The Platform

Local fruit and vegetable market in Nairobi, Kenya.

Doing business without costing the planet is very critical. Three socio-economic production and consumption systems that underpin nearly all businesses – food, infrastructure, and energy – are responsible for the most significant pressures on biodiversity and ecosystems. Approximately 80% of threatened and near-threatened species, for instance, are currently endangered by these three systems that underpin nearly all areas of business. These risks send a simple message – climate change and degradation have moved from being a fringe threat to a core threat to economic productivity. And when economies suffer, purchasing power falls, demand dwindles, and businesses suffer. On the flip side, implementing climate resilience in the three socio-economic production and consumption systems can create business opportunities.

An investment of $1 in ecological approaches provides a return of up to $30. 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. The just-concluded COP26 in Glasgow paved the way for market-driven actions to implement country climate action commitments. This is a green light for businesses to be formulated around offering sustainable solutions that help countries enforce the Paris Agreement commitments. But the critical question is how businesses in Africa can tap into these enterprise opportunities to implement sustainability in Africa. 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.

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 into 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. 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 globally and create 395 million jobs. These are a cross-section of business opportunities from the environment and climate action available to enterprises in Africa to drive their business growth. But doing this calls for some fundamental tenets.

First, align your investments with national and global climate policy signals. In November, 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, 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 and supply markets and grow businesses.

Third, youth need to graduate themselves into the private sector. The private sector in Africa goes beyond the corporate world. It includes the informal sector that engages up to 80% of our people and young people transitioning to the labour markets, constituting nearly 70% of our population. The best bet we have is for these youth to engage in non-capital-intensive climate action solutions that meet on-demand areas for the informal sector while aligning to policy. For example, waste recovery to fuel briquettes is an area that is a non-capital-intensive area. The fuel briquettes have found a market niche among charcoal users because they are up to 2 times cheaper than charcoal. Youth are engaging in producing briquettes to tap the $20 billion charcoal market and the 20% market growth rate.

Fourth is targeted soft incentives. Hard policy incentives that we already know will accomplish very little if they fall on uninspired citizens. Cultivating the right mindset among the constituency of implementers, mostly the young people, and igniting them to turn their passions into profits is our urgency of now. This calls for a new perspective because regardless of the amount of money or policies we have in place, turning NDCs, plans, and policies into action will not work if people do not have the passion and self-drive to change their behaviour. Without passion, you throw money at every problem, and you will waste it and end up with no result. We must inspire youth to develop passion and find their purpose around climate actions to leverage them as investment and entrepreneurship opportunities. Regardless of what we contribute, if it falls on passionless youth, then no transformation will occur.

Dr. Richard Munang is the United Nations Environment Africa Regional Climate Change Programme Coordinator. He is responsible for guiding the optimal actualisation of UN Environment’s climate resilient development objectives for Africa through coordinating implementation of diverse projects in adaptation and mitigation in key economic sectors especially agriculture, and energy as well as informing strategy and policy development from project lessons.

Robert Mgendi works with the Africa Climate Change Programme.