THE GREAT AFRICAN DISCONNECT OF 2013

GREEN VOICES SILENT AT AFRICA MEETINGS

“We know what to do: why don’t we do it?” – Wangari Maathai, 1940-2011, Nobel Peace Prize winner 2004

At the beginning of this year when I began to notice that most Africa summits and conferences being held around the world did not include green growth or the green economy in their agendas I started a campaign to put the green economy into Africa's growth story.  The more I looked into this the more concerned I became that another year of high level meetings would come and go without a single mention of the green economy in Africa. The blog post, Call for Discussion on the Green Economy in Africa, was a direct appeal to all those involved in events that will have a considerable impact on Africa's future. As next year's summits are now being announced, the green economy is still absent despite the fact that African leaders are pushing hard for green investment. The 'brown' economy, or business-as-usual,  is expanding fast in Africa and its familiar hidden social, environmental and long-term economic costs are rising rapidly. This is the reason for this post.

Teach your son how to use a gun
The word “great” has been used a lot since the 2008 “great crash” of the global economy. There is the “great recession”, the “great rebalancing”, the “great convergence”, the “great rotation”, the "great transition" etc. all requiring a “great rethinking” of just about everything we do. All of this shows us that we are facing challenges of “great urgency”. 

There is also the “great disconnect” between our knowing how to meet the challenges of the 21^st century and not getting on with the job with the greatest speed.

As world leaders struggle to keep the current system going, stumbling from one crisis to the next, that same system is destroying the planet on multiple levels with consequences no one can imagine. The whole fantastic system, which has created great wealth and improved life for billions, is unfortunately built on diminishing returns. Trying to fixing our system is a Sysephusian task, like pushing a rock uphill knowing it will eventually roll back down and you have to start all over again.

In his book “10 billion” Stephen Emmott, the eminent Cambridge scientist, assesses the likely state of the planet when there are 10 billion people living in the current system. He sums up the situation in three words: “We are fucked”. But Professor Emmott ends his book with the even more alarming words of a young, rational and very bright scientist working in his lab. Asked if there was just one thing he had to do about the situation we face, what would it be?

His reply?

“Teach my son how to use a gun”

How are we to avoid such a reality?

So far, the crisis has not been wasted

The good news is that since the “great crash” in October 2008 a vast amount of work has been carried out and a vast amount of knowledge gained on a new model for inclusive, sustainable economic development using the green economy as an essential tool in the transition. Partnerships between global institutions such as the United Nations, World Bank, OECD and the Global Green Growth Institute are creating the knowledge platforms and organisational frameworks on which the green economy can take shape. The emerging economies, led by China, are pushing ahead with green agendas. Countless other global and local, public and private initiatives are building the green foundations. So far, in many areas the crisis has not been wasted.

Most informed people on the planet, in one way or another, would agree with Professor Emmott, though they might express it in different ways. Governments know the green economy is the only way forward. Five years ago the G20 worked together on a Global Green New Deal to “build an inclusive, green, and sustainable recovery.” At the Saint Petersburg Summit in September 2013 the G20 agreed that “Measures have to simultaneously ensure a transition to a ‘green economy’ and sustainable development with quality jobs.”

Now is the time to accelerate the process. The technologies for the transition are well advanced, the skills are there, the private sector is leading the way and green success stories are everywhere. Financial institutions are creating new instruments. Investors are sitting on trillions of dollars saying “where can I put my money?” Ten minutes googling “Green Economy” should be enough to convince him or her that this the growth story of the 21^st century.

So if governments, businesses and most individuals agree that something urgently needs to be done, and that some sort of 'green' economy is the only practical route towards sustainability, why isn't everyone involved? Why isn't everyone talking about it? Why is there this disconnect? Or, as the late Wangari Maathai, one of Africa’s great green explorers, used to say, “We know what to do: why don’t we do it?”

Two stories of Africa - brown and green

Perhaps the greatest disconnect is found in Africa’s growth story and how it is being told. Some are telling the 21^st century green growth story where sustainability is the central theme, and some are telling the 20^th century brown growth story where the issue is given very little space or none at all. The story that gets most most peoples' attention is the one that will decide Africa's future and the future of the planet.

