Africa’s fateful choice

With Africa reeling from multiple crises this year, the region’s governments will have to direct their policy responses not just toward short-term recovery, but also toward long-term sustainability and resilience. Africa simply cannot afford any more investments in the dirty, inefficient, fragile economy of the past.

CAPE TOWN – The International Monetary Fund predicts that COVID-19 could set Sub-Saharan Africa back by a decade in per capita GDP terms, which means that staging a strong recovery from the crisis will be critical. But African leaders must choose wisely among the available policy options. If investments made today merely set the stage for future environmental and economic crises, the region will find itself back where it started.

Africa’s energy sector is at the center of this strategic calculus. Clean, modern energy could fuel the region’s economic growth and accelerate the expansion of electricity into rural areas, because renewables have already become cost-competitive with fossil fuels. Over the past decade, the cost of solar photovoltaics and onshore wind fell by 81% and 46%, respectively. In the African context, energy from new renewable facilities is already less expensive than even energy from coal. And shifting to renewables would allow African countries that are currently dependent on imported fossil fuels to achieve greater energy independence.

Renewables are already the fastest-growing source of jobs in several African countries. A concentrated solar facility recently built in Morocco created more than 1,600 jobs per year during construction, and is now expected to maintain some 200 jobs during its first 25 years of operation – not to mention the hundreds of additional jobs that will be supported indirectly.

Off-grid forms of renewable energy also can bolster public health. In Kenya, where only 19% of health facilities have reliable electricity, rural clinics are improving their capacity by installing solar panels. Investing more in such practical solutions will pay off both in the midst of the COVID-19 crisis and for decades to come.

By contrast, poorly directed energy investments could further destabilize the region’s economies and exacerbate public-health problems. Globally, 42% of coal-fired power plants are losing money, and this year’s oil-price collapse has underscored the danger of relying on fossil-fuel revenues to drive economic growth. Across Sub-Saharan Africa, oil-exporting countries could lose up to $65 billion in revenues this year.

Fossil-fuel use also causes health problems, not least through air pollution, which has increased by 36% in Africa since 1990. According to 2013 study, air pollution killed an estimated 250,000 people on the continent in that year alone. And more recent research suggests that poor air quality leaves people more susceptible to respiratory infections such as COVID-19.

Public, environmental, and economic health are thus intersecting issues, which means that African countries will have to build greater resilience in all sectors – not just energy. In most cases, this can be done by working with nature and investing in green infrastructure. For example, restoring degraded landscapes can support ecosystems, improve rural livelihoods, and strengthen food security, which has become an urgent concern now that African farmers are bearing the triple burden of COVID-19, locust outbreaks, and climate change.

Investments to improve the health of rural landscapes would lay the foundation for addressing all of these converging risks. By some estimates, every $1 invested in land restoration can provide up to $30 in benefits. Globally, developing sustainable food and land-use systems represent a business opportunity worth up to $2.3 trillion, and could create 70 million jobs by 2030.

Recognizing this potential, farmers in Niger have restored around five million hectares of land since the early 1990s. But just imagine what investing in green solutions at a much larger scale could do for Africa, where so many young people in rural areas struggle to find opportunities.

To be sure, green-recovery strategies require upfront investment, which raises the question of financing large down payments and capital outlays. While more than $10 trillion is being spent to soften the blow from COVID-19, the bulk of it has been confined to the world’s major economies. Yet when it comes to achieving a full and lasting recovery, all our fates are intertwined. Advanced economies must recognize that it is in their own interest to show solidarity with Africa.

While the G20 has agreed to suspend debt repayments for developing countries until the end of the year, that will not be enough. African countries will need at least two years of breathing room just to address the lasting effects of the pandemic. Multilateral organizations should be exploring additional forms of support, such as a social protection fund for the developing world.

Meanwhile, abolishing fossil-fuel subsidies – the source of more than $400 billion in waste each year – would allow national governments in Africa and elsewhere to free up public resources for fighting the pandemic and investing in a green recovery. And with oil prices so low, the usual political risks of doing so are minimal. Seizing the moment, Nigeria recently announced that it will end its expensive gasoline subsidy; and a number of other fossil-fuel-producing countries are seeking to diversify their economies away from dependence on hydrocarbons.

As a complementary policy, carbon-pricing programs could generate even more revenues. Some 79 countries or subnational governments already have, or will soon have, carbon-pricing systems. Covering over 20% of global emissions, these schemes generated $45 billion in revenues in 2019 alone. A carbon price need not be regressive. In South Africa and a growing number of other countries, the system is being designed explicitly to benefit the poor.

Before the pandemic struck, 2020 was supposed to be a year when the international community took concerted action to reduce greenhouse-gas emissions and protect biodiversity. Now, these issues have been shown to be more important than ever. Under the 2015 Paris climate accord, all signatory governments are committed to strengthening their emissions-reduction plans every five years, and of the 105 countries that have publicly done so for the 2020 deadline, 44 are in Africa. That is a promising sign. A growing body of research shows that climate-conscious investments and infrastructure also improve lives and livelihoods.

For example, the International Energy Agency recently released a COVID-19 Sustainable Recovery Plan that could boost annual global economic growth by 1.1%, while saving or creating nine million jobs per year. The IEA finds that $1 million invested in energy efficiency, clean urban transportation, or solar PV can create more than twice as many jobs as investing $1 million in coal or gas power. And research from the Global Commission on the Economy and Climate shows that bold green investments made today could deliver 65 million new jobs by 2030, with returns accruing immediately.

Clearly, any viable post-pandemic recovery plan must also be a climate plan. But, to translate such plans into action, we will need renewed cooperation and a shared sense of urgency among all countries.

Africa has arrived at a critical juncture. How the region’s countries respond to today’s crisis will determine whether they can withstand the next one. Rather than locking in the dirty, inefficient economies of the past, governments must start devising plans to “build back better.” We in Africa can secure a future in which our children breathe freely, our hospitals have reliable clean electricity, our farmers prosper, and our economies compete globally. But much will depend on the decisions we make now and in the coming months.

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First published by Project Syndicate