<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="541" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Pieter-Bensch-Sage-1-820x541.jpg" alt="" class="wp-image-422528" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Pieter-Bensch-Sage-1-820x541.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Pieter-Bensch-Sage-1-300x198.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Pieter-Bensch-Sage-1-136x90.jpg 136w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Pieter-Bensch-Sage-1-768x507.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Pieter-Bensch-Sage-1-1536x1014.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Pieter-Bensch-Sage-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption"><a href="https://www.linkedin.com/in/pieter-bensch-1aa3a64/" target="_blank" rel="noreferrer noopener">Pieter Bensch</a>, Executive Vice President for Sage Africa &amp; Middle East</figcaption></figure>



South Africa’s shortfall of power generation capacity has reached beyond crisis levels this year. We’ve experienced more days and hours of load shedding in 2022 than in any other year, but we also saw the longest stretch of unbroken load shedding across September and October. It’s clear there will be no quick fixes for this long-standing challenge.



In crisis lies the opportunity for organisations of all sizes, including small and medium businesses (SMBs). The public conversation often focuses on the challenges and costs of load shedding for smaller businesses and how these can be mitigated. But a more empowering way to look at it is as a chance for SMBs to champion and lead the shift to a cleaner, more sustainable energy world.



The&nbsp;<a href="https://www.sage.com/en-za/company/sustainability-and-society/planet/" target="_blank" rel="noreferrer noopener">SME Climate Impact Report</a>&nbsp;commissioned by Sage and launched in partnership with Oxford Economics and the International Chamber of Commerce (ICC), shows SMEs&#8217; footprint totalled 29% of non-household emissions in South Africa when greenhouse gases generated in their supply chains were considered.



As such, SMBs can play a key role in the transition to cleaner energy. Let’s start with the enormous demand we see in the market for renewables. From independent power producers (IPPs) building wind and solar farms to feed into the grid to large companies self-provisioning power to solar installations for SMBs and homes – there are plenty of growth opportunities.



In 2020, electricity generated from renewables amounted to&nbsp;<a href="https://researchspace.csir.co.za/dspace/handle/10204/11865?show=full" target="_blank" rel="noreferrer noopener">a mere 10.5%</a>&nbsp;of the South African national total. One researcher&nbsp;<a href="https://www.globaldata.com/media/power/south-africa-power-supply-security-rely-gas-based-capacity-renewables-replace-coal-low-power-market-growth-expected-2035-says-globaldata/#:~:text=Renewable%20power%20capacity%20is%20expected,capacity%2C%20according%20to%20GlobalData.%E2%80%9D" target="_blank" rel="noreferrer noopener">forecasts</a>&nbsp;that South Africa’s renewable power capacity will increase at a compound annual growth rate of 10.7% from 2021 to 2035 to reach an estimate of 40.6GW by 2035, which will constitute 48.3% of total installed capacity.



<h2 class="wp-block-heading">Opening the floodgates</h2>



President Cyril Ramaphosa recently opened the floodgates for renewables investment, announcing a broad package of reforms. These include making it easier for large power users to self-provide up to 100MW of embedded power generation, launching an Eskom feed-in tariff for solar users to sell power to the grid, and acceleration of IPP rollouts.



This creates enormous opportunities for entrepreneurs and SMBs throughout the supply chain, from providing and installing systems to manufacturing components and playing a role in power storage and provision. The market is far from saturated, and skills are in short supply, creating compelling entrepreneurial prospects in an industry with a bright future.



The pace of innovation in renewables has been astonishing; we could envisage SMBs playing a leading role in driving further progress. One of the lessons we could take from the load shedding crisis is that avoiding another monopoly would be highly desirable. Instead, we could foster a renewables ecosystem with competition at every level – from installation to power provision.



In fact, driving entrepreneurship is essential for a just transition. Government, labour and communities are justifiably concerned about the loss of fossil fuel jobs and the poor getting left behind in the renewable energy revolution. An inclusive renewables industry would help address these challenges by potentially creating&nbsp;<a href="https://gwec.net/report-capturing-green-recovery-opportunities-from-wind-power-in-emerging-economies/" target="_blank" rel="noreferrer noopener">250 000 new jobs over the next 25 years</a>&nbsp;and off-grid power solutions for rural communities.



<h2 class="wp-block-heading">Harnessing renewables in your business</h2>



Of course, not every SMB will want to become directly involved in the renewables industry, but every SMB uses electricity. Herein lies an opportunity for SMBs to evaluate ways of harnessing alternative energy to improve business resilience, sustainability, and efficiency. Rapid renewables innovation means a strong business case for going solar.



For most businesses, barring those with heavy machinery or commercial fridges, solar panels and battery backup are excellent backup power sources. They’re cleaner, quiet, and don’t depend on expensive fuel. What’s more, solar offers small businesses the prospect of becoming increasingly independent from the grid and reducing their power bill over time.



Some municipalities, such as Cape Town, allow businesses to feed power back to the grid for a rebate. Over time, solar installations will pay for themselves, even if you don’t factor productivity through load shedding into the equation. Becoming more sustainable is also a good reputational move that enhances an SMB’s standing with customers and suppliers.



Tools such as&nbsp;<a href="https://www.sage.com/en-za/news/press-releases/2022/10/sage-acquires-spherics-to-help-smbs-measure-and-cut-their-carbon-emissions/" target="_blank" rel="noreferrer noopener">Spherics</a>, a carbon accounting solution from Sage, can help businesses easily understand and reduce their environmental impact. Though not yet available in South Africa, it will help SMBs manage their carbon footprint and the data shows where the low-hanging fruit is for SMBs in making the transition.



<h2 class="wp-block-heading" id="h-renewable-energy-is-key-to-securing-energy-future">Renewable energy is key to securing energy future</h2>



Given that coal and nuclear plants are built on decade-plus timespans, solar and wind are the best options to address South Africa’s power shortfall rapidly. But the backstory is that we need to gradually wean ourselves from fossil fuels to meet our climate emission promise to the global community and play our part in addressing climate change.&nbsp;



It’s clear the future is renewable. Energy reform is an opportunity for businesses to increase growth and become more sustainable. SMBs need to take their rightful place at the energy reform table, so they don’t get left behind.&nbsp;Government and big business would be wise to tap into the resourcefulness and innovation of the SMB sector to help drive a faster and more successful transition.

Pieter-Bensch-Sage-1

The renewables revolution offers a brighter future for South African SMBs

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Chido-Munyati-Panel-820x547.jpg" alt="" class="wp-image-422404" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Chido-Munyati-Panel-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Chido-Munyati-Panel-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Chido-Munyati-Panel-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Chido-Munyati-Panel-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Chido-Munyati-Panel-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Chido-Munyati-Panel-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum</figcaption></figure>



By Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum, and Landry Signé, Executive Director and Professor, Thunderbird School of Global Management in Washington, DC; Senior Fellow, The Brookings Institution; Co-Chair, World Economic Forum Regional Action Group for Africa.



At a time of multiple, overlapping global challenges – from climate change to energy shocks to rising inflation and a cost-of-living crisis – the Africa Continental Free Trade Area (AfCFTA) offers promise not only for the region but for the world.



The AfCFTA, established in 2018, will create the world’s largest free trade area, bringing transformative change and tremendous opportunity to African economies and business environments. Its adoption and implementation will accelerate intra-African trade and develop regional and local value chains, creating new business dynamics that offer investors access to a population of 1.7 billion people with combined business and consumer spending reaching $6.7 billion by <a href="https://www.brookings.edu/book/unlocking-africas-business-potential/">2030</a>.



Global businesses have an important role to play in accelerating the implementation of the AfCFTA, according to a new report from the World Economic Forum, in collaboration with the AfCFTA Secretariat and Forum partners. The report outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in successfully entering and expanding in this area. &nbsp;



The AfCFTA Secretariat selected four key sectors that represent high-potential opportunities for companies looking to invest in Africa: the automotive industry, agriculture and agro-processing, pharmaceuticals, and transportation and logistics. These four sectors are expected to see rapid acceleration in production and trade volumes under the AfCFTA, given that they have a high potential to meet local demand with local production. Until now, local demand for these goods and services is currently being met through relatively high-cost imports, despite the region’s growing and lower cost production capabilities.



While the AfCFTA offers business opportunities in each of these four sectors, companies will also need to understand how the changing environments under the trade agreement will affect their strategies for success in the region. The World Economic Forum is actively working toward implementing trade and investment tools that are aligned with the negotiation process of the AfCFTA by identifying areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.



For example, public-private collaboration centered around implementing AfCFTA trade-facilitating provisions can <a href="https://www.tradefacilitation.org/">facilitate</a> trade in goods, on-the-ground initiatives can address fragmented investment regulatory frameworks, and bringing together groups committed to 4IR technology, digital payments, and information exchanges can support digital trade. To improve the societal outcomes of trade, the Forum’s Inclusive Trade Initiative is uncovering best practices that can be shared with AfCFTA negotiators and businesses. And an <a href="https://www.weforum.org/reports/accelerating-decarbonization-through-trade-in-climate-goods-and-services">inventory of 25 key climate technologies</a> and with country-specific studies helps identify opportunities for trade to align with circular economy goals. &nbsp;&nbsp;



Companies can also look to five new operational tools as they adjust to the changing dynamics under the trade agreement.



The AfCFTA Guided Trade Initiative has facilitated the start of trade in eight countries for 96 products, providing support and guidance on customs clearing and while gathering information on how to make the process more efficient for the private sector.



The Pan-African Payment and Settlement System enables users to make near-instant payments in their local currency without needing to convert to a foreign currency or use a third-party institution.



The AfCFTA Adjustment Facility Fund is a combination of a base fund, general fund, and credit fund, that assists governments and the private sector in addressing short-term disruptions through financing, technical assistance, and grants and compensation funding.



The AfCFTA Private Engagement Strategy helps companies to better understand the overall continental strategy as well as the specific initiatives and policy recommendations in emerging sectors that the AfCFTA is prioritizing.



And the Rules of Origin Manual &amp; E-Tariff Book sets the guidelines for the rules and procedures for determining the origin status of goods and makes information on duty rates easily searchable and comparable.



In addition, analysis of on-the-ground experience from companies including Agility, AFC, Coca-Cola, DP World, Menzies, Novartis, OCP, UBA, Volkswagen, and Yara, has revealed three main strategies that have led to success in Africa and can provide invaluable lessons to companies planning to seize the opportunities opened by the trade agreement.



The first strategy is to form local partnerships with governments, local institutions, universities and others to create regional hubs and host R&amp;D at local universities. The second strategy is to leverage key trade accelerators such as investing in local infrastructure and logistics, with opportunities ranging from food storage to partnering with local organizations to move various parts of the value chain onto the continent. The third strategy is to form integrated ecosystems by developing end-to-end value chains around local resources, which de-risks projects and creates an environment where shared infrastructure can support multiple projects in different sectors.



The global private sector must be prepared for the changes in trade dynamics ahead on the continent to seize the opportunities that the AfCFTA brings, achieving business success while helping to usher in a new era of economic development.



This article is part of the <a href="https://www.weforum.org/events/world-economic-forum-annual-meeting-2023">World Economic Forum’s Annual Meeting 2023</a>.

Centre for the Fourth Industrial Revolution, Rwanda Launch

A new era for global business and investment in Africa

Faced with rising demand for food by its growing population that is expected to cross the two-billion mark by 2050, amidst intensifying effects of climate change, Africa has no choice but to focus more on nature-friendly production.



This is the only sustainable way out for a continent that is already under intense pressure as it struggles to feed itself. According to the UN Food and Agriculture Organisation, Africa bears the heaviest malnutrition burden with an undernourishment prevalence rate of over 20%, compared to the global average of 9.9%.



With the food and nutrition insecurity projected to further worsen, production has to be significantly stepped up, urgently. Unfortunately, with the increasing frequency and intensity of extreme weather conditions due to biting effects of climate change, this boost in production can no longer be oblivious of its impact on the environment that also afflicts food systems. Food systems are estimated to contribute about a third of greenhouse gas emissions that cause climate change, with Africa particularly vulnerable. &nbsp;



Continuing with the traditional approaches, such as expanding cropland as a means of boosting production is no longer sustainable and risks serious consequences. Between 2003 and 2019, 75% of sub-Saharan Africa’s crop production growth came from the expansion of cropland, with only 25% coming from crop yield improvements. Such unsustainable patterns of production intensification have also compounded fragilities in Africa’s food systems.



On the other hand, the weighted average price of fertilizer has doubled between June 2021 and April 2022, putting a strain on farmers across the continent. The average application rate of mineral fertilizer in sub-Saharan Africa is 14 kilogrammes per hectare, which is at least 10 times lower than corresponding figures in South Asia, EU, South America, and East Asia. Limited availability and high prices of fertilizers has dampened prospects of the continent taking this route towards increasing productivity.



This leaves nature-positive production, and regenerative agriculture in particular, as a plausible option for the continent. It presents an opportunity to intensify production to address the current food crisis by sustainably boosting outputs to cater for growing consumption needs.



