Strong government structures can turn the dream of a prosperous continent into a reality
According to a famous African proverb, “When the music changes, so does the dance.” This adage illustrates the continent’s current position amidst opportunities for, and challenges to, development and governance as the 21st century unfolds.
In recent years, national leaders have pursued many new development initiatives. Among them are the Addis Ababa Action Agenda on sustainable financing, the 2030 Agenda for Sustainable Development, the Paris climate agreement and the World Trade Organization’s Nairobi Package.
These frameworks could fast-track the continent’s development, and even fulfil the promise of the Sustainable Development Goals (SDGs) over the next 15 years. The initiatives dovetail with the African Union’s (AU) Agenda 2063, a set of aspirations for a more prosperous continent.
At the same time, Africa confronts chronic problems of poverty, food insecurity, ballooning youth unemployment, mounting debt, climate change and environmental degradation. These problems have been exacerbated by falling commodity prices, which have dropped over 40% from their peak in 2011. This translates to a loss of over $63 billion, which has left a trail of economic devastation for commodity-dependent nations such as Angola, Nigeria and Zambia. Commodity revenues make up more than half the total of Africa’s gross domestic product (GDP).
Africa must make a concerted effort to address these long-standing obstacles to growth, and seize available opportunities to get on a path to sustainable development.
Natural capital losses
Africa currently loses $68 billion annually from environmental degradation, according to Agriculture for Impact, an independent group that advocates for smallholder farmers in sub-Saharan Africa.
In addition, key environmental sectors such as forestry, wildlife, fisheries and mining suffer losses worth billions to illegal logging, illegal trade in wildlife, unaccounted and unregulated fishing and illegal mining practices, the UN Environment Programme (UNEP) has found.
Without investments to eliminate inefficiencies in the agro-value chain resulting from farming on degraded lands, Africa loses between $4 billion and $48 billion in food worth annually. This is in addition to 6.6 million tonnes of potential grain harvest lost to degraded ecosystems.
Consequently, countries in Africa spend $35 billion annually on food imports, which is hardly sufficient, as more than 200 million Africans still go hungry, says the UN Food and Agriculture Organization. Yet with appropriate government policies, Africa could recover that $35 billion and be able to finance development projects and boost food security.
Targeted policy interventions
Africa’s current precarious ecosystem situation can be addressed by promoting environmental sustainability. A good first step is to sustainably harness Africa’s natural capital, advises UNEP.
At the sixth African Ministerial Conference for the Environment, held in Cairo, Egypt, in April, Africa’s environmental experts identified three key ways to leverage natural capital opportunities. The first involves policies, actions and partnerships at national, regional and global levels designed to reverse current losses from degraded ecosystems, agro-value-chain inefficiencies, illicit financial flows and crimes involving wildlife, logging, fisheries and mining.
By reversing these losses, Africa could save up to $150 billion annually. Sectors such as health care and education, needing annual investments of up to $32 billion and $26 billion respectively, and infrastructure, for which investments of $93 billion are required annually, could potentially benefit.
The second way Africa can sustainably harness natural capital is by allocating, again at national and regional levels, a portion of current natural capital earnings to unlock the potential of natural-capital-based sectors. By so doing, the continent would be achieving the targets of multiple SDGs.
For example, investments in ecosystem-based, adaptation-driven agriculture and using clean energy for processing and other commercial chains can potentially support sustainable agro-industrialization.
Clean energy can boost sustainable agro-processing in rural areas and, combined with affordable financing and market accessibility, enhance farmers’ incomes, boost food security by up to 128% and create up to 17 million jobs along the entire value chain. This is in addition to boosting an agro-sector expected to be worth $1 trillion by 2030, according to the World Bank.
Investments in natural-capital-based sustainable agro-industry will contribute towards SDG 1 (poverty eradication), SDG 2 (an end to hunger), SDG 7 (affordable and clean energy) and SDG 8 (sustainable economic growth and employment), as well as promoting food security and improved nutrition.
Investments can enhance climate adaptation and the health of ecosystems, and produce healthier food even as clean energy options reduce emissions and pollution-all of which would contribute to SDG 3 (good health and well-being for all) and SDG 13 on climate action. Healthy ecosystems would contribute to SDG 15 (protecting life on land).
The World Bank reckons that a 10% increase in crop yields in Africa would translate to approximately a 7% reduction in poverty through agricultural growth, which is at least two to four times more effective in reducing poverty than growth in other sectors.
The third way Africa can leverage natural capital opportunities is by targeting policies and actions to enable value addition of its natural capital exports, instead of exporting raw materials. This would enhance earnings. Policies prioritizing investment in rural transport and energy infrastructure to achieve sustainable agro-industrialization is a good starting point, experts believe.
Unlocking agriculture potential
Experts continue to praise key elements of the Paris climate agreement, the SDGs, and the AU’s Agenda 2063. What is lacking, however, are policies to ensure those elements are part of individual countries’ development frameworks and, most importantly, that their implementation is financed.
Without such policies and financing, it may be difficult to achieve modern, climate-friendly and efficient food systems, and, by extension, inclusive economic growth.
With regard to the critical financing need, one area of intense discussion is how to deal with illicit financial flows, mainly attributable to Africa’s natural capital. According to the Organisation for Economic Cooperation and Development (OECD), financial aid spent on improving tax administration could substantially increase tax revenue for African countries. For instance, a project assisting Kenya’s tax administrators returned a massive $1,650 for every $1 extra invested, while a programme in Mozambique was able to increase short-term revenues by 350%.
The potential is huge, yet currently just 0.07% of OECD assistance to poor countries is used to improve tax systems. Building capacity of Africa’s negotiators with multinational companies and improving regulatory oversight in tax administration could help deal with illicit flows and recoup funds for sustainable development.
African countries should make it a priority to implement the 2015 recommendations of the AU high-level panel on illicit financial flows headed by former South African President Thabo Mbeki. These include taking measures to deal with organized crime, including environmental crimes (which make up about 33% of all organized crimes) and the public sector corruption that plays a key role in facilitating these outflows.
Additionally, unnecessary tax expenditures such as incentives for natural-resource exploration constitute significant revenue losses, up to 4% of GDP, in addition to providing loopholes for fraud. Up to 65% of oil subsidies in Africa benefit the richest 40% of households and feed corrupt cartels, according to the African Development Bank.
Africa’s huge natural resources can turn the dream of a prosperous continent into a reality. Countries need to act urgently and strengthen the governance structure and to enact and implement appropriate policies. The challenge is to make actions speak louder than all the fine words.
Dr. Richard Munang is an Africa climate change and development policy expert at UNEP, and Mr. Robert Mgendi is an adaptation policy expert. The views expressed here are those of the authors and do not necessarily represent those of UNEP.