Agenda | Mar 30,2024
Dec 31 , 2022
By Bright Simons
The price of Africa’s contribution to meeting this emissions target is estimated at 1.3 trillion dollars, which is what African leaders and their advisers are seeking from the rest of the world. But if the affluent paid the developing continent to build more carbon-intensive industries instead, the world would achieve its targets exceptionally. writes Bright Simons. He is the founder and president of mPedigree, a social enterprise working on technology reform of supply chains, and an honorary vice president of IMANI, a think tank based in Accra.
Many in the global development community impel rich countries to transfer large sums of money to developing countries and help them shift to cleaner energy without impeding economic growth. This elevates raises important economic questions that do not receive enough attention.
Consider Africa, the world’s second-largest continent is said to have contributed only one percent of historic carbon emissions. Today it generates only four percent of global emissions. Its annual anthropogenic carbon dioxide emissions are equivalent to 1.4 billion tons, 35pc of which are from South Africa.
Africa’s carbon dioxide emissions are just 20pc of the per capita global average. According to the Intergovernmental Panel on Climate Change, the world needs to cut nearly 10 billion tons of CO2 annually to meet the 2030 target of a “maximum increase of two degrees centigrade". The stark reality is that taking the continent to net-zero emissions would burden Africans with a significant proportion of the global cost.
The price of Africa’s contribution to meeting this emission target is estimated at 1.3 trillion dollars, which is what African leaders and their advisers are seeking from the rest of the world. But, what if the affluent paid the continent to build more carbon-intensive industries instead?
It sounds outrageous until one realizes that Africa’s inward foreign direct investment totals about 80 billion dollars annually. Based on current benchmarks for the carbon intensity of industrialization, Africa could add three percentage points to its annual economic growth with a corresponding increase in emissions of roughly 100pc. The FDI requirement for this boost is around 40 billion dollars; we could even pad the number to 80 billion dollars.
By doubling emissions and FDI, the 4.6pc average annual growth in the last few decades could rise to nearly eight percent, potentially owing to multiplier effects. At this rate, Africa would double its per capita income by 2030, which could lift 90pc of the population out of poverty. This will be excellent news if the environmental Kuznets curve holds in the long run, with CO2 emissions continuing to decline in many countries as national income rises.
Africa’s institutional environment will likely remain more receptive to polluting industries than green industries, as the latter requires higher skills, capital, and purchasing power. Given Africa’s small net contributions, it may be sensible to tolerate longer horizons for decarbonization on the continent because richer countries have a more vital comparative advantage in switching to green industries.
Setting aside moral imperatives, economic analysis can produce some counterintuitive results. Many people are skeptical about the basis of “green aid” to the continent. Considering that its non-anthropogenic emissions are far higher than total emissions in the US, the world’s largest overall polluter, others question what marginal reductions in manmade emissions in Africa would mean in the broader scheme.
Institutional receptivity can be generalized to encompass the full context of institutional quality. Some argue that previous “normal aid” episodes to Africa have had mixed results. “Climate finance” is not a new category of aid but a rebranding of money from the same old pots of development aid.
What basis is there for believing that 1.3 trillion dollars in “green aid” is likely to have generally positive outcomes?
Such complex trust factors complicate crafting green aid to finance net-zero transitions in places like Africa.
The inertia of aid effectiveness supports promoting “normal FDI” with no green strings attached. The continent has already adapted to such financing. A new paradigm of green aid requiring deep institutional reform has already met some entrenched skepticism, even if it has not been voiced openly—the growing number of frameworks to tackle climate-finance corruption hints at this.
Private investors could act to “green FDI" on their own, but coordination in transnational private markets is difficult, complicating any such shift. New multilateral public-private partnerships are required to reconcile the moral, political, and economic trade-offs, but progress is slow, as we have seen with the Green Climate Fund.
The institutionalization of these new structures will take time. In their absence, there is strong reason to doubt that large amounts of green financing will go to the developing world and Africa to pay for a climate transition. This pessimism is rarely expressed in polite company.
But why keep up the charade if the prospects are so poor?
PUBLISHED ON
Dec 31,2022 [ VOL
23 , NO
1183]
Agenda | Mar 30,2024
Viewpoints | Nov 13,2021
Commentaries | Nov 27,2021
Radar | Sep 26,2021
Fortune News | Nov 29,2020
Radar | Jan 11,2020
Radar | Oct 23,2023
Viewpoints | Dec 17,2022
Radar | Dec 05,2018
Commentaries | Dec 14,2019
Photo Gallery | 97276 Views | May 06,2019
Photo Gallery | 89498 Views | Apr 26,2019
My Opinion | 67340 Views | Aug 14,2021
Commentaries | 65812 Views | Oct 02,2021
Feb 24 , 2024 . By MUNIR SHEMSU
Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slash...
Feb 10 , 2024 . By MUNIR SHEMSU
In his last week's address to Parliament, Prime Minister Abiy Ahmed (PhD) painted a picture of an economy...
Jan 7 , 2024
In the realm of international finance and diplomacy, few cities hold the distinction that Addis Abeba doe...
Sep 30 , 2023 . By AKSAH ITALO
On a chilly morning outside Ke'Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng...
Apr 27 , 2024
The Prosperity Party (PP) - Prosperitians - is charting a course through treacherous...
Apr 20 , 2024
In a departure from its traditionally opaque practices, the National Bank of Ethiopia...
Apr 13 , 2024
In the hushed corridors of the legislative house on Lorenzo Te'azaz Road (Arat Kilo)...
Apr 6 , 2024
In a rather unsettling turn of events, the state-owned Commercial Bank of Ethiopia (C...
Apr 28 , 2024
A dire situation unfolds across public universities, where students face the harsh re...
Apr 28 , 2024 . By MUNIR SHEMSU
A European business lobby in Ethiopia issued a scathing review of the tax system last...
Apr 28 , 2024
The Federal Supreme Court has recently ruled in the prolonged commercial dispute surr...
Apr 28 , 2024 . By MUNIR SHEMSU
Transport authorities placed blame on driving schools and vehicle inspection centres...