According to studies by the Africa Regenerative Agriculture Study Group, 2040 scenarios show that a 13% increase in yields from a regenerative agriculture scenario would translate into 62 million dry matter tonnes of additional crop production per year. This is in addition to potentially supporting 5 million full-time jobs by 2040, with over USD 70 billion of gross value being added per year.



Although many initiatives have been developed to promote nature-positive agriculture systems in Africa, smallholders have been slow to adopt the technological practices. Studies show that the certified land under organic agriculture in Africa is around 2.1 million hectares, which represents only 0.2% of the continent’s total agricultural area.



AGRA’s regenerative agriculture projects in Kakamega, Nandi and Vihiga counties of Kenya have seen about 4,451 hectares being put under sustainable land management practices, including conservation agriculture, agroforestry, soil and water conservation and integrated soil fertility management. However, despite the range of benefits from transitioning to regenerative and nature positive production bring clear, intrinsic barriers to the adoption of the practices by smallholder farmers still exist. This call for more efforts to bring more land under sustainable farming practices.



To effectively shift food systems to become more nature-positive, it depends largely on a conducive policy environment to deliver necessary incentives and de-risk the transition. This calls for a few key policy actions.



First, given that most regenerative practices involve permanent and long-term investments, it will be crucial to institute appropriate property rights and land tenure arrangements. This will not only provide the needed security to encourage investments, but also facilitate de-risking of the transition.



Secondly, we need to drive policy and regulatory reforms that level the playing field and incentivize regenerative agriculture. Current agricultural policies tend to disproportionately serve industrial agriculture over regenerative agriculture. Hence, we need to get the policy and institutional architecture right to support the needed transition.&nbsp;



The third imperative is focus on providing support for farmers during their beginning or transitioning years of regenerative farming. We need to invest more in decentralized and diverse food systems infrastructure, to create additional market and operational capacity for farmers pursuing regenerative farming. The technical resources offered through extension and public research institutions need to be improved to meet specific needs of farmers. National extension systems will also need to be appropriately resourced and equipped to provide tailored and specialist services to smallholder farmers to ease adoption hurdles.



Finally, we need to shape demand for food towards more sustainable diets. For instance, there should be mechanisms to support market development, raise consumer awareness and promote the consumption of products produced under regenerative farming systems.



This shift is necessary, since boosting productivity without a sustainability lens will continue to aggravate food systems challenges.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="661" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Vine-Mutyasira-1-820x661.jpg" alt="" class="wp-image-422387" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Vine-Mutyasira-1-820x661.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Vine-Mutyasira-1-300x242.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Vine-Mutyasira-1-112x90.jpg 112w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Vine-Mutyasira-1-768x619.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Vine-Mutyasira-1-1536x1239.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/Vine-Mutyasira-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Dr Vine Mutyasira is Program Officer for Policy Quantitative Modelling and Data Analytics at AGRA.</figcaption></figure>

Vine-Mutyasira-1

Africa needs more nature-friendly food systems

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="616" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/a-plant-sprouting-from-a-handful-of-coins-investm-2022-12-01-21-16-04-utc-820x616.jpg" alt="" class="wp-image-422289" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/a-plant-sprouting-from-a-handful-of-coins-investm-2022-12-01-21-16-04-utc-820x616.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/a-plant-sprouting-from-a-handful-of-coins-investm-2022-12-01-21-16-04-utc-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/a-plant-sprouting-from-a-handful-of-coins-investm-2022-12-01-21-16-04-utc-120x90.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/a-plant-sprouting-from-a-handful-of-coins-investm-2022-12-01-21-16-04-utc-768x577.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/a-plant-sprouting-from-a-handful-of-coins-investm-2022-12-01-21-16-04-utc-1536x1153.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/a-plant-sprouting-from-a-handful-of-coins-investm-2022-12-01-21-16-04-utc-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A plant sprouting from a handful of coins. Investment, finance, and accounting concept</figcaption></figure>



As the provider of food, nutrition, and jobs for millions, Africa’s food systems are a central pillar of livelihoods and GDPs across the continent. Yet, they are at the forefront of the global climate crisis.



Climate change has reduced productivity growth of African food systems by 34 per cent since 1961. Still, continued warming to 2C this century could cause crop yields to fall by up to&nbsp;<a href="https://www.un.org/africarenewal/magazine/special-edition-agriculture-2014/despite-climate-change-africa-can-feed-africa" target="_blank" rel="noreferrer noopener">20 per cent</a>&nbsp;by 2030, endangering countless lives and livelihoods alike.



In the face of this urgent challenge, there remains a huge gap in Africa’s current climate adaptation funding, estimated to be within the region of&nbsp;<a href="https://gca.org/wp-content/uploads/2022/11/GCA_State-and-Trends-in-Adaptation-2022_Adaptation-Finance-Flows-in-Africa.pdf" target="_blank" rel="noreferrer noopener">US$41.3 billion</a>&nbsp;– annually – for the entire continent.



To bridge this climate finance gap, African countries must urgently adopt a range of innovative policy, financial, and institutional solutions to encourage more investment in adaptation. The recently released Malabo Montpellier Panel&nbsp;<a href="https://www.mamopanel.org/resources/climate-finance/" target="_blank" rel="noreferrer noopener">climate finance report</a>&nbsp;analyzes policy and institutional innovations and programmatic interventions across four African countries to explore government actions toward leveraging international climate finance for food systems transformation.



Key recommendations from the report underscore the importance of securing timely, predictable, and sustainable access to finance to support adaptation across Africa’s food systems – buffering the main source of nutrition and livelihoods for many. Similarly, access to finance must go hand-in-hand with capacity building in national institutions across the region, in the public and private sectors, for sustainable outcomes.



To begin with, mobilizing greater private sector finance will prove essential in bridging the existing gap in adaptation finance. Private finance is an underutilized resource in African climate finance, yet the goal of greater adaptation for food systems cannot be achieved without it.



Currently, the African Development Bank estimates that about 75 per cent of the financing required for the successful implementation of Africa’s Nationally Determined Contributions (NDCs) – the climate commitments and goals of each individual country – needs to be provided through private investments. Despite this, there is also a lack of data to accurately capture the amount of private climate finance that is currently allocated to food systems, a fundamental drawback that must be resolved in bridging this financing gap.



Recent developments in private finance offer a path forward for unlocking future adaptation funding for African countries. For instance, the&nbsp;<a href="https://www.clarmondial.com/fsf_launch_first_investment/" target="_blank" rel="noreferrer noopener">Food Securities Fund</a>, developed by Clarmondial, provides working capital loans to agricultural aggregators such as cooperatives, processors, and traders in developing and emerging markets.



Secondly, African countries should prioritize blended finance models in raising more and better adaptation funding.



Blended finance models combine concessional capital from private or public resources to de-risk and “leverage” additional capital from other actors. Furthermore, blended finance instruments allow each party to accomplish their own objectives while at the same time contributing to common goals – in this case – climate adaptation.



According to the National Climate Funds Tracker, there are 12 national climate funds in Africa. National climate funds offer an important means to mobilize funds for adaptation by raising and blending capital from public and private sources.



Moving forward, African governments and financial decisionmakers should seek to prioritize blended finance models to boost adaptation funding. Ethiopia’s Climate Resilient Green Economy (<a href="https://www.mofed.gov.et/programmes-projects/crge-facility/" target="_blank" rel="noreferrer noopener">CRGE</a>) Facility, for example, offers a dedicated financing arm to coordinate the receipts and disbursements of finance from international sources to sectoral ministries for implementation.



Finally, African countries should adopt local climate finance models, to boost the climate adaptation of local communities who are ultimately on the frontlines of climate change.



At present, estimates suggest that only five per cent of all funding flows from international climate funds have been disbursed for locally based climate adaptation interventions on the continent. Essentially, the communities that most need this finance are not receiving it.



In 2017/18, climate finance globally reached only&nbsp;<a href="https://www.climatepolicyinitiative.org/publication/climate-finance-small-scale-agriculture/" target="_blank" rel="noreferrer noopener">US$8.1 billion</a>&nbsp;for small-scale farmers, agri-entrepreneurs, and other value chain actors serving them – despite their importance in adapting our food systems as a whole to the impacts of climate change. These figures were equivalent to only&nbsp;<a href="https://www.climatepolicyinitiative.org/publication/climate-finance-small-scale-agriculture/" target="_blank" rel="noreferrer noopener">40 per cent</a>&nbsp;of the total climate funds committed to the agriculture, forestry, and land use sectors in those years.



Governments and financial sectors across Africa must take note of recent developments to grow the amount of climate finance reaching local communities. The development of the National Fund for Environment and Climate Change (FNEC) and Community Development Support Fund (FaDEC) in Benin, offer examples for how climate finance can help support the most vulnerable local communities more effectively.



To meet the adaptation needs of Africa’s food systems, an important paradigm shift amongst the finance community, and African governments, is needed; both groups are critical and need to complement each other to achieve collective aims.



Climate adaptation is not only an opportunity to address the impacts of climate change, but also serves as a springboard to unlock the potential of food systems to deliver for lives and livelihoods across Africa.



Dr. Debisi Araba, Visiting Researcher, Imperial College London; Member, Malabo Montpellier Panel

A plant sprouting from a handful of coins. Investment, finance, and accounting concept

The African innovations unlocking new pathways to scale access to climate finance

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="499" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/12/SSAK-QAK-main-lab-Matthew-Henning-4MG-2-820x499.jpg" alt="" class="wp-image-421744" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/12/SSAK-QAK-main-lab-Matthew-Henning-4MG-2-820x499.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/SSAK-QAK-main-lab-Matthew-Henning-4MG-2-300x182.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/SSAK-QAK-main-lab-Matthew-Henning-4MG-2-148x90.jpg 148w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/SSAK-QAK-main-lab-Matthew-Henning-4MG-2-768x467.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/SSAK-QAK-main-lab-Matthew-Henning-4MG-2-1536x934.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/12/SSAK-QAK-main-lab-Matthew-Henning-4MG-2.jpg 1638w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Professor Quarraisha Abdool Karim (L) and Prof Salim Abdool Karim (R) at the CAPRISA main laboratory in Durban, South Africa. They are two of the world’s leading AIDS researchers, with pioneering contributions in understanding the evolving HIV epidemic among young people, especially among young women while also advocating for the rights of people living with and affected by HIV.</figcaption></figure>



We can no longer ignore the connection between inequality and new HIV infections &#8211; Prof. Salim Abdool Karim, Director of the Center for the AIDS Program of Research in South Africa (CAPRISA)



In sub-Saharan Africa, every two minutes an adolescent girl or young woman was newly infected with HIV in 2021 alone. One young woman. Every two minutes. Think about that for a moment. The <a href="https://indanger.unaids.org/">In Danger</a>report should raise alarm bells for all of us.



The COVID-19 pandemic has slowed down HIV prevention and treatment in the past two-and-a-half years leading to significant impact on the control of the disease and the achievement of the <a href="https://www.unaids.org/en/resources/documents/2020/global-aids-report">95-95-9</a>5 strategy which calls for 95% of people living with HIV to know their HIV status, 95% of people who know their status to be on antiretroviral, and 95% of all patients receiving antiretroviral therapy to be virally suppressed.



While much progress has been made over the past four decades since the first HIV cases were reported, not everyone is benefitting equally from the scientific advancements that have taken place in HIV research in recent years. Notably, this progress should not be used to justify inequalities that still persist in HIV testing and treatment, even more so for the introduction of new technologies. The upcoming 2nd <a href="https://cphia2022.com/">International Conference on Public Health in Africa</a> (CPHIA 2022) December 13-15 in Kigali, Rwanda will shine the spotlight on this connection and the urgent need to focus on HIV response alongside Tuberculosis (TB), malaria and other neglected tropical diseases (NTDs).



Reducing stigma and discrimination, and increasing access to justice are critical in the global response to HIV. By combining resources and strengths to support vulnerable communities at a higher risk of exposure to HIV – such as migrants and prisoners, people who use drugs, LGBTI people, sex workers, teenagers, young people, women and children, we can work together to address the range of challenges they face and in so doing, ensure they have timely access to essential HIV care and support.



Identifying and involving these vulnerable communities lie at the heart of an effective action plan. These groups bring invaluable knowledge of the specific obstacles they face, and the potential – and sustainable – solutions to affect real long-term change. Partnerships between community-based organisations and academic institutions can provide the evidence to inform policy, programs and services to better respond to the unique realities and needs of communities, particularly the most marginalised. Such partnerships are fundamental to creating lasting health change in Africa.



From the COVID-19 response, we have learned the importance of supporting scientific innovation and promoting cutting-edge medical technologies, and making them available to people in all countries throughout the world in an affordable and timely manner. Similarly, African-led convenings, such as CPHIA 2022, will offer opportunities for researchers and public health leaders share knowledge, and strengthen scientific collaboration and innovation to reinforce stronger primary health care systems and create a conducive environment capable of responding to diseases—such as HIV —that continue to disproportionately affect vulnerable communities.