Like Dr Maathai, many leading Africans over the past twenty years have been telling the green story by promoting sustainable growth through green development whose aim is to balance economic, environmental and social interests. In the five years since the great crash Africans have been telling the world that the green economy is a major pathway towards inclusive, sustainable and resilient African economies. A new chapter in Africa's green growth story started with the leaders' Consensus Statement to Rio+20 in June 2012 where they make it clear that green growth is critical and a green economy is their only option.

The 20^th century brown growth story on the other hand, the one that says nothing about hidden costs, is the one that is still being told by many of Africa's traditional western partners as well as by China and other emerging market economies pouring into Africa. It is also being told in most of this years’ record number of Africa summits and conferences.This year will see the greatest number of Afro-optimists gathering in venues around the world to talk about Africa’s great prospects. Yet, with few exceptions, the ‘green’ economy is absent from agendas. Many summits and conferences do not even mention sustainability.

This is the great African disconnect of 2013, and as next year’s events are being announced many look like they will be telling the same story. The disconnect will continue.

As an example, the Financial Times’ 5th  “Private Equity in Africa” Summit, taking place in London on October 16, is one of the most important Africa summits in this summit-filled this year, yet there is not a single mention of the green economy or even sustainability in the full-day agenda.

For the first time in a long and complex relationship with the private sector, which was mostly to Africa's disadvantage, Africans are finally opening their doors. This move is crucial, not only for Africa but for the global economy. Unless sustainability, and more specifically the green economy, is built into discussions and followed through with green growth plans any return on private equity investment in Africa risks being short-lived.

There are many hidden costs in the world’s most challenging continent that must be understood and factored in. Some are mounting fast. As the FT's Private Equity in Africa takes place, the UN is talking about a “conveyor belt of instability" from north-east Africa across to Mauritania in the west. Veteran Africa reporter Patrick Smith is warning that security crises threaten Africa’s economic success. The waves of Africans arriving on Europe's southern shores show that there are still many hopeless people in the Hopeful Continent. And as Africa analyst Richard Walker recently wrote, “Africa has crashed before and can crash again...and when it comes, if it comes, it will be very, very big.”

For the lack of discussion on sustainability and the green economy at the FT’s Private Equity summit I sent a Letter to the Editor on October 3 with the subject Private Equity, Africa and the Green Economy. This letter was not published. (for a list of letters published in the FT click here.)

Letter to the FT Editor, October 3.

Sir,

This letter is not in connection with any FT news item or related letter, but with an FT LIVE event recently advertised in these pages, “Private Equity in Africa Summit”, to be held in London on October 16. This is arguably one of the most important Africa events in this event-filled year, for as the website says, "against the backdrop of a slowing global economy and increasingly constrained development spending, the private sector is now recognised to lie at the heart of driving Africa's economic transformation." With the continent in greater demand than ever before, the FT’s 5^th Private Equity in Africa Summit is an historic moment for the private sector.

From the arrival of the European and Arab slavers 600 years ago up until the end of the colonial era, Africa did not have many fair deals with “the private sector”. At independence most private (colonial) assets were sequestered by the state and for forty years private enterprise was mistrusted and discouraged throughout most of the continent. Only in the past decade have Africans begun to have dealings again with private investors. The FT's forthcoming Summit is evidence of how far things have come.

While state-led investment in Africa has its serious shortcomings, Africa’s challenge with new private investors is to ensure that there is no return to business-as-usual where elite Africans and their foreign partners reap all the benefits while those marginalised grow in numbers and the environment is left in ruins. Unfortunately there is already evidence of this happening again all over Africa.

For the past five years African leaders have been calling for responsible partners to create growth which is inclusive, protects the environment, minimises resources and runs on low carbon fuels. They have made it clear that the green economy is the only viable path to achieve this. They have made it clear that the potential for green growth in Africa’s vast underdeveloped human, ecological and mineral resources is enormous. Ten minutes googling "Africa Green Economy" will take you into Africa’s green growth story which is clearly the story for responsible private investment.

What is amazing in this record year of Africa summits and conferences worldwide is that, with few exceptions, the green economy is totally absent. The FT's Summit comes nowhere near it. In the same way the Economist’s Africa Summit in February “Africa Unchained: the Next Generation”, while very inspiring did not touch on the green economy.

