Report says Africa’s future prosperity lies in green industrial revolution

23 Oct 2017, 12:00 am
Financial Nigeria

Summary

Report says Africa’s transformation to a more prosperous and sustainable economy will require both structural change and faster productivity growth.

Nigerian former finance minister Ngozi Okonjo-Iweala

Africa can leapfrog to a clean, resource-efficient modern economy, if the continent combines transformative economic and ‘green growth’ policies with entrepreneurship. This is according to the working paper: “Green Industrialisation and Entrepreneurship in Africa.” The paper was written by New Climate Economy for the African Economic Outlook 2017: Entrepreneurship and Industrialisation report, jointly produced by African Development Bank, OECD, and the UNDP.

The New Climate Economy is the flagship project of the Global Commission on the Economy and Climate, established by seven countries, namely Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden and the United Kingdom. The Commission -- an independent initiative to examine how countries can achieve economic growth while dealing with the risks posed by climate change -- has as co-chair former Nigerian finance minister Ngozi Okonjo-Iweala.
 
The report says Africa’s transformation to a more prosperous and sustainable economy will require both structural change and faster productivity growth. By structural change, the report refers to the shift of workers and other resources from low-productivity sectors, such as subsistence agriculture, to high-productivity sectors, such as industry and modern services. The report also says that both economic transformation and structural change depend upon entrepreneurs driving change through innovation and risk-taking.
 
The incentives and means for Africa to achieve green industrialisation are strong. Over 450 million new workers are expected to enter the African labour market by 2035, and electricity demand is expected to double between 2012 and 2030. At the same time, the cost of clean technologies is falling rapidly and Africa’s clean energy resources are significant.

“This research is a map for African policy-makers plotting the path to a more prosperous and sustainable future. By fostering economic transformation, green growth and entrepreneurship, governments can realize their development goals and improve the lives of millions,” said Milan Brahmbhatt, lead author of the report and senior fellow at World Resources Institute.

The working paper concludes that, “sustained robust economic growth is essential to achieve rapid job growth and poverty reduction in Africa.” It made three policy recommendations: (1) implement pricing, regulatory and public investment policies to offset market failures and foster development of domestic green markets; (2) strengthen industrial development policies and increasingly exploit global green market opportunities; and (3) create policies that strengthen capacity and entrepreneurship, including green entrepreneurship, by adopting unique strategies for the three major types of firms in Africa’s industrial sector – ‘elephants’, ‘gazelles’ and ‘survival entrepreneurs’.

“Africa has the natural resources and the determination to instigate a green industrial revolution,” said Dr. Carlos Lopes, a member of the Global Commission on the Economy and Climate, and Professor at the Graduate School of Development Policy and Practice, University of Cape Town, at the Chatham House Annual Conference in London. “Now we need the right policies to unleash economic transformation, green growth and entrepreneurship across the continent. A more prosperous and sustainable future is within Africa’s reach, we just need to seize it.”


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