The <a href="https://www.unaids.org/en/resources/documents/2021/2021_political-declaration-on-hiv-and-aids">political declaration</a> adopted by United Nations Member States in 2021 to end inequality and get on track to end AIDS by 2030 is a clear indication that there is genuine eagerness – and action – toward reducing new HIV infection. Reaching this goal will require an integrated and holistic approach by all players to create mutually beneficial partnerships; those that seek to combine the different strengths of diverse partners to convert big ideas into bigger, impactful outcomes.



Therefore, it is important to learn from the pandemic and leverage cross-border and cross-sectoral collaborations with speed and accuracy when these challenges threaten our lives and economic well-being. &nbsp;



We owe it to the next generation to do better. We owe it to them to break the cycle of economic, social, cultural and legal inequalities and ensure an <a href="https://2009-2017.state.gov/secretary/20092013clinton/rm/2011/11/176810.htm">AIDS-free generation</a> with zero new HIV infections, zero discrimination and zero AIDS-related deaths. The goal is ambitious but achievable and vital in ending AIDS as a global health threat.



As we commemorate the 34th anniversary of World AIDS Day today (1 December) under the theme “Equalize”, I join hands with other public health leaders in every sphere and at every level in committing providing actionable solutions to the barriers that keep us from making progress and helping to end AIDS.

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Ending AIDS for the Next Generation

Africa is in a race against time on food security and the stakes could not be higher. The situation is unprecedented in my four decades of experience working in agricultural research and development.



We are faced with the longest drought in over 40 years, leaving <a href="https://www.who.int/news/item/02-08-2022-who-launches-appeal-to-respond-to-urgent-health-needs-in-the-greater-horn-of-africa">80 million people in the Horn of Africa with uncertain access to adequate nourishment</a>. In my home country of Nigeria, <a href="https://nema.gov.ng/">recent flooding</a> – the worst in a decade – has destroyed vital food supplies in Africa’s most populous nation. Hunger is again stalking the continent.



Africa’s food security is squeezed from two sides since the continent has both the lowest agricultural productivity of any region and the fastest population growth. Yields of everything from wheat to rice to cassava are well below the global average, reflecting the fact that millions of smallholder farmers lack access to the basic tools and skills that could lift them beyond subsistence.



The short-term outlook is bleak. Regional conflicts, extreme weather events and economic instability are all exacerbating the food crisis. And Russia’s invasion of Ukraine has driven up global prices for food, fuel and fertilizer, limiting the ability of African countries to finance vital imports.



Despite this, there remains an enormous untapped opportunity to put Africa’s food security on a sounder footing. The economic case for action is compelling. Investments in agricultural innovations have been shown to generate <a href="https://www.cgiar.org/news-events/news/cgiar-research-pays-off-new-report-finds-10-times-return-on-investment/">returns 10 times the amount initially invested</a>.



By rolling out agricultural solutions that are known to improve productivity – from better seeds and fertilizers to early warning systems and training for growers – farms across Africa can increase output and build long-term resilience.



According to one analysis, <a href="https://www.mckinsey.com/industries/agriculture/our-insights/winning-in-africas-agricultural-market">Africa could produce two to three times more cereals and coarse grains</a>, primarily by improving crop yields and reducing post-harvest losses. Even a fraction of that improvement would transform the continent’s food security situation and slash its current alarming dependence on imports.



The window for action, however, is limited and the need to implement change is urgent. African nations need to move away from dependency on development assistance, they need to significantly invest in agricultural research and development and for the near term, they need to select and fast-track interventions with the greatest potential to deliver both immediate gains and sustainable improvements in agriculture. This is essential to meet the demographic challenges of the years ahead.



Encouragingly, leading African institutions are now coming together to help make these productivity gains a reality. &nbsp;



The African Development Bank (AfDB), the African Union, the Forum for Agricultural Research in Africa and CGIAR – the world’s largest agricultural research and innovation network, have recently <a href="https://www.cgiar.org/news-events/news/abidjan-ii-african-development-bank-african-union-commission-cgiar-forum-for-agricultural-research-in-africa-join-forces-to-strengthen-africas-food-systems/">committed to close cooperation</a> to take African agriculture to the next level. This is welcome news.



The aim – to empower African farmers to better feed their communities – is simple, yet the prize is great. The immediate priority is to deploy proven tools at the scale of tens of millions of farmers. It is a goal that is eminently achievable. In the last three years, for example, the Technologies for African Agricultural Transformation (TAAT) scheme, which is supported by the African Development Bank and implemented by CGIAR, has delivered climate-smart seeds to 12 million farmers in 27 countries. Breeding better crop varieties is just one of a range of transformational innovations that are needed to ensure Africa’s future food security, ranging from improvements in soil fertility to better livestock management. It does not stop there, for any holistic solution it will be critical to maintain investment in research, to improve resilience to future shocks.



Leveraging the capabilities of CGIAR’s network of research centers, which benefit from the support and partnership of their host countries in Africa and beyond, Africa can achieve similar agricultural growth and food security gains seen in Asia and Latin America.



The transition to a more unified and integrated “One CGIAR” is positioning the organization to tackle increasingly complex and interconnected challenges to food security and deliver holistic solutions to smallholder farmers everywhere. I believe that smallholder farmers in Africa will benefit most from an integrated CGIAR working in partnership with African research and innovation institutions. That is why I, along with other African stakeholders and partners of CGIAR, support the call from its <a href="https://www.cgiar.org/news-events/news/cgiar-country-region-and-funding-partners-signal-strong-support-for-integration/">country, regional and funding constituents</a>, for CGIAR Centers and other parties to endorse in December an agreement that puts the integration on a clear path forward.  



Sadly, the world is not on track to meet the <a href="https://www.un.org/sustainabledevelopment/hunger/">UN Sustainable Development Goal of zero hunger by 2030</a> – and it is people in Africa who will bear the brunt of this policy failure. That is all the more reason to deploy proven technologies that can transform the fortunes of Africa’s farmers today, while maintaining critical investment in research that will provide resilience to future shocks. &nbsp;&nbsp;



Now is the right time for African decision-makers to make the smart investment decisions needed to get appropriate technologies to their farmers at scale.



Dr Nwanze has worked for more than 40 years for CGIAR and Rome-based agencies, most recently serving as President of the International Fund for Agricultural Development (IFAD), and is a former member of the CGIAR System Management Board.

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Unleashing Africa’s agricultural potential is key to food security

Although African delegates had marginal success in placing the continent’s unique needs and circumstances on the agenda of COP27, the ultimate deal to create a ‘loss and damage’ fund is a huge boost to tackle climate change.



The proposed dedicated fund will provide a framework for developed countries to compensate developing countries that have suffered the impact of climate-related damage to infrastructure. It promises to benefit Africa, a continent, disproportionately afflicted by the effects of climate change. Even as delegates from across the world, drawn from government, private sector, not-for-profits, young people, civil society, indigenous peoples, and local communities congregated to discuss the solutions, there was the backdrop of severe droughts and floods in different parts of the continent, defining the urgency.



The challenge for Africa now lies in sustaining the momentum to address ‘loss and damage’ by setting in motion the proposed fund. We need to lock in the details that will operationalise the fund, for it to begin paying out compensation to unlock its benefits, for inclusive and sustainable development that leaves no one behind. There is a great onus on the international community to turn the agreement into action in the spirit of ‘follow through’ that COP27 was about. Additionally, consideration needs to be given to widening the net of contributors to the fund beyond the developed countries to draw in the private sector, including through innovative mechanisms, such as sustainable smart finance.



Besides the opportunity presented by the ‘loss and damage’ fund, there were other glimmers of hope in advancing climate change action at COP27. These too need to be consolidated and pursued.



One such opportunity is food systems, featuring prominently in COP27 for the first time in such gatherings. We cannot win the fight against climate change unless attention is paid to holistically transforming food systems. Having it on the negotiation floor is a crucial first step in this direction. This focus needs to be sustained and explore scaling resilient systems while tackling emissions across the value chains.



In addition to this, indigenous voices were significantly represented at COP27. This needs to be built on and strengthened, knowing communities are good custodians of nature. Nature is our climate defender and we need communities to unleash this potential if we are to effectively tackle the climate crisis. We have to link the mega commitments to action at the grassroots by investing in nature-based solutions.



All these are opportunities to re-energize the fight against climate change. Africa cannot afford to relent and take its foot off the pedal. Efforts need to be sustained to scale up urgent climate action. More importantly, the continent has to continue working together to fight climate change and biodiversity loss. Now more than ever before, collective response to the climate crisis is key, to unlock investments in technology transfer, capacity building, and financial resources. We all have to work together for a better future by pursuing the opportunities unlocked by COP27.



As we tackle the climate change crisis, nature-based solutions must remain a core part of our ammunition. Natural habitats have the ability to absorb and store vast amounts of carbon. It is projected that protection, restoration, and better management of our lands and wetlands reduce up to a third of the emissions needed to limit global warming and keep the climate within safe boundaries. Natural solutions not only restore and protect vulnerable ecosystems but also positively impact the livelihoods of communities. Nature-based solutions require more climate funding, beyond the current less than 10% percent globally. In this regard, The Nature Conservancy will continue providing the expertise and the science for governments and other actors.



As Africa looks ahead to COP28 next year, delegates must prepare well to secure a more ambitious mitigation outcome. The continent needs to secure a robust global goal on adaptation and the scaling of funding to move faster and further, beyond pledges and commitments towards effective climate action.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="697" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/Ademola-Ajagbe-2-820x697.jpg" alt="" class="wp-image-421601" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/Ademola-Ajagbe-2-820x697.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/Ademola-Ajagbe-2-300x255.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/Ademola-Ajagbe-2-106x90.jpg 106w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/Ademola-Ajagbe-2-768x653.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/Ademola-Ajagbe-2-1536x1305.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/Ademola-Ajagbe-2-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Ademola Ajagbe is the Regional Managing Director, Africa at The Nature Conservancy</figcaption></figure>



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How Africa can build on COP27’s small wins

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/51585576608_b441fdc2ab_o-1-820x547.jpg" alt="" class="wp-image-421577" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/51585576608_b441fdc2ab_o-1-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/51585576608_b441fdc2ab_o-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/51585576608_b441fdc2ab_o-1-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/51585576608_b441fdc2ab_o-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/51585576608_b441fdc2ab_o-1-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/51585576608_b441fdc2ab_o-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FoodBanking Kenya volunteers distribute food items such as flour, potatoes, kales and french beans to the residents of Ilbisi located in Kajiado County, Kenya, on September 20, 2021. PHOTO © THE GLOBAL FOODBANKING NETWORK/BRIAN OTIENO</figcaption></figure>



The&nbsp;Maasai&nbsp;people of Kenya’s Great Rift Valley are some of Africa’s most well-known and culturally distinctive tribal peoples. Traditionally nomadic and pastoralist, the&nbsp;Maasai&nbsp;are self-sufficient, thriving from the production of their livestock and living off the lands they call home.



Yet, when this land fails, due to climate stress and&nbsp;<a href="https://www.reuters.com/world/africa/drought-forces-kenyas-maasai-sell-starving-cattle-pittance-2022-10-19/" target="_blank" rel="noreferrer noopener">persistent drought</a>&nbsp;rendering swathes of pastureland unviable for the grazing of livestock, the specter of hunger and deprivation follows close behind. However, for many of the&nbsp;Maasai, relief has come from what some might consider an unexpected source: food banks.



Traversing inaccessible terrain and the interference of wild elephants, the refrigerated trucks of&nbsp;<a href="https://www.foodbankingkenya.org/" target="_blank" rel="noreferrer noopener">Food Banking Kenya</a>&nbsp;are able to overcome numerous obstacles with the support of local government guides. And by working with local churches and other institutions, the food bank can distribute much-needed food to the peripatetic&nbsp;Maasai, before they move on to pastures anew.



From maize and rice to fresh fruits and vegetables, the food provided offers immediate relief from the rising insecurities facing communities like the&nbsp;Maasai. Yet, much of the food that eventually reaches this community was not originally grown for this purpose.



Instead, it is largely sourced from many of Kenya’s farms, which experience around 40 per cent of their production ending up wasted, largely post-harvest. Juxtapose this against the reality that a similar percentage of Kenyans face food insecurity every day, and it becomes more apparent that food banks can play an important role in addressing both issues through food redistribution.



Africa’s food banks can bridge the gap between farms with surplus food and communities without. But, although Food Banking Kenya’s&nbsp;<a href="https://www.foodbankingkenya.org/?page_id=21" target="_blank" rel="noreferrer noopener">Agricultural Recovery Programme</a>&nbsp;prevented over 400,000 kilograms of fresh fruits and vegetables going to waste on the country’s farms in 2021, more effective support is needed to truly make a dent in Africa’s mountain of food waste.



This is because the dual climate and hunger challenges facing the&nbsp;Maasai&nbsp;are not unique to their community alone, but are symptomatic of the rising burden being placed on Africa’s already strained food systems.



The continent, like many parts of the world, suffers not from a lack of food – but a lack of connectivity between the food it produces, and its most vulnerable communities.