As next year will undoubtedly focus even more on Africa and even more events will be held, could there please be more discussion on Africa and the Green Economy. If this is “Africa’s Moment” this is the moment to discuss green investment in Africa in ways that could help rebalance the global economy from "Brown to Green".

Over the past five years the FT and its sister newspaper, The Economist, have arguably done more than any other (private sector) publications to explain how the green economy in Africa might work. Those planning next year’s events have an historic opportunity to put the green economy into Africa's remarkable growth story.

End of Letter

Next year's Africa summits
This year's Africa summits, conferences and meetings are demonstrating the great progress and great inroads being made on what was until recently known as “the forgotten continent”. But participants are not yet discussing the green economy as the one tool African leaders know is their only real hope for fulfilling their great potential, as well as for coping with the mounting challenges of the 21^st century. Landscapes degrading, resources depleting, biodiversity being lost at an alarming rate, climate changing, populations rising, youth unemployment in some places out of control. It is clear that only a green economy will work in Africa, one that accounts for the hidden costs of doing business on this fragile and often hostile continent.

As the planners, sponsors and organisers of next year’s Africa summits and conferences consider their agendas, this is the time to start telling Africa's green growth story. If Africa can become a green frontier and lead the world in green growth it might even prove Stephen Emmott wrong.

Last word
If anyone reading this is involved or knows anyone who is involved in any Africa meetings, this year or next, and is convinced of their importance for telling Africa's green growth story, please send them an email or forward the link. 

.     

TIME FOR AFRICANS TO MAKE GREEN GROWTH PLANS

The following is another version of a previous post, ‘Africa’s coming crash and how the green economy can prevent it’ (link). It is prompted by the currency crisis in the emerging economies which is likely to have a negative impact on Africa. It is based on a letter sent to the Financial Times on August 27 which was not published. (For a list of published letters on Africa and the Green Economy click here.)

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As the 21^st century progresses and the global economy lurches from one crisis to the next, one thing is clear: the time between crises is getting shorter. No sooner do we hear that America’s recovery is ‘on more solid ground’ and Europe is ‘turning a corner’ than a new crisis erupts in the emerging market economies. The new urgency is a currency crisis in many countries including India, Indonesia, Turkey, South Africa and Brazil. A resulting slow-down in these increasingly important high growth economies will stifle growth globally and could yet derail the US/European recoveries. (China, whose currency is not as vulnerable as other emerging economies, has its ‘debt dragon’ which is another crisis waiting to happen.) 

In July the Economist and its sister newspaper the Financial Times began reporting, sometimes on a daily basis, the new crisis. Although there are many underlying reasons the currency crisis was sparked off by news of the US Federal Reserve Bank’s announcement in May that it may begin reducing, or ‘tapering’, its purchase of government bonds, i.e. its third quantitive easing programme, nicknamed QE3. This extraordinary monetary measure to support the US recovery has effectively been pumping $85 billion a month into the global economy since early 2012, on top of the trillions of dollars' worth of other US stimulus packages since the beginning of the great crash five years ago.

With historically low interest rates in the US much of the monthly $85 billion has been borrowed by speculators who invested in the emerging economies’ currencies and stock markets where returns were much higher. The Fed’s plan to taper the stimulus and the expected effect on US rates has caused vast quantities of this ‘hot money’ to exit the emerging economies back to the US. David Pilling, writing in the FT on 21 August, said ‘the prospect of a gradual withdrawal of stimulus by the US Federal Reserve and a rise in American interest rates...has produced a giant sucking sound as risk capital retreats [from emerging markets]’.

The central banks of the effected countries have managed to patch things up but much more needs to be done to create more resilient and sustainable economies in the developing world. Throughout the boom years of the past decade policy makers in these countries, like those in the advanced economies, were content to rest on their laurels (or, as some say, were reluctant to turn the music off while everyone was dancing) and failed to enact sufficient reforms to cope with the realities of a rapidly changing and increasingly volatile world.

