By Milan Brahmbhatt, Senior Fellow, New Climate Economy (NCE) and World Resources Institute
Policy makers across Africa have embraced industrialisation and economic transformation as keys to accelerate inclusive growth. They also increasingly see the need for economic transformation to deliver green growth – growth that does not endanger Africa’s natural environment in ways that reduce the welfare of present and future generations. Economic transformation and green growth depend on doing new things: making risky investments in new, unfamiliar sectors or products or adopting new, unfamiliar methods, processes, technologies, inputs or business models. All this depends crucially on the activity of entrepreneurs, who drive change through their innovation and risk-taking. Fostering entrepreneurship, including green entrepreneurship, is thus a key policy aim for African countries.
Africa already is experiencing the ill effects of environmental deterioration on many fronts, including the impacts of climate variability and change. Rapid population growth and land use practices are contributing to deforestation and land degradation, damaging fragile ecosystems, and exacerbating water scarcity. Five of the ten countries worldwide with the fastest acceleration in tree cover loss in 2001-14 were in West Africa. In cities, air pollution and ineffective waste management pose serious and growing problems.
The impact of economic transformation on the environment thus warrants special attention. Economic transformation and growth tend to increase demands on natural capital, especially as countries move from low-income to upper middle-income status. Energy and water uses in most sub-Saharan African countries, for example, are still very small compared to other regions, and will rise substantially over coming decades. But the extent and nature of environmental impacts depend greatly on the specific structural transformation path a country takes, on technological progress and improvements in the efficiency of resource use, and, crucially, on the extent to which economic policies and institutions create incentives for green growth and green entrepreneurship.
Green entrepreneurs develop and serve markets for new processes, technologies and products that make the economy more efficient in its use of the natural environment and more resilient to environmental impacts, such as climate change. Green markets can be for new intermediate processes or inputs in production, or for new consumer goods and services. Take the case of energy efficiency. New markets emerge to supply businesses with technologies or inputs that increase the energy efficiency of their production process. New markets also emerge for energy-efficient consumer goods and services, such as more energy-efficient household appliances.
Unlock the potential of African entrepreneurs for accelerating Africa’s industrial transformation, says the African Economic Outlook 2017
AfricanEconomicOutlook.org offers comprehensive and comparable data and analysis of 54 African economies.