Organizations which can bridge this gap, like food banks, are not yet fully understood or appreciated by governments, leaving much unfulfilled potential. Meanwhile, reducing food waste also helps minimize the agricultural sector’s carbon footprint, as it alone is responsible for up to&nbsp;<a href="https://www.fao.org/3/bb144e/bb144e.pdf" target="_blank" rel="noreferrer noopener">8 per cent</a>&nbsp;of global greenhouse gas emissions.



With greater support, Africa’s emerging food bank sector can help address rising continental food insecurity, which is exacerbated by climate change and global economic shocks.



That’s why following COP27 – recognized as ‘Africa’s COP’ – both African and global leaders must begin to fully recognize and support the role of food banks in addressing the intertwined climate and hunger crisis.



To begin with, this means adopting policies that better support food donation and distribution and the role food banks play in delivering greater nutritional security, climate change mitigation, and adaptation, across the continent. Many food producers, in Kenya and across Africa, produce a surplus of food but face barriers when preventing this from going to waste if it is not possible to sell to markets.



Better policies, as highlighted by the&nbsp;<a href="https://atlas.foodbanking.org/" target="_blank" rel="noreferrer noopener">Global Food Donation Policy Atlas</a>, such as tax incentives and liability protection for food donors, must be adopted to prevent food waste and feed communities, alongside building awareness for food banks’ role in reducing food waste across the entire food value chain.



Secondly, with the rising impact of climate change on our food systems in mind, African governments must recognize the importance of strategically including food banks in their national climate action plans, known as Nationally Determined Contributions (NDCs).



Finally, the continent’s leaders must understand and support a broader role for food banks in the functioning of Africa’s food systems. For instance, because of Food Banking Kenya’s&nbsp;<a href="https://www.foodbankingkenya.org/?page_id=21" target="_blank" rel="noreferrer noopener">school feeding program</a>, more than 7,000 Kenyan children are not only receiving nutritious diets, but are also supported to stay in school and receive an invaluable education.



Far from being just a port of last resort, food banks now stand ready to serve Africa at the nexus of two of the continent’s greatest challenges – the increasing impact of climate change and rising levels of hunger.

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Food banks in Africa: a novel solution to the continent’s hunger and climate crises

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="555" height="550" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/thumbnail_Bogolo-Kenwendo.jpg" alt="" class="wp-image-421409" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/thumbnail_Bogolo-Kenwendo.jpg 555w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/thumbnail_Bogolo-Kenwendo-300x297.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/thumbnail_Bogolo-Kenwendo-91x90.jpg 91w" sizes="auto, (max-width: 555px) 100vw, 555px" /><figcaption>Bogolo&nbsp;Joy&nbsp;Kenewendo is&nbsp;UN Climate Change High-Level Champions’ Special Advisor, Africa Director, and&nbsp;former Cabinet Minister of Investment,&nbsp;Trade&nbsp;and Industry of Botswana</figcaption></figure>



With&nbsp;an&nbsp;abundance of land, natural capital and a growing, young population, Africa&nbsp;is undoubtedly&nbsp;the&nbsp;nature-positive economic&nbsp;superpower of the world.&nbsp;The protection of&nbsp;Africa’s nature could drive development across the&nbsp;entire&nbsp;continent.&nbsp;A nature-positive economy is regenerative and brings widespread&nbsp;economic opportunity including&nbsp;youth employment&nbsp;while protecting biodiversity.&nbsp;With&nbsp;access to&nbsp;the&nbsp;global&nbsp;voluntary&nbsp;carbon market;&nbsp;valuing and commercializing nature assets could unlock new financing opportunities for development for the Africa.&nbsp;This&nbsp;market, operating with integrity,&nbsp;equity&nbsp;and transparency,&nbsp;could&nbsp;help Africa&nbsp;deliver on three&nbsp;fronts: nature, climate&nbsp;and development.



<h2 class="wp-block-heading">Nature: the perils and possibilities </h2>



From savannahs&nbsp;to deserts, Africa is home to numerous unique and&nbsp;rich&nbsp;habitats.&nbsp;Given this&nbsp;range of ecosystems, it is perhaps unsurprising that&nbsp;the continentis home to at least&nbsp;<a href="https://www.fao.org/3/ca7948en/ca7948en.pdf" target="_blank" rel="noreferrer noopener">25% of&nbsp;our planet’s&nbsp;biodiversity</a>.&nbsp;As well as endemic species of mammals, birds and plants, many countries boast vast and ancient tropical forests.&nbsp;Many local people and communities live in these forests and depend upon them for their subsistence and everyday livelihoods. However, the benefits of these ecosystems extend&nbsp;far&nbsp;beyond the countries within which they exist. For instance, the forests of the Congo Basin are frequently referred to as the ‘lungs of Africa’as it is&nbsp;the world’s largest carbon sink. Crossing six countries, this forest&nbsp;<a href="https://www.worldbank.org/en/news/feature/2022/10/24/journey-into-the-congo-basin-the-lungs-of-africa-and-beating-heart-of-the-world" target="_blank" rel="noreferrer noopener">absorbs&nbsp;more CO2</a>&nbsp;from the atmosphere than the Amazon.&nbsp;&nbsp;



The natural world, particularly in Africa,&nbsp;holds huge possibilities for&nbsp;driving&nbsp;climate change mitigation&nbsp;and resilience.&nbsp;However, the potential of these natural resources is&nbsp;currently&nbsp;being eroded by a seemingly insatiable global appetite for food,&nbsp;fibre&nbsp;and&nbsp;timber. Indeed,&nbsp;nearly&nbsp;<a href="https://earth.org/deforestation-in-africa/" target="_blank" rel="noreferrer noopener">fourmillion hectares</a>&nbsp;of natural forest is destroyed across Africa each year, some of this is due agricultural expansion.However&nbsp;well as&nbsp;pushing many species to the brink of extinction,&nbsp;deforestation at this scale&nbsp;also&nbsp;has consequences for food security.&nbsp;



Wholesale&nbsp;deforestation or tree clearing&nbsp;can cause&nbsp;soil degradation.&nbsp;Tree roots transport water to the earth and decomposing leaves return&nbsp;essential&nbsp;nutrients the ground. Therefore, without trees,&nbsp;soil becomes&nbsp;drier&nbsp;and less productive for crops. Coupled with rising temperatures, there is a real risk of dusty, depleted topsoil blowing away and further reducing the capacity of the land for the people who depend on it. This is one factor&nbsp;behind the current food insecurity crisis faced by many people across Africa.&nbsp;There is a critical to&nbsp;need&nbsp;to adopt&nbsp;high-yield, adaptive&nbsp;<a href="https://climatechampions.unfccc.int/call-to-action-for-climate-resilient-sustainable-food-systems-in-africa/" target="_blank" rel="noreferrer noopener">nature-positive agricultural practises</a>&nbsp;whilst not expanding agricultural land further.&nbsp;



So&nbsp;if we work with nature rather than against it, by reversing deforestation and restoring degraded land then prospects for food security, livelihoods and economies will improve.&nbsp;<a href="https://www.iucn.org/resources/file/regenerative-agriculture-report-opportunity-businesses-and-society-restore-degraded" target="_blank" rel="noreferrer noopener">A study last year</a>&nbsp;found that if regenerative agriculture is practised on just 50% of African farmland, it would equate to USD 17 billion in savings to farmers and companies each year, as well as reduction in soil erosion, improvements&nbsp;in&nbsp;water filtration rates and nitrogen content.



<h2 class="wp-block-heading">Funding climate justice</h2>



Africa’s forests&nbsp;not only benefit the continent but&nbsp;offer&nbsp;a vital&nbsp;climate service to the planet&nbsp;which we need to conserve and harness at all costs given the climate emergency upon us.&nbsp;We need to see the nature services from this continent&nbsp;generate&nbsp;significant finance&nbsp;to&nbsp;drive local development.&nbsp;



Implementing such a&nbsp;transformation&nbsp;requires a climate justice approach.&nbsp;Climate justice&nbsp;recognises that without the promotion of&nbsp;human rights&nbsp;and&nbsp;the protection of nature,&nbsp;sustainable development&nbsp;is not possible.&nbsp;Many young climate activists are leading the campaign for climate justice&nbsp;across Africa.&nbsp;Now&nbsp;we&nbsp;need investors and governments&nbsp;to&nbsp;act&nbsp;with&nbsp;the same levels of commitment and enthusiasm&nbsp;shown by&nbsp;these&nbsp;courageous&nbsp;youth&nbsp;leaders.&nbsp;



Climate justice&nbsp;requires&nbsp;the&nbsp;urgent acceleration of&nbsp;finance at scale.&nbsp;This could be found from&nbsp;public funds, especially from climate funds&nbsp;which only&nbsp;currently&nbsp;account for&nbsp;<a href="https://www.climatepolicyinitiative.org/wp-content/uploads/2022/09/Landscape-of-Climate-Finance-in-Africa.pdf" target="_blank" rel="noreferrer noopener">$1 billion (3%) of climate finance</a>&nbsp;flows to Africa,&nbsp;and multilateral development banks (MDBs)&nbsp;who could use public finance to de-risk nature investments.&nbsp;Additionally,&nbsp;agricultural&nbsp;subsidies&nbsp;in the west and on this continent&nbsp;could be&nbsp;repurposed to fund this transition.&nbsp;



One&nbsp;avenue left relatively untapped&nbsp;is&nbsp;the voluntary carbon market.&nbsp;Two thirds of Africa’s&nbsp;carbon&nbsp;credits come from only&nbsp;five&nbsp;countries.&nbsp;This&nbsp;market holds&nbsp;huge potential to unlock private capital to fund projects that simultaneously protect nature&nbsp;and&nbsp;bring economic benefits to local people and communities.&nbsp;Africa could increase its engagement with the voluntary carbon market to ensure a good price, and greater access to finance.&nbsp;



This potential has been acknowledged by numerous key stakeholders across Africa&nbsp;which has led to&nbsp;the establishment of the Africa Carbon Market Initiative (ACMI),&nbsp;formed by SE for All, UNECA and Global Energy Alliance for People and Planet with the UN Climate Change High Level Champions as a supporting partner.&nbsp;This&nbsp;was&nbsp;<a href="https://climatechampions.unfccc.int/africa-carbon-markets-initiative/" target="_blank" rel="noreferrer noopener">launched&nbsp;this week&nbsp;at COP27</a>&nbsp;as a means of enabling more money to flow to nature-based projects and power&nbsp;Africa’s development, we’resupporting the ACMI.&nbsp;The initiative will be fundamental in the&nbsp;shaping of&nbsp;Africa’s engagement in&nbsp;the voluntary&nbsp;carbon market and&nbsp;in&nbsp;the protection of its precious natural ecosystems&nbsp;going forward.



<h2 class="wp-block-heading" id="h-mobilising-carbon-and-nature-based-payments">Mobilising carbon and nature-based payments  </h2>



The voluntary carbon&nbsp;market,&nbsp;especially&nbsp;the demand for&nbsp;nature-based&nbsp;carbon&nbsp;credits,&nbsp;is growing rapidly, and if Africa doesn’t mobilise&nbsp;soon there&nbsp;is a risk that we fail to shape our engagement with the market to ensure transparency,&nbsp;integrity and&nbsp;benefits&nbsp;which are retained on&nbsp;the continent. &nbsp; &nbsp;



Carbon markets, with clear operating principles, could help power nature positive development.&nbsp;The entry point for buyers must be clearly defined to drive high integrity demand from the outset. And there should be payment for biodiversity – over and above payment for carbon. Certain innovative conservation organisations are already piloting biodiversity payments, proving that valuing nature in this way is possible.&nbsp;



Above all, it is vitally important that&nbsp;there&nbsp;are continual, widespread&nbsp;consultations with&nbsp;governments,&nbsp;buyers,&nbsp;regional carbon&nbsp;market shaping&nbsp;initiatives&nbsp;as well as&nbsp;local communities to&nbsp;shape&nbsp;the way ahead&nbsp;for the voluntary carbon market in Africa&nbsp;and&nbsp;understand where finance can make the greatest impact.&nbsp;The best nature-based projects not&nbsp;only generate high quality carbon credits, but also bring lasting benefits for&nbsp;these&nbsp;local&nbsp;communities, the custodians of biodiversity. This is the context for the formation of the African Carbon Markets Initiative (ACMI), which has&nbsp;the aim of scaling supply and demand for carbon credit projects in Africa.&nbsp;The 2030 technical potential of Africa-sourced carbon credits is estimated at up to 2,370 MtCO2e based on existing, nascent, and innovative methodologies in sectors such as forestry, agriculture, blue carbon, renewable energy, household devices, livestock, engineered removals, decommissioning of fossil fuels and more.&nbsp;



For the sake of&nbsp;all our futures,&nbsp;nature must be valued appropriately, it must be included in the valuation of the economy and factored into GDP calculations. Carbonfinance&nbsp;and other forms of payment (e.g.&nbsp;biodiversity credits)&nbsp;generated from natural climate solutions can simultaneously restore and conserve nature while also providing significant funding to national development efforts across Africa.&nbsp;Now is the&nbsp;time for the world to recognise and reward Africa for its natural capital assets.

