Foresight Africa Viewpoint: Small-scale, high-impact policies for fighting climate change in 2017

Editor's note:

Below is a viewpoint from Chapter 5 of the Foresight Africa 2017 report, which explores six overarching themes that provide opportunities for Africa to overcome its obstacles and spur inclusive growth. Read the full chapter on confronting climate change here.

foresightafrica_brandingbadgeThe proliferation of small-scale, high-impact climate actions can drive a dramatic shift in Africa’s response to climate change, provided policymakers set up the right incentives. And in 2017 the continent will show it is on its way.

The rapid growth of African urban centers like Nairobi, Lagos, or Abidjan opens an opportunity for the development of distributed solar generation, thereby accelerating access to clean electricity as experienced by Mexico and other large cities in Latin America. In rural areas too, electricity generation from mini-grids is picking up as distribution to rural communities from the national grid is generally not financially attractive for power utilities. The Economist[1] indicated recently that the number of households receiving electricity through off-grid solar PV could double in 2017.

The number of households receiving electricity through off-grid solar PV could double in 2017.

Similar developments are happening in agroforestry. According to the Intergovernmental Panel on Climate Change, agriculture, forestry, and other land use accounts for 21 percent of greenhouse gas emissions, and its exposure to climate change represents a significant risk to food security, especially in Africa. Solutions are shaping up through integrated approaches that combine agriculture and conservation of forests with a reliance on small holder farmers. Political will is there: Côte d’Ivoire, for instance, is committed to agriculture with zero deforestation after its forests have been depleted from 12 million to 2 million hectares in the last 50 years.

To turn these actions into a green revolution, Africa needs to leverage the growing ecosystem of local financial institutions. Commercial bank networks are expanding rapidly (15 percent per annum for retail banking according to the initiative Making Finance Work for Africa). So are specialized investment funds backed by reputed limited partners, like Althelia in Madagascar. Regulators and banking associations have a key role to play in this process. First, they can define standards for small-scale green investments and treat them favorably. Second, they should advocate for fiscal incentives to aggregators and financial vehicles so that cash flows resulting from these activities can be pooled efficiently to entice institutional investors. Finally, they should promote the adoption of best practices to attract international climate finance flows. The establishment of a green credit policy in China in 2007 and the sustainable banking principles adopted in Nigeria in 2012 are examples African regulators can draw upon.

Such measures have the potential to drive a paradigm shift in climate action in Africa.

[1] 1 “Africa Unplugged: Small-scale Solar Power Is Surging Ahead.” The Economist. The Economist Newspaper, 29 Oct. 2016.