eight sub-Saharan African countries in agriculture, integrated waste management, manufacturing, and tourism.

The African Continental Free Trade Area (AfCFTA):

• The fast-growing fashion and textiles sector in sub-Saharan Africa is valued at approximately $31 billion, presents opportunities such as sustainable material sourcing, recycling, ethical manufacturing, rental and sharing models, and consumer education.
• The African automotive market is predominantly dominated by used vehicles, paving the way for businesses to thrive in vehicle recycling, remanufacturing, battery recycling, shared mobility solutions, repair and maintenance services, circular supply chain management, and training and skill development.
• The financing gap for environmentally sound technologies (ESTs) must be addressed. In 2020, only $6.07 billion flowed into the continent for ESTs, while the global exported technology value reached $1.17 trillion.
• A pipeline of 360 ongoing sustainable infrastructure projects worth $100 billion in sectors like energy, information and communications technology (ICT), logistics, mining and construction (as of 2022) and additional tentative projects in the same sectors valued at $257 billion, demonstrates the continent’s diverse investment opportunities in the transition to net zero emissions.

The African voluntary carbon market:

• Despite immense potential, Africa utilizes only a fraction of its carbon credit capacity concentrated in only five countries, due to fragmented projects, a scarcity of large-scale developers, regulatory uncertainties, credibility concerns for certain credits and equitable value distribution.
• Africa’s untapped potential is estimated at approximately 2,400 metric tons of CO2 equivalent (MtCO2e) per annum. It could achieve an additional 400 MtCO2e yearly, valued at around US$7 billion per year by 2030.
• Initiatives such as the African Carbon Market Initiative (ACMI) and the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) recommend regional and global actions to scale the supply and demand for high-integrity carbon credits.

The report notes unique challenges to many African economies, including limited investments, institutional capacity, scalability, high transaction costs, effect transportation, and access to- and affordability of electricity. Reducing upfront costs and promoting energy-efficient solutions, and innovative financing mechanisms must all be prioritized by policymakers.

“Africa faces not just incredible challenges on climate change, nature loss and pollution, but it has a uniquely dynamic economic landscape, youthful demographic, and opportunities for decarbonization, digital transformation and for leveraging environmental, social and governance (ESG) framework for sustainability in the business sector,’ said Rose Mwebaza, UNEP Director and Regional Representative for Africa. “With this new report, we hope to inspire African entrepreneurs and businesses, especially audacious first movers, to engage in green growth and contribute to sustainable development goals”.