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Protecting nature to drive development: how Africa can be a nature-positive superpower

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1244663337-820x547.jpg" alt="" class="wp-image-421297" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1244663337-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1244663337-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1244663337-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1244663337-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1244663337-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1244663337-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Participants walk in front of COP27 logo in the Green Zone on the fourth day of the COP27 UN Climate Change Conference, held by UNFCCC in Sharm El-Sheikh International Convention Center, Egypt on November 10, 2022. COP27, running from November 6 to November 18 in Sharm El Sheikh focuses on implementation of measures already agreed during previous COPs. The Conference in Sharm El Sheikh focuses also on the most vulnerable communities as the climate crisis hardens life conditions of those already most disadvantaged. on the fourth day of the COP27 UN Climate Change Conference, held by UNFCCC in Sharm El-Sheikh International Convention Center, Egypt on November 10, 2022. COP27, running from November 6 to November 18 in Sharm El Sheikh focuses on implementation of measures already agreed during previous COPs. The Conference in Sharm El Sheikh focuses also on the most vulnerable communities as the climate crisis hardens life conditions of those already most disadvantaged. (Photo by Dominika Zarzycka/NurPhoto via Getty Images)</figcaption></figure>



Sharm El–Sheikh, Egypt, 14 November 2022:&nbsp;The hosting of the COP27 conference in Africa signifies a unique opportunity for the continent to assert its needs, challenges and outlooks, and most significantly to drive the African Position on just transition. Historically this conference, focused on climate change and its humanitarian ramifications, has marginalized Africa – whose contribution to humanity’s carbon footprint is minimal but whose people are suffering disproportionately from its effects.



But with this year’s gathering of world leaders occurring in Egypt’s Sharm El Sheikh, it is vital that Africa’s authentic voice is heard – this is the overriding purpose of Afreximbank’s mission at COP27. By inserting and asserting our perspective in the global climate change debate, we want to promote a mainstream African position, as a key stakeholder region.



Africa’s situation, and therefore the position articulated by Afreximbank, diverges from those of many other regional blocs, particularly in the more prosperous Global North. This continent’s long-term sustainable development agenda, which relies on traditional energy sources, is impeded by the ongoing campaign towards zero-carbon emissions, and the short-term livelihoods of millions of Africans are imperiled by a headlong rush towards net-zero.



With this in mind, Afreximbank’s participation in COP27 revolves around three core elements: an accelerated implementation of the African Continental Free Trade Agreement AfCFTA, which can reduce the continent’s reliance on carbon-intensive imports; the fostering of partnerships to promote an energy transition model that is more globally inclusive; and the maintenance of a pan-African position which achieves a balanced, environmentally sustainable economic development strategy. So, in partnership with likeminded organisations, Afreximbank’s participation at COP27 has been marshalled to articulate the following outcomes:



<ul class="wp-block-list"><li>Calling for the full Implementation of the AfCFTA towards the localization of industries to transition towards net zero emissions:</li></ul>



Afreximbank believes that the AfCFTA offers an opportunity for Africa to produce and consume goods within the continent, thereby reducing its carbon footprint. Erasing borders offers an opportunity for Africa to share technology, collaborate on science, and leverage its youthful population to achieve the development the continent warrants. In understanding this, Afreximbank supports the full implementation of the AfCFTA – which will help the continent pool resources to accelerate and speed up its development trajectory. At the COP27 conference, Afreximbank is rallying member states and development partners to accelerate the implementation of the AfCFTA. In so doing, Afreximbank called on these organisations and Governments to fund the AfCFTA Adjustment Fund. Capital from this Fund will be deployed to support both the public and private sectors to address short-term disruptions, while enabling the private sector to retool, reskill, and develop the necessary capabilities to produce value-added goods and services that can be traded competitively within the continent – catalysing the emergence of AfCFTA-led regional value chains.



<ul class="wp-block-list"><li>Fostering partnerships for an energy transition model that is more globally inclusive:</li></ul>



Currently, 600 million Africans have no access to electricity, while another 900 million lack access to clean cooking. However, Africa, a continent endowed with abundant resources, is home to 30 percent of the world’s mineral reserves, eight percent of the world’s natural gas, and 12 percent of the world’s oil reserves. Due to its low levels of development and large green energy sources, Africa emits the least of any region, contributing about 4 percent of total global emissions. Afreximbank believes that Africa must use its vast minerals to tackle the continent’s energy poverty and achieve its development plans under Agenda 2063. Exploring Africa’s natural gas reserves can double the continent’s electricity capacity, while adding less than one percent to global emissions. At Afreximbank, we believe Africa cannot achieve its development plans without access to energy. Hence Africa has the right to develop its resources, including fossil fuels, and we, as a Bank, are prepared to finance the continent’s energy just transition. At the conference, Afreximbank has confirmed its intention and willingness to continue to partner with petroleum producers to promote adaptation, support energy value chains and mitigate the costs of transition. With a well-articulated African position, we believe the continent’s economic development will be well positioned to grow while ensuring the continent’s energy transition progress is compatible with, and complementary to, the Sustainable Development Goals (SDG) as well as the continent’s long-term social and environmental objectives, as set out in African Union’s Agenda 2063: The Africa We Want.



<ul class="wp-block-list"><li>Supporting the common pan-African position around a balanced, environmentally sustainable, and responsible economic development strategy:</li></ul>



If our continent is to achieve sustainable development goals, we must take charge of its trajectory. Africa is blessed with rich mineral resources enough to finance its development, but the continent has failed to benefit from the exploitation of these resources. Afro-centric institutions are key to driving Africa’s economic agenda and building Africa’s resilience against climate change. Afreximbank has committed to supporting the African positioning for the continent’s benefit. At this critical time of global economic uncertainty, it is imperative that Africa coordinates and supports the common African position on economic development amidst global climate change. At the conference, Afreximbank is calling for adaptation financing models prioritising resilience in economies and ecosystems, in place of green financing models for mitigation – as this will generate new nomenclature bonds befitting the African situation. Moreover, Afreximbank has called for compensation for loss and damage and a transition from transactional to systemic finance – both crucial for our collective future.

COP27 In Sharm El Sheikh – Day 4

Afreximbank asserts Africa’s common position at COP27

This week marks the beginning of the 27th Climate Change Convention (CoP27), which is rightfully christened the African CoP as it takes place in the Egyptian City of Sharm El Sheikh, but also because it presents the best opportunity for Africa to take leadership in determining the future of its mitigation and adaptation course, particularly as pertains to financing.



&nbsp;While it has previously been the expectation that the developed countries, who incidentally are the largest contributors of carbon emissions would come around to sufficiently support developing countries in climate finance, this assistance has been slow to come. This has necessitated a shift in perspective to include the incorporation of mitigation and adaptation goals into national, regional, and continental planning and budgetary systems.



Africa remains one of the regions that are worst affected by climate change, even as it contributes the least of global emissions. Today, the changing precipitation patterns are undermining the continents food and water security. Food insecurity increases by 5–20 percentage points with each drought or flood in sub-Saharan&nbsp;Africa, and global warming is expected to melt Africa’s remaining glaciers in the next few decades reducing the availability of water, an essential component of agricultural production.



Ultimately, with agriculture being critical to Africa’s economic transformation, climate change would continue to increase the risk for agriculture sector investors, destabilize local markets and limit economic growth.



Faced with such risks, we must now arrive at the conclusion that Africa’s overreliance on foreign assistance may delay adaptation plans, and that the quicker way forward is to create own financing mechanisms, including the blending of public and private sector finance in de-risking investments in climate action.



For a rapid take-off, African governments and leadership must take charge and create a policy environment that encourages private-sector investments with a climate angle.&nbsp; Recent commitments, including the Africa Common Position at the 2021 UN Food Systems Summit, and more at the AGRF Summit this year, show an eagerness by African governments to position the war against climate change as a key development agenda. However, the commitments can only be validated by a policy direction that clearly brings out the central position of climate finance in the envisioned transformation.



The idea here is to mobilize private finance, which as at now, remains the biggest hope of meeting the continent’s climate goals. As of today, nearly 87% &#8212; or$20bn &#8212; of Africa’s annual climate finance emanates from public actors, with very limited contribution from the private sector. And with annual needs of $280bn to implement the continent’s Nationally Determined Contributions by 2030, it goes without saying that private sector investments are an urgent necessity, which can be quickened by shattering existing investment barriers through supportive policies. &nbsp;



Meanwhile, as governments create an environment that fosters local contribution to climate finance, private sector players must also independently devise ways of contributing to the war against climate change. The truth is, we all, in one way or another, suffer the adverse consequences of the warming climate, and private enterprises are not excluded. The inculcation of a climate agenda within the strategies of private businesses would, therefore, drive meaningful contribution to continental climate action.



We also expect more activity from scientists and researchers, who are now called upon to draft convincing plans and strategies to encourage the uptake of carbon credits and other reward systems for contributions towards climate change mitigation and adaptation. This community plays a key role in provoking rapid and far-reaching action across many sectors, and their dedication participation would lead to activities that mainstream climate action investment, across many different sectors.



Finally, Africa’s farmers, perhaps the biggest victims of climate change, must in their own small way contribute to climate action. Farmer groups must be active in educating their members of their role in mitigation and adaptation and we expect their dedicated contribution through such activities as the creation of communal tree nurseries and supporting of sustainable land management program that includes tree planting initiatives soil &amp; water management of degraded lands across the watershed.



But it is still important to reiterate that the world’s greatest emitters must remain accountable, and that we in Africa and other developing regions expect them to honor their $100bn annual climate finance pledge beyond the lips service.



In conclusion, we must realize that we are now at a change-point, where the business-as-usual approach must be discarded, and new strategy that engages all our participation in climate action is embraced. For Africa’s leaders, this is the right time for transformation, and in the next two weeks of the African CoP we expect to see more local and sustainable climate finance initiatives.



The writer is the former Prime Minister of Ethiopia, and the current Board Chair of the AGRF Partners Group. The AGRF is Africa’s premier convening platform for inclusive agricultural transformation.

H.E.-Hailemariam-1

African countries must create their own climate finance plans

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="551" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1439677821-820x551.jpg" alt="" class="wp-image-421087" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1439677821-820x551.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1439677821-300x202.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1439677821-134x90.jpg 134w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1439677821-768x516.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1439677821-1536x1033.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/GettyImages-1439677821-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>SHARM EL SHEIKH, EGYPT &#8211; NOVEMBER 07: A sign hangs over the main entrance on day two of the UNFCCC COP27 climate conference on November 07, 2022 in Sharm El Sheikh, Egypt. The conference is bringing together political leaders and representatives from 190 countries to discuss climate-related topics including climate change adaptation, climate finance, decarbonisation, agriculture and biodiversity. The conference is running from November 6-18. (Photo by Sean Gallup/Getty Images)</figcaption></figure>



Ahead of her panel discussion at the Friends of South Africa session at COP27 today, Chief Sustainability Officer Nazmeera Moola discusses why and how we must navigate the transition to net zero across high emitting countries and companies



07 November 2022:&nbsp;The transition to net zero will not be linear or simplistic, especially for companies in carbon-intensive emerging market economies like South Africa.&nbsp; A high-emitting company of today will only have a role to play in the net zero economy of tomorrow if it has an ambitious, credible, and implementable plan to transition toward a greener, cleaner future.&nbsp;



As asset managers who are invested in these companies, it is our responsibility to support their transition to net zero, to use our shareholder vote responsibly and to approach decarbonisation from a real-world world-perspective and not from our own portfolio perspective.&nbsp; We do not support ‘portfolio purity’ or divestment.



Remaining invested in the high carbon emitters in our existing portfolio, specifically those in emerging markets, is the right thing to do. It is not about where the company’s or country’s carbon position is today – rather it is about their willingness and ability to move the needle on their carbon emissions. In contrast, divesting from high emitters to cleanse the portfolio does nothing for contributing to real-world decarbonisation.



Corporate South Africa is making progress, with several firms pledging to achieve net-zero emissions by 2050, inclusive of companies from the hard-to-abate industries, like cement manufacturer PPC, paper and pulp producer Sappi, and Sasol.



However, most companies globally, but particularly in emerging markets – do not yet have a clear plan on how they’re going to get to net zero by 2050. Therefore, it is our role as shareholders to encourage, measure and engage the high emitters in our portfolio on their transition, to go on the journey of transition alongside them, with special focus on emerging markets.&nbsp; To ensure that we do this with integrity, we have developed an in-house ‘Transition Plan Assessment Framework’ that scores our heaviest emitters on three key principles: level of ambition, credibility of plan, and implementation of plan.



