In order to create a green economy in Africa, governments must first reduce widespread energy subsidies for fossil fuels. Current levels of green energy subsidies are far below what is required to support this transition. ESG is a component of the green economy agenda, and it is impossible to discuss the green economy without also discussing the environmental and social dimensions and contributions of the ESG phenomenon across the continent. ESG helps to achieve a net zero environmental impact on the path to establishing a green economy in Africa. Previously thought to be a first-world phenomenon, ESG is now undeniably a worldwide phenomenon.
The role of finance in Africa is important to the major economic transformation required to shift away from fossil fuels and reach a net zero so the global economy can be managed without affecting the environment. As a result, one of the most important outcomes of COP26 was the $1.5 billion promise made by over 450 financial institutions across 45 countries to keep global warming to 1.5C. The president of the African Development Bank, Akinwumi Adesina, committed $6.5 billion toward funding the Great Green Wall by 2025. The Great Green Wall initiative involves a wall of trees that would extend across the Sahel as part of the efforts to combat desertification.
The private sector in Africa is also making significant efforts to secure additional funding. African enterprises have reportedly raised $2.5 billion in capital this year, the most they have in a single year, despite a year in which international investment in Africa fell by 12%. The difficulties surrounding the African continent’s green economy and ESG are still very much in their infancy, with a variety of perspectives that have yet to be explored.
We, as ALN, are aware of the need to discuss the role of Africa in global decarbonisation, the impact of ESG on the funding shortfalls in African infrastructure, and the trends and challenges for a green economy on the continent. In the near future, we will explore how, whilst navigating the green transition in non-green industries, the continent can commercialise a green agenda.
It is now time for all to stop talking the talk and start walking the walk.
ALN Academy Editors: Angelica Gutierrez, Zephyr Waithira