The African continent represents around 17% of the world’s population, yet contributes to only around 4% of global greenhouse gas emissions (AJLabs,2023). At 1.45 billion tons worth of annual emissions, the continent is the least contributing to the accelerating climate crisis the world is witnessing. According to research published in 2023, around 19 million people in Africa were put under vulnerable conditions as a result of the lack of security caused by the continuous deterioration caused by an exacerbating global warming (Moyo et.al., 2023). The African continent is vulnerable, experiencing challenges from multiple fronts, most prominently, the ever-growing food and water insecurity as well as an economy under the fire of a boiling planet.
Despite what seems like an impossible circumstance, according to the African Development Bank Group, African countries are dominating the world’s fastest growing economies, making the continent the fastest economically developing region after Asia (2024). This is a puzzle, where development, vulnerability, and economic hardship seem to co-exist. Climate change is undoubtedly a key player in the African economic plight. This interesting circumstance of the continent both economically and environmentally, begs for more exploration of the relationship between both factors and the question of where does the global environmental struggle fit in the microcosm of the African continent.
On Wednesday July 17, the BS4CL webinar series resumed with its third episode titled, “The Economics and Finance of Climate Change,” moderated by Thami Ghorfi, Dean of ESCA Management School, Morocco. The webinar hosted a discussion between Tanya DosSantos, Sustainability Advisor at the University of Pretoria’s Gordon Institute of Business Science (GIBS), Karl Schmedders, Professor of Finance at the International Institute for Management Development (IMD), and Randa Hamza, Consultant at UN International Fund for Agricultural Development (IFAD), opening up a discussion on the negative effects of climate change on the economic development of the African continent and the importance of collective action towards a more sustainable economic environment.
A Steady Economic Growth
“Africa needs to build infrastructure because without infrastructure we cannot have economic growth,” says Ghorfi before opening up the floor to the discussion of the possibility of African economic development under an increasingly volatile atmosphere. Interestingly, the first response to this statement was from Schmedders saying, “Africa needs energy.” When it comes to the topic of economic development, the discussion of infrastructure, energy resources and industrialization is inevitable. These three elements arguably serve as the backbone to the idea of an economic transformation.
The schools of thought are often split: one adamant on the opinion that an economic development is impossible without the use of fossil fuels as a catalyst to industrialization, while the other suggests that fossil fuels only provide a short-term remedy that only leads to a dead-end and eventually, a collapsing economy (Alagidede, 2014). “I would urge you to think about the long-term development of Africa and that means, [skipping] as much as possible the fossil fuel based energy,” says Schmedders, suggesting that the key to a sustainable curve of economic growth is the shift towards sustainable energy resources.
In 2014, the International Trade Union Confederation (ITUC) created a campaign slogan that remains relevant to this discussion ten years later, “There are no jobs on a dead planet.”. The main argument for a fossil fuel-led economy is that it provides a fast route towards growth through industrialization, provision of goods and increased production (Alaigdede,2014), but how can one logically expect an everlasting growth through a route that leads to the eventual death of the planet? Adding to this point, the fact that Africa suffers the most from the drastic effect of climate change; the death of the planet is already at play in most African countries, particularly those in the sub-Saharan region. This ultimately means that the African continent should be one of the most active players when it comes to the shift towards a renewable path to development.
“The issue is that we are not sitting in front of a white sheet of paper, completely empty where we redesign the world. What we are looking for is a transition and in this transition, we want to develop the emerging areas of the world,” emphasizes Schmedders, urging the necessity to view African economic development through a lens of continuity. In other words, just because the continent happens to be the least contributor to climate change does not mean that its development should be viewed separately from the trajectory of the planet towards boiling point. Rather than arguing that Africa should be using fossil fuels to accelerate its development, the argument should be towards the continent seeking greener, long-term methods towards a stable path of growth.
Contextualizing Stability
“We need to learn from mistakes, we need to employ climate friendly or environmentally friendly infrastructure development in African countries – the technical know-how for these new infrastructure is not available for developing countries, let alone African countries,” says Hamza, adding another layer to the discussion that is the context of the continent.
While it is important to advocate for the shift towards an economic growth based on sustainable means, it is also important to contextualize the means towards this change. This is where the term “just transition” fits it in, acknowledging that African countries do not have the same starting base as those of the Global North. This idea takes into account that before demanding that African countries immediately and dramatically foster climate-friendly development, the international order must first provide the healthy environment for such a dramatic move (Gerard,2022).
“34 out of the 59 most [climate] vulnerable countries are also at risk of fiscal crisis,” adds DosSantos on Hamza’s point. The African continent does not have the financial resources or the technical know-how to achieve an immediate change, therefore, the international community must gear itself towards supporting this shift. Without creating the necessary supporting environment, the efforts of the African continent would arguably be deemed futile within the face of a global crisis. “What really unifies us, is that we all suffer from climate change … so I think the Western world would be well-advised to support Africa in this portfolio of greener technologies in order to avoid more coal or oil based plants,” emphasizes Schmedders in agreement with both Hamza and DosSantos on the necessity of accommodating the African transition globally.
Additionally, one must take into consideration the economic structure of most countries in the continent. Over half of the continent’s workforce relies on agriculture, meaning that there is a smaller base of infrastructure to launch an optimized flow of production and development (Blimpo et.al,2024). Furthermore, there is a need to update and re-skill this workforce when adapting them to the change towards a renewable energy based economy.
Integrating Africa in the Global Scheme
It is important to highlight the financing behavior of most African initiatives, Hamza elaborates saying that,
“The African continent needs to reach accessible finance, affordable finance, because the majority of infrastructure projects are usually financed by the public sector and for the public sector, when they don’t have the resources they borrow. So, the majority of the projects are financed by that.”
The previous statement emphasizes the need to have a sustainable financing system during the energy transition. African countries must not be faced with the two devastating choices of succumbing to environmental disaster or facing insurmountable foreign debt. DosSantos further hammers on this point by adding that even current carbon regulation measures “are not necessarily fair [towards African countries], [such as] CBAM.” The Carbon Border Adjustment Mechanism (CBAM), which is part of the European Green Deal aiming to reduce Greenhouse gas emissions to at least 56% by 2030 (European Commission).
CBAM aims to regulate the import of carbon-intensive products through adding tariffs; given that the African economy is currently partially relying on the export of carbon-intensive productions such as steel, such regulations can be a critical hit to the core of the continent’s development path. According to a 2023 report by the African Climate foundation, “ CBAM may reduce African exports to the EU by -5.7% and continental GDP by -0.91% (equivalent to a $16 billion reduction in GDP at 2021 levels),” (cited in Gilder 2024). This means that regulations like CBAM are built with disregard to the African process of development, making it even more difficult to integrate into the global movement towards sustainability.
In other words, Africa must view its own economic development as part of a continuity of global development, seeking the same path towards a renewable growth . Nonetheless, there is the other side to this equation of economic growth that is the developed countries, which must also view Africa as part of their own journey towards a sustainable future . In the global fight against climate change, one cannot do without the other.