Transition plan assessment principles



1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Level of ambition



Ambition is critical to signal how seriously a company takes climate risk and it’s transition strategy. Measuring ambition can be subjective, and therefore including objective indicators&nbsp; ensure a robust, scientific and&nbsp; credible assessment. This can be achieved by assess the following three indicators:



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Disclosure of Scope 1, 2 and 3 emissions&nbsp;(all categories) with independent verification and public disclosure via a disclosure platform such as the Carbon Disclosure Project



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Time bound reduction targets&nbsp;across short, medium and long term of Scope 1,2 and 3 emissions



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Official commitment to achieve net zero by 2050 or sooner, with 1.5C science-based targets and SBTi approval (where possible)



2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credibility of plan



The second principle on which we evaluate plans is on credibility; namely whether the company has a time-bound, clearly financeable, and just transition strategy. Indicators of a credible strategy include:



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if the plan is based on existing low-carbon technology rather than new, unproven technologies;



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if the company is not relying on divestment of high-emitting assets or carbon offsets to decarbonise; and



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if the company has planned to generate significant revenue from low-carbon products and services.



Additionally, financial planning and allocation to transition is critical to consider. The capital expenditure requirements, the impact on revenues and expenditures of this plan, and whether the company can afford it are all indicative of how seriously the company is taking transition and of the potential for transition success. Included in the assessment of transition is the consideration and measurement of social impact to ensure that the transition is sustainable both for people and planet.



3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Implementation and measurement



Engagement and lobbying alignment signify alignment of the company plan with the broader environment in which the company is embedded. Additionally, good governance structures, with clear oversight of transition-related strategy at board level is a good indicator that the transition plan has full company-level buy-in, ensuring transparency and accountability.



Indicators of progress are the final element of measurement. Carbon reduction, of course, is the key metric of success. But carbon is not the only consideration, especially in the early years of transition. Rather, we look for tangible signs of progress, including:



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;investment in transition-related capacity building;



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;new partnerships and acquisitions that enable the company to transition; and



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a growing share of green revenues generated by the company



It’s about progress, not just pledges



Achieving net zero is a global problem. The ideal outcome would be for sectors and countries that can achieve it more easily to decarbonise faster, and for hard-to-abate sectors and developing countries to have slower pathways.&nbsp;



It is essential to South Africa’s economy to execute on the decarbonisation strategy. Local corporates have begun to engage, and in some instances, taken the lead on the opportunity and risk presented by the transition. The approach we are taking enables us to have a clear view on where we are today, and where we are going in light of where we desire to be. Net zero offers both a threat and an opportunity for South Africa and at Ninety One we continue to stand firm in our position of support for both a country and at company level for a just transition to a low-carbon, thriving future.

COP27 Climate Conference: Opening Ceremony And High-Level Summit

COP27: It’s about progress, not pledges, especially in emerging markets

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="562" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/AJ7JTKPKIVLLVHHLY5YH6EU57Y-820x562.jpg" alt="" class="wp-image-420926" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/AJ7JTKPKIVLLVHHLY5YH6EU57Y-820x562.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/AJ7JTKPKIVLLVHHLY5YH6EU57Y-300x206.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/AJ7JTKPKIVLLVHHLY5YH6EU57Y-131x90.jpg 131w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/AJ7JTKPKIVLLVHHLY5YH6EU57Y-768x526.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/AJ7JTKPKIVLLVHHLY5YH6EU57Y-1536x1053.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/AJ7JTKPKIVLLVHHLY5YH6EU57Y-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FILE PHOTO: View of a COP27 sign on the road leading to the conference area in Egypt&#8217;s Red Sea resort of Sharm el-Sheikh town as the city prepares to host the COP27 summit next month, in Sharm el-Sheikh, Egypt October 20, 2022. REUTERS/Sayed Sheasha/File Photo</figcaption></figure>



Africa needs cheap, affordable and modern energy solutions to realise its development goals.&nbsp;<a href="https://data.worldbank.org/indicator/SP.POP.GROW?end=2021&amp;locations=ZG&amp;start=1961">Projections</a>&nbsp;show that one in four of the world’s people will be sub-Saharan African in 2050. As the region’s population and incomes grow, the pace of industry, commerce and agriculture will accelerate. Yet, 600 million people in Africa do not have access to electricity.



<a href="https://iea.blob.core.windows.net/assets/6fa5a6c0-ca73-4a7f-a243-fb5e83ecfb94/AfricaEnergyOutlook2022.pdf">According to the IEA</a>, demand for modern energy in sub-Saharan Africa is expected to expand by a third in the next decade. Moreover, power generation capacity will need to increase&nbsp;<a href="https://publications.jrc.ec.europa.eu/repository/handle/JRC118432">ten-fold by 2065</a>&nbsp;to meet projected electricity demands.



Africa accounts for only 3% of cumulative global CO2 emissions, but it is&nbsp;<a href="https://www.weforum.org/agenda/2022/05/how-south-africa-s-recent-floods-compel-climate-action/">disproportionately affected</a>&nbsp;by the impacts of climate change. Of the ten countries most vulnerable to climate change, seven are located in Africa.&nbsp;Against this backdrop, the region faces the complex challenge of growing its economies along with the pressing mandate for emissions reduction.



There is no doubt that Africa will need to increase its energy consumption to drive economic growth and achieve development goals. Although emissions are decreasing in other regions, Africa’s CO2 emissions are poised to grow in the coming decades. The&nbsp;<a href="https://iopscience.iop.org/article/10.1088/1748-9326/abc64f/pdf">growth rate in energy-related CO2 emissions</a>&nbsp;in Africa over the last two decades is 123%, considerably greater than the world average of 60%, due largely to the high rate of population growth. Indeed, shifting from a growth powered by cheap fossil fuels to low-emission and climate-resilient economies requires both bolder policies and vast investments.



Current climate financing commitments fall woefully short of the region’s needs. In 2009, at COP15 in Copenhagen, developed countries agreed to mobilise $100 billion per year by 2020 to developing countries. While, in 2020, a total of&nbsp;<a href="https://www.oecd.org/climate-change/finance-usd-100-billion-goal/aggregate-trends-of-climate-finance-provided-and-mobilised-by-developed-countries-in-2013-2020.pdf">$ 83.3 billion in climate finance was mobilised</a>; but of this, only $20 billion was directed to Africa. Climate finance flowing from all sources reached&nbsp;<a href="https://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2021/">$632 billion in 2019/2020</a>, with Africa receiving just 3% of this. Given the scale of need, at COP26 the Africa Group of Negotiators called for&nbsp;<a href="https://unfccc.int/sites/default/files/resource/3_11_21_%2520Joint_CPR_New%2520Goal.pdf">$</a><a href="https://unfccc.int/sites/default/files/resource/3_11_21_%20Joint_CPR_New%20Goal.pdf">1.3 trillion in climate finance</a>&nbsp;annually starting in 2030.



Other notable outcomes for Africa from COP26, included a reaffirmation of the $100 billion pledge in climate funding for developing countries; a commitment to double finance for adaptation; clearer rules around carbon markets; and heightened attention to losses and damage.



Bridging Africa’s climate financing gap



The&nbsp;<a href="https://unfccc.int/sites/default/files/resource/cma2021_10_add1_adv.pdf">Glasgow Climate Pact</a>&nbsp;noted its ‘regret’ that the developed countries were not able to mobilise the financing pledged at COP15. Indeed, climate financing is again likely to be the most contentious issue at the upcoming COP27 (dubbed Africa’s COP) in Sharm el-Sheikh, Egypt.



The current finance architecture and mechanisms for accessing finance are not meeting Africa’s needs. Financing Africa&#8217;s green energy transition requires a major ramp-up in the scale and quality of investments in infrastructure,&nbsp;climate innovations, climate-smart agriculture, renewable energy and biodiversity.



Concessional loans from bilateral and multilateral donors&nbsp;<a href="https://www.oecd.org/newsroom/statement-from-oecd-secretary-general-mathias-cormann-on-climate-finance-in-2019.htm">account for over two-thirds of climate financing</a>&nbsp;to African countries. Despite the climate pact’s emphasis on ‘grants’ and ‘highly concessional forms of finance,’ however, this source of financing will not match the trillions required to achieve low-carbon development. And a heavy dependence on loans for financing Africa&#8217;s green energy transition is neither an optimal nor sustainable cause of action.



Specifically, the pandemic has had a negative impact on Africa’s sovereign debt situation: resulting in half of the region’s countries in either&nbsp;<a href="https://www.imf.org/external/Pubs/ft/dsa/DSAlist.pdf">debt distress or at high risk of debt distress</a>. On average, the region’s economies collected&nbsp;<a href="https://www.brookings.edu/wp-content/uploads/2021/10/COVID-and-debt.pdf">13.6% less revenue than projected</a>&nbsp;in 2020 and 9.3% less in 2021. Furthermore, eleven countries are experiencing double-digit inflation, worsening an already heavy debt-service burden.&nbsp;<a href="http://country.eiu.com/article.aspx?articleid=982147881&amp;Country=Nigeria&amp;topic=Economy&amp;subtopic=Outlook&amp;subsubtopic=Financial">One in five African countries dedicate 20% or more of foreign-exchange</a>&nbsp;income to external debt servicing and this burden is much larger for a handful of highly-leveraged states. Undoubtedly, private investment and private finance, including innovative financing solutions, will have to play a bigger role.



Innovative financing solutions



Perhaps the most promising outcome of COP26 was the&nbsp;Just Energy Transition Partnership&nbsp;(JETP) between the governments of South Africa and the International Partners Group (Germany, France, the United Kingdom, the United States and the European Union). The JETP aims to accelerate the decarbonisation of South Africa&#8217;s economy, with a focus on the electricity system, by mobilising an initial amount of $8.5 billion over the next three to five years through various mechanisms, including grants, concessional loans, investments and risk-sharing instruments. The success of the JETP could serve as a model for climate financing in Africa, particularly if it has a systemic regional approach.



Negotiating for climate finance is important, but more policy imagination will be needed to integrate climate action into development agendas. The African Continental Free Trade Area (AfCFTA) serves as a framework for the region’s green transition — by promoting green industries and trade-related policies. For example, investment in lithium-ion battery manufacturing on the continent should be a priority. By shifting battery manufacturing downstream to where many of the critical inputs are sourced, such as to the DRC, where 70% of the global cobalt supply is produced, the region can become a critical hub in the global supply chain for electric vehicles.



Additionally, given the region’s debt situation, debt-for-nature swaps could be an effective instrument for diverse climate financing. Debt-for-nature swaps are financial transactions in which a&nbsp;<a href="https://www.imf.org/en/News/Articles/2022/05/03/CF-Belize-swapping-debt-for-nature">portion of a country&#8217;s foreign debt is forgiven</a>&nbsp;in exchange for local investments in environmental conservation measures. In the current economic downturn, this instrument is likely to be more appealing to developed countries than issuing new loans and grants.



Finally, carbon credit mechanisms are an effective tool for both preserving and restoring ecosystems and generating additional revenues for governments. African countries have the potential to meet&nbsp;<a href="https://mo.ibrahim.foundation/sites/default/files/2022-07/2022-forum-report.pdf">30% of the world’s sequestration needs by 2050</a>. And the United Nations Economic Commission of Africa estimates that with optimal pricing, Africa can&nbsp;<a href="https://www.ipsnews.net/2022/08/africa-trade-carbon-credits-fund-renewable-energy-expert/">generate between $15 and $82 billion annually</a>&nbsp;by trading carbon credits with emitters. A lack of finance and capacity, however, has prevented African governments from participating in global carbon markets. Building a regional registry and a market exchange for carbon credits would create transparency and protect against price volatility.



These solutions are far from exhaustive, but they will be integral components of the region’s broader strategy to decouple growth from CO2 emissions, including the exploitation of natural gas as a transition fuel.

FILE PHOTO: Egypt prepares to host the COP27 summit

Why financing Africa’s green energy transition should be the focus of COP27

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1110" height="740" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1110x740.jpg" alt="" class="wp-image-395422" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1110x740.jpg 1110w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-scaled.jpg 2048w" sizes="auto, (max-width: 1110px) 100vw, 1110px" /><figcaption>oMalayitsha (transporters) Charles and his colleagues buy groceries for family which will be transported across the border to Zimbabwe on February 20, 2019. &#8211; Items are loaded in Johannesburg onto trailers attached to minibuses which make the 550 kilometres (340 miles) journey north to the border of Zimbabwe, where economic situation has dramatically deteriorated, pushing inflation above 50 percent, and shortages of household essentials have become widespread. (Photo by GULSHAN KHAN / AFP) (Photo credit should read GULSHAN KHAN/AFP via Getty Images)</figcaption></figure>



<a href="https://www.imf.org/en/Publications/REO/SSA/Issues/2022/10/14/regional-economic-outlook-for-sub-saharan-africa-october-2022?utm_medium=email&amp;utm_source=govdelivery">Sub-Saharan Africa</a>&nbsp;faces one of the most challenging economic environments in years, marked by a slow recovery from the pandemic, rising food and energy prices, and high levels of public debt. One of the most urgent issues confronting the region is the need to tackle decade-high levels of&nbsp;<a href="https://www.imf.org/-/media/Files/Publications/REO/AFR/2022/October/English/RisingInflationNote.ashx?utm_medium=email&amp;utm_source=govdelivery">inflation</a>—which are devastating incomes and food security—while also supporting growth.