Meanwhile, although Africa was hailed earlier this year as the Hopeful Continent and new global growth engine, most notably in the FT/Economist ‘Africa Rising’ campaign, nothing was being said about how the continent might be affected by the new crisis. This omission was striking particularly as Africa has become increasingly reliant on its new ‘south-south’ partners in the emerging economies. For this lack of discussion, I wrote a letter to the FT on August 27. The following letter was not published:

Sir,

As concerns mount for the global economy, (‘Call for aggressive action over emerging markets crisis’ – Aug 25), one big question needs to be asked: What about Rising Africa? The world’s most hopeful continent is still the most vulnerable on many fronts, especially another economic crisis.

At the start of the FT/Economist ‘Africa Rising’ campaign earlier this year, Africa’s uncertainty was summed up in the FT by Sebastian Mallaby on Jan 1: ‘Africa is hooked on growth’, he wrote, with the warning, ‘but there is no guarantee of future progress’. Six months later Barack Obama on his June tour of Africa also summed up the concerns. ‘Africa is rising’, he said, ‘but on a fragile foundation’. In ‘IMF outlook: what happened to Africa?’ (beyondbrics July 9) we were reminded that, ‘despite all the Africa rising headlines, the region’s rapid growth will not be without some bumps along the way.’ How big the bumps will be is critical.

Perhaps the gravest warning of the bumps ahead comes from Richard Walker, one of the most bullish of Africa analysts who contributed to The Fastest Billion – the story behind Africa’s economic revolution published last year. Writing in this June’s edition of Africa Business magazine Mr Walker says, ‘Africa is heading for a crash, it has happened before and it can happen again, and when it happens – if it happens – it will be very, very big.’ But he is quick to add that it can be avoided if Africa’s policy makers and business leaders ‘manage the moment, see the threats that are on the horizon, and act on them’.

Mr Walker identifies three major ‘danger points’: reliance on commodity exports, a huge infrastructure deficit and China dependency. Although ‘this time is different’ in Africa, when it comes to threats on the horizon, today’s are no different to those in previous booms except that the dependency was not on China but on the West.

But what is different this time is that African leaders see the threats on the horizon and are trying to act on them. Twenty years ago, standing in the wreckage of the post-colonial development model, Africans launched new green development strategies to rebuild their ravaged continent. In the past 5 years leading Africans including late Ethiopian prime minister Meles Zenawi, former UN secretary-general Kofi Anan and African Development Bank president Donald Kaberuka, have been calling for green growth as critical to Africa's future. At Rio+20 last June African leaders called on the international community to work on a ‘green investment strategy to facilitate Africa’s transition to the green economy’.

But so far, the international decision makers are not listening. Perhaps more worrying is that most of this year’s record number of major conferences on Africa, including the Economist’s summit 'Africa Unchained: the Next Generation’ summit in February and the FT’s ‘Private Equity in Africa' summit in October, do not even have the green economy in their programs.

With the international community, preoccupied as it is with multiple crises, unlikely to deliver a green investment strategy in time to prevent Africa's coming crash, this is an historic opportunity for Africans to propose their own. The African Development Bank’s Green Growth Initiative is a good place to start planning. Ethiopia’s Climate Resilient Green Economy Strategy is another. There are many more.

At Davos in January, IMF Managing Director Christine Lagarde said, ‘2013 will be a make or break year’. With only four months to go (now only three) and another crisis never far away, Africans have no time to lose in making green growth plans. If they don’t, as Richard Walker warns, drawing on the title of Chinua Achebe’s most famous book, ‘things might just fall apart.’ If this happens Africa’s crash will not be contained.

END OF LETTER

In addition to threats outlined by Mr Walker there are many others on Africa’s horizons as recent attacks by Muslim extremists in Kenya and Nigeria attest. There is also the danger that African policy makers, like their counterparts in the emerging economies, will continue to enjoy the fruits of the current boom and fail to introduce urgently needed structural reforms to deal with these mounting threats. One of the great disadvantages of spreading democracy in Africa is that elected leaders, with only 4-5 year terms, do not have the time to bring about the necessary reforms. Short-term thinking also might lure Africans into excessive consumption instead of saving and investing for the future (Nigerians are the second highest consumers of champagne after the French, and Kenyans have a taste for premium brand, and premium priced, Scotch).

However, despite the multiple danger points in Africa, the leaders and people of the Hopeful Continent are well positioned to manage the moment, see the threats on the horizon and act on them. In the past twenty years sufficient foundations have been laid for Africans to develop investment strategies to facilitate their transition