While there are big differences between countries, the median of inflation rates in the region increased to almost 9 percent in August. And even though the rise has been less dramatic than in other parts of the world, and the drivers are different, inflation is nearly double pre-pandemic levels, risking social and political instability and worsening food insecurity.<a></a>



Despite a rebound last year, the fallout from the pandemic has kept domestic economic activity in sub-Saharan Africa relatively muted, and we expect growth in the region to slow this year. Most countries in the region have lacked the resources to support and stimulate growth, in sharp contrast to richer countries elsewhere that could inject trillions of dollars into their economies.



In sub-Saharan Africa, inflation has been driven less by domestic activity than in advanced economies. Instead, external developments have shaped the path of inflation since the start of the pandemic. They include the sharp spike in global commodity prices, swings in the exchange rate, global supply chain disruptions, and natural disasters.



In the&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2022/09/30/global-food-crisis-demands-support-for-people-open-trade-bigger-local-harvests?utm_medium=email&amp;utm_source=govdelivery">case of food</a>, the&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2022/09/26/africa-food-prices-are-soaring-amid-high-import-reliance?utm_medium=email&amp;utm_source=govdelivery">prices of key staples</a>&nbsp;such as maize and wheat have increased since 2019, contributing two-thirds of overall inflation in fragile states and one-half elsewhere in the region. Higher global energy prices and the&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2022/10/14/how-countries-should-respond-to-the-strong-dollar?utm_medium=email&amp;utm_source=govdelivery">strong dollar</a>&nbsp;have also fed through to inflation indirectly, via transportation and tradable goods like household products.



By contrast, there have been only modest increases for the prices of goods and services that most reflect domestic demand pressures, so-called nontradables—which typically include any locally-produced services, such as in the hospitality, health, or education sectors.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="538" height="538" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-1-4_crop.jpg" alt="" class="wp-image-420660" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-1-4_crop.jpg 538w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-1-4_crop-300x300.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-1-4_crop-90x90.jpg 90w" sizes="auto, (max-width: 538px) 100vw, 538px" /></figure>



With food and energy accounting for half of household consumption in sub-Saharan Africa, living costs across the region have spiraled. The IMF estimates that 12 percent of the region’s population will face acute&nbsp;<a href="https://www.imf.org/-/media/Files/Publications/REO/AFR/2022/October/English/FoodSecurityNote.ashx?utm_medium=email&amp;utm_source=govdelivery">food insecurity</a>&nbsp;by the end of this year.



Many countries have therefore turned to subsidies and tax cuts to alleviate the squeeze in household incomes. These measures should be temporary and as well targeted as possible to maximize their impact and minimize their costs on already-stretched budgets.



Central banks across the region had already started raising interest rates in response to rising inflation, capital outflows and currency depreciation resulting from monetary policy tightening in advanced economies. Examples include Ghana, Malawi, Mozambique, Nigeria, Uganda and the economic and monetary unions for both Central and West Africa.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="538" height="718" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-2-3x4-19_crop.jpg" alt="" class="wp-image-420661" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-2-3x4-19_crop.jpg 538w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-2-3x4-19_crop-225x300.jpg 225w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-chart-2-3x4-19_crop-67x90.jpg 67w" sizes="auto, (max-width: 538px) 100vw, 538px" /></figure>



Monetary authorities also find themselves facing an increasingly delicate trade-off: raising rates to keep inflation in check will risk choking off credit for investment, depressing economic activity, and reducing incomes. Meanwhile, fiscal consolidation and the global slowdown weigh on domestic economic activity.



That means central banks should proceed with caution and raise interest rates gradually so as not to jeopardize the recovery. But policymakers must also not be complacent: countries where domestic demand pressures are acute, or inflation is very high may need to tighten faster or more decisively.



The same applies to countries where monetary policy credibility is weak, the currency is depreciating rapidly, or foreign exchange reserves are shrinking. While countries with exchange rates that are fixed or heavily managed have, so far, experienced lower inflation than those with more flexible regimes, their ability to control the pace of interest-rate increases is constrained by their currency arrangement.



There are some concerns that monetary policy could still be too accommodative, given that rate increases have not kept pace with inflation. Policy coordination can help. Fiscal consolidation has a role to play in countries where policy is too loose, as can a combination of rate increases and currency depreciation.



Given sub-Saharan Africa’s fragile recovery, combined with the fact that domestic demand pressures have not so far been an important driver of inflation, policymakers must proceed with caution in coming months while closely monitoring inflation.



—&nbsp;This blog, which draws on the October 2022 Regional Economic Outlook for Sub-Saharan Africa, reflects additional research contributions from Seung Mo Choi, Samson M’boueke, and Cleary Haines.



<a href="https://www.imf.org/en/Blogs/Articles/2022/10/20/africas-inflation-among-regions-most-urgent-challents?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"></a>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="450" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop-450x800.png" alt="" class="wp-image-420662" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop-450x800.png 450w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop-169x300.png 169w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop-51x90.png 51w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/afr-reo-table-44-01-63-45-43_crop.png 538w" sizes="auto, (max-width: 450px) 100vw, 450px" /></figure>

SAFRICA-ZIMBABWE-ECONOMY-TRADE

Africa’s Inflation Among Region’s Most Urgent Challenges

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="581" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-820x581.jpg" alt="" class="wp-image-419263" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-820x581.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-300x213.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-127x90.jpg 127w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-768x544.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-1536x1088.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/Karen-Keylock-2-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Karen Keylock, Nedbank, National Franchise Manager</figcaption></figure>



While Covid-19 put the brakes on the economy, the post-pandemic recovery has almost been stymied by the ongoing Russian war on Ukraine and the impending fears of a US recession, contributing negatively to economies around the world. Through the most challenging hurdles, however, the franchise sector in South Africa has remained steadfast in its goals to grow the economy and create jobs. This sector, which employs an estimated 350&nbsp;000, is a rock on which the economy is built.



Statistics from the Franchise Association of South Africa (FASA) estimate that the country’s franchise industry contributes around 15% (R721&nbsp;billion) to gross domestic product (GDP). This figure is&nbsp;the total market value of all finished goods and services produced in&nbsp;the country during a specific period.



Statistics South Africa (Stats SA) revealed that more than 1 000 small businesses shut down in the first six months of 2021. Likewise, the Small Business Institute noted that as many as 70% of small businesses in South Africa fail in the first five years.



Therefore, considering the sector’s strength during tough times, there is evidence that investing in a franchise is one way that entrepreneurs can remain sustainable, get assistance from their franchisor, and ride out any storm.



South Africa’s challenges are many, notwithstanding the uncertainty and loss of business brought about by load-shedding However, with the pandemic having eased amid fears of another variant being forecast by the Department of Health for the end of October, businesses are looking towards speeding up growth opportunities so that they can increase their financial strength.



This takes on greater significance if you consider that in the post-pandemic phase, Stats SA’s Quarterly Labour Force Survey – Q1 2021 showed that the official unemployment rate was 32,6% in the first quarter. FASA labelled unemployment the most significant concern among youth (15 to 34 age bracket). FASA took it a step further, working with partners to transform the industry by working with stakeholders to create franchise opportunities in and around townships in South Africa. Introducing the franchise business model and franchise manager occupational training in and around townships aims to empower and inspire youth to take up franchise opportunities. Such initiatives must be supported because they serve the dual purpose of helping to grow the economy and create jobs.



The government has called on the fuel industry to meet significant transformation objectives in the next five years to ensure essential compliance with the Fuel Liquid Charter and a sustainable enterprise. As a bank, we are proud to have played a vital role in helping drive transformation in the fuel sector in line with these transformation targets for the industry.



Like most other countries, South Africa’s fuel industry is of strategic importance to ensuring energy security and economic growth. According to the South African Petroleum Industry Association, the fuel subsector contributes about 8% to the country’s GDP, which is approximately R300 billion in production output. There are about 5 000 petrol stations across all brands, creating over 700 000 direct and indirect job opportunities that make up 5% of total formal employment in South Africa.&nbsp;Sustained business growth is crucial for expanding any economy, but this growth shouldn’t come at a high cost. By understanding business growth trends that focus on more than increasing the bottom lines, businesses can look ahead with confidence, mainly if backed by a money expert committed to doing good.



As a bank, we have identified four key trends dominating and accelerating business growth in South Africa. Without a doubt, the most important – and a legal imperative – is transformation.



This is an imperative of South Africa, given the country’s history, and one which Nedbank Commercial Banking maintains is advanced not only through ownership, but also through sufficient education, value chain inclusion, job creation and supporting minor and micro-enterprises.



Another critical imperative meant to stimulate growth is understanding that climate resilience speaks to what businesses are doing to contribute to sustaining the environment while ensuring the growth of the economy.



As a bank, we believe that sustainability is broader than climate resilience. While sustainability is essentially about preserving the environment and the responsible use of natural resources, it is also about the upliftment of society. Understanding that this should not negatively impact franchisors and franchisees, but rather help drive business growth positively.



Without a doubt, it has been seen that companies making their mark in the Fourth Industrial Revolution will be those that understand the drivers of value, such as data, artificial intelligence, machine learning, digitisation and e-commerce. Embracing digital tools must be done in a way that ensures that clients continue to enjoy a great experience and receive expert advice whenever they need it.



One superb example of this is Nedbank’s innovative app Avo, which has received plaudits for bringing consumers and businesses together; accurately matching consumers’ lifestyle needs to product and service offerings through powerful artificial intelligence; allowing safe and secure payments, all while providing bank-grade security. Avo has taken the power of selling into the homes of millions of citizens. Whether users need home services, to shop online for groceries, takeaways or great tech deals, or to search for the next family holiday, entertainment options or security solutions, Avo let’s them do it all! The new Avo B2B Marketplace, a digital marketplace for businesses to buy from or sell to other companies, will increase this footprint further.



Inevitably, a robust supply chain is essential to foster business growth. But your banker can help make rands and cents of the current challenges and help unlock opportunities for growth.



The franchise team at Nedbank Commercial Banking can help your business to align with these and other trends to realise growth. Talk to your business manager or contact us at&nbsp;<a href="mailto:%20business@nedbank.co.za" target="_blank" rel="noreferrer noopener">business@nedbank.co.za</a>&nbsp;for more information and assistance.

Karen-Keylock-2

Accelerating business growth in South Africa’s franchise sector

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="485" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/5K52FDSDWFNOJEMWHZY6GIWIVY.jpg" alt="" class="wp-image-420053" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/5K52FDSDWFNOJEMWHZY6GIWIVY.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/5K52FDSDWFNOJEMWHZY6GIWIVY-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/5K52FDSDWFNOJEMWHZY6GIWIVY-135x90.jpg 135w" sizes="auto, (max-width: 728px) 100vw, 728px" /><figcaption>The International Monetary Fund logo is seen at IMF headquarters in Washington, U.S., October 14, 2017. REUTERS/Yuri Gripas/File Photo</figcaption></figure>



The global economy continues to face steep challenges, shaped by the Russian invasion of Ukraine, a cost-of-living crisis caused by&nbsp;persistent and broadening&nbsp;inflation pressures, and the slowdown in China.



Our <a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDUsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL1B1YmxpY2F0aW9ucy9XRU8vSXNzdWVzLzIwMjIvMTAvMTEvd29ybGQtZWNvbm9taWMtb3V0bG9vay1vY3RvYmVyLTIwMjI_dXRtX21lZGl1bT1lbWFpbCZ1dG1fc291cmNlPWdvdmRlbGl2ZXJ5In0.xBtVeJmAGgXbJvjcd07iMyK-ZW9kKLLtwG7dJU8nSsQ/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">global growth forecast</a> for this year is unchanged at 3.2 percent, while our projection for next year is lowered to 2.7 percent—0.2 percentage points lower than the <a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDYsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL1B1YmxpY2F0aW9ucy9XRU8vSXNzdWVzLzIwMjIvMDcvMjYvd29ybGQtZWNvbm9taWMtb3V0bG9vay11cGRhdGUtanVseS0yMDIyP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.Eonvc3NvnjqBD2i9OMaUQ2_VrJ7J44Bjk4rLRBPrAIY/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">July forecast</a>. The 2023 slowdown will be broad-based, with countries accounting for about one-third of the global economy poised to contract this year or next. The three largest economies, the United States, China, and the euro area will continue to stall. Overall, this year’s shocks will re-open economic wounds that were only partially healed post-pandemic. In short, the worst is yet to come and, for many people, 2023 will feel like a recession.



In the United States, the tightening of monetary and financial conditions will slow growth to 1 percent next year. In China, we have lowered next year’s growth forecast to 4.4 percent due to a weakening property sector and continued lockdowns.



The slowdown is most pronounced in the euro area, where the energy crisis caused by the war will continue to take a heavy toll, reducing growth to 0.5 percent in 2023.



Almost everywhere, rapidly rising prices, especially of food and energy, are causing serious hardship for households, particularly for the poor.



Despite the economic slowdown, inflation pressures are proving broader and more persistent than anticipated. Global inflation is now expected to peak at 9.5 percent this year before decelerating to 4.1 percent by 2024. Inflation is also broadening well beyond food and energy. Global core inflation rose from an annualized monthly rate of 4.2 percent at end-2021 to 6.7 percent in July for the median country.



Downside risks to the outlook remain elevated, while policy trade-offs to address the cost-of-living crisis have become more challenging. Among the ones highlighted in our report:



<ul class="wp-block-list"><li>The risk of monetary, fiscal, or financial policy miscalibration has risen sharply amid high uncertainty and growing fragilities.</li><li>Global financial conditions could deteriorate, and the dollar strengthen further, should turmoil in financial markets erupt, pushing investors towards safe assets. This would add significantly to inflation pressures and financial fragilities in the rest of the world, especially emerging markets and developing economies.</li><li>Inflation could, yet again, prove more persistent, especially if labor markets remain extremely tight.</li><li>Finally, the war in Ukraine is still raging and further escalation can exacerbate the energy crisis.</li></ul>



Our <a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDksInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL1B1YmxpY2F0aW9ucy9XRU8vSXNzdWVzLzIwMjIvMTAvMTEvd29ybGQtZWNvbm9taWMtb3V0bG9vay1vY3RvYmVyLTIwMjI_dXRtX21lZGl1bT1lbWFpbCZ1dG1fc291cmNlPWdvdmRlbGl2ZXJ5In0.U2NUrJS1hv1hDIDEYoHFP1koHY0zsTOZBT_f-Egbl-k/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">latest outlook</a> also assesses the risks around our baseline projections. We estimate that there is about a one in four probability that global growth next year could fall below the historically low level of 2 percent. If many of the risks materialize, global growth would decline to 1.1 percent with quasi stagnant income-per-capita in 2023. According to our calculations, the likelihood of such an adverse outcome, or worse, is 10 percent to 15 percent.



Cost-of-living crisis



Increasing price pressures remain the most immediate threat to current and future prosperity by squeezing real incomes and undermining macroeconomic stability. Central banks are now laser-focused on restoring price stability, and the pace of tightening has accelerated sharply.



There are risks of both under- and over-tightening. Under-tightening would further entrench inflation, erode the credibility of central banks, and de-anchor inflation expectations. As history teaches us, this would only increase the eventual cost of bringing inflation under control.



Over-tightening risks pushing the global economy into an unnecessarily severe recession. Financial markets may also struggle with overly rapid tightening. Yet, the costs of these policy mistakes are not symmetric. The hard-won credibility of central banks could be undermined if they misjudge yet again the stubborn persistence of inflation. This would prove much more detrimental to future macroeconomic stability. Where necessary, financial policy should ensure that markets remain stable. However, central banks need to keep a steady hand with monetary policy firmly focused on taming inflation.



Formulating the appropriate fiscal response to the cost-of-living crisis has become a serious challenge. Let me mention a few key principles.



First, fiscal policy should not work at cross-purpose with monetary authorities’ efforts to bring down inflation. Doing so will only prolong inflation and could cause serious financial instability, as recent events illustrated.



Second, the energy crisis, especially in Europe, is not a transitory shock. The geopolitical realignment of energy supplies in the wake of the war is broad and permanent. Winter 2022 will be challenging, but winter 2023 will likely be worse. Price signals will be essential to curb energy demand and stimulate supply. Price controls, untargeted subsidies, or export bans are fiscally costly and lead to excess demand, undersupply, misallocation, and rationing. They rarely work. Fiscal policy should instead aim to protect the most vulnerable through targeted and temporary transfers.



Third, fiscal policy can help economies adapt to a more volatile environment by investing in productive capacity: human capital, digitalization, green energy, and supply chain diversification. Expanding these can make economies more resilient to future crises. Unfortunately, these important principles are not always guiding policy right now.



Effects of a strong dollar



For many emerging markets, the strength of the dollar is a major challenge. The dollar is now at its strongest since the early 2000s, although the appreciation is most pronounced against currencies of advanced economies. So far, the rise appears mostly driven by fundamental forces such as tightening US monetary policy and the energy crisis.



The appropriate response in most emerging and developing countries is to calibrate monetary policy to maintain price stability, while letting exchange rates adjust, conserving valuable foreign exchange reserves for when financial conditions really worsen.



As the global economy is headed for stormy waters, now is the time for emerging market policymakers to batten down the hatches.



Eligible countries with sound policies should urgently consider improving their liquidity buffers, including by requesting access to precautionary instruments from the Fund. Countries should also aim to minimize the impact of future financial turmoil through a combination of preemptive macroprudential and capital flow measures, where appropriate, in line with our&nbsp;<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMTIsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL1RvcGljcy9JUEYtSW50ZWdyYXRlZC1Qb2xpY3ktRnJhbWV3b3JrP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.lPYzk9igGxQVNoyO071v9ldHmg5V-zWZtj8ILK0xwAY/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">Integrated Policy Framework</a>.



Too many low-income countries are in or near debt distress. Progress toward orderly debt restructurings through the&nbsp;<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMTMsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL0Jsb2dzL0FydGljbGVzLzIwMjEvMTIvMDIvYmxvZzEyMDIyMXRoZS1nMjAtY29tbW9uLWZyYW1ld29yay1mb3ItZGVidC10cmVhdG1lbnRzLW11c3QtYmUtc3RlcHBlZC11cD91dG1fbWVkaXVtPWVtYWlsJnV0bV9zb3VyY2U9Z292ZGVsaXZlcnkifQ.GGvRq8rucqnSFuEvFBvhXMgyI-wh78SKlLbyhfB_agU/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">Group of Twenty’s Common Framework</a>&nbsp;for the most affected is urgently needed to avert a wave of sovereign debt crisis. Time may soon run out.



The energy and food crises, coupled with extreme summer temperatures, are stark reminders of what an uncontrolled climate transition would look like. Progress on climate policies, as well as on debt resolution and other targeted multilateral issues, will prove that a focused multilateralism can, indeed, achieve progress for all and succeed in overcoming&nbsp;<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMTQsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjEwMTEuNjQ5NTIyMDEiLCJ1cmwiOiJodHRwczovL3d3dy5pbWYub3JnL2VuL0Jsb2dzL0FydGljbGVzLzIwMjIvMDUvMjIvYmxvZy13aHktd2UtbXVzdC1yZXNpc3QtZ2VvZWNvbm9taWMtZnJhZ21lbnRhdGlvbj91dG1fbWVkaXVtPWVtYWlsJnV0bV9zb3VyY2U9Z292ZGVsaXZlcnkifQ.3p002h7bluo72Fpw2feMxw94S2WhDsL0_vZZTtZxSlA/s/1121717145/br/145541864671-l" target="_blank" rel="noreferrer noopener">geoeconomic fragmentation</a>&nbsp;pressures.

FILE PHOTO: The International Monetary Fund logo is seen at IMF headquarters in Washington

Policymakers Need Steady Hand as Storm Clouds Gather Over Global Economy

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="816" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-816x800.jpg" alt="" class="wp-image-420082" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-816x800.jpg 816w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-300x294.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-92x90.jpg 92w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-768x753.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-1536x1506.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/09/William-Asiko-1.2-scaled.jpg 2048w" sizes="auto, (max-width: 816px) 100vw, 816px" /><figcaption>William Asiko, Vice President of the Africa Region Office, The Rockefeller Foundation</figcaption></figure>



The devastating floods in Pakistan have affected 33 million people, many of whom are among the country’s most vulnerable. Closer to home, millions of people in the greater Horn of Africa face hunger and starvation as the region faces one of its worst droughts in decades.



At the same time, the war in Ukraine has highlighted the global north&#8217;s continued dependence on fossil fuels and their vulnerability to energy insecurity. Energy prices have risen steeply since early 2022, exposing &#8216;Europe&#8217;s economies strategic and ethical dilemma.



While in a meaningful way, climate change requires a collaborative global agenda, Africa is not currently at the table, and the positions being taken in Africa are largely reactive. We must change the narrative from Africa being victims of climate change requiring help, to Africa, a champion of climate action and mitigation.



As citizens of Africa, we have been conditioned to believe we are helpless in a global world. It is time to take back control, write our narrative and be the masters of our destiny. Coupled with having the youngest and fastest growing population on earth, we have enormous untapped opportunities to place us firmly at the table of the climate debate.



<h2 class="wp-block-heading" id="h-africa-s-twin-challenges">Africa&#8217;s Twin Challenges</h2>



Africa contributes less than 4% of global greenhouse gas (GHG) emissions. Despite being a minor contributor to global emissions, the continent is among the most vulnerable to its negative effects. Our low emissions are often positioned on the worldwide stage in a positive light; however, it has come at a developmental cost – Africa&#8217;s twin challenges.



Firstly, Africa did not become a low emitter by choice, or knowingly embark on an intentional journey towards climate action. Our low emissions are symptomatic of significant underinvestment in power generation and infrastructure over the years.



Secondly, due to this low investment, there is a severe lack of access to reliable electricity on the continent. Earlier this year, a report released by the International Energy Agency (IEA) said 600 million people living in Africa, or 43% of the continent&#8217;s population, lack access to reliable electricity.



Energy, in general, underpins economic growth, and reliable access to electricity is crucial to Africa&#8217;s development. No country in the world has eliminated poverty without first eliminating energy poverty.&nbsp; Africa&#8217;s rapidly growing population will require a reliable energy supply to power industrial production, electrify households and expand the use of transport to drive economic activity. Therefore, Africa&#8217;s position on the global stage as it relates to climate action, must also address the twin challenges of a lack of electricity and investment in its generation.



<h2 class="wp-block-heading">The African Opportunity</h2>



I am convinced that Africa can develop a narrative that attracts people to want to engage us on climate action on a win-win basis. With this outcome in mind, our narrative should include three elements. Firstly, we have an enormous opportunity to develop carbon credit programs on the continent, many success stories can be scaled, and new ones developed. This is largely within our control through policy commitments and appropriate incentives. &nbsp;Developers are looking for bankable opportunities but require policymakers to create an environment which attracts investment into this space.



Several organizations have launched an initiative to establish a concrete action plan to stimulate the production of carbon credits across the continent at scale. By COP 27 in Sharm El-Sheikh, Egypt this November, we hope to see an overall ambition for voluntary carbon markets in Africa established, lighthouse projects identified, and a concrete roadmap for the years ahead developed. If successful, it will radically reduce the time it takes to generate credits, increase the underlying quality of African carbon credits enabling them to command a price premium, and significantly increase the volume of credits.



Secondly, we have limitless untapped renewable energy sources. We require a policy regime that encourages the private sector, both foreign and domestic, to invest in demonstrably profitable renewable energy projects. The IEA has noted that renewables, including solar, wind, hydropower, and geothermal, could account for over 80% of Africa&#8217;s new power generation capacity by 2030. While our continent is home to 60% of the best solar resources globally, we only have 1% of the world&#8217;s installed solar energy capacity. In the medium to long-term, Africa has an immense opportunity to produce and export green energy to sunshine-poor northern climates.



The Rockefeller Foundation, IKEA Foundation, and Bezos Earth Fund joined forces to launch the Global Energy Alliance for People and Planet (GEAPP) at COP26 and is already working to deliver transformational programs in partnership with countries across Africa. With national governments, GEAPP leverages its convening power, distinct and rare philanthropic capital, expertise, and a network of 18 Alliance partners to design, finance, and execute renewable energy projects.



Finally, our narrative needs to take account of our abundance of labour that is willing and able to work on these projects. 60% of our continent&#8217;s population is under the age of 25, with a median age of 19 years. We are also facing rapid urbanization, with Africa&#8217;s urban population expected to nearly triple to over 1.3 billion people by 2050, who will need access to goods, services, and job opportunities.



<h2 class="wp-block-heading">Time for Action</h2>



There is a vital role for both the public and private sectors to play on this journey. The public sector controls policy and the legislative agenda – a considerable part of what is required to get this done. They also maintain relationships with some of the world&#8217;s biggest most prominent development finance institutions. Ultimately, their responsibility is to create a conducive environment for large-scale investments. This could include tax breaks for those investing in renewables, permitting the repatriation of profits for foreign investors, and coming to market with bankable projects with the necessary approvals and government support.



The private sector brings with it commercial capital, expertise, and innovation. Therefore, the two sectors need to work in mutually beneficial harmony. They need to come together and develop a harmonious agenda so that the private sector invests at scale to benefit our people.&nbsp; Philanthropy can be a great convener and facilitator of this.



Africa&#8217;s starting point on this journey is developing a new, bold narrative. The Rockefeller Foundation could play an important role as a convenor that brings stakeholders together to discuss the issues and develop a coherent narrative that accurately depicts Africa as it exists right now. We could also share this with the relevant institutions to secure important buy-ins to make this a successful endeavour for the people of Africa



A common, realistic position adopted by African states that paints us in a positive light, not as victims, but as key role players in addressing climate change, will help shift dynamics and ensure that we take our rightful seat at the table in global discussions. We want the world to see Africa as the best investment destination for green energy projects and carbon credit programs with our limited natural resources and abundant labour. It is up to us Africans to realize this potential and become champions in the climate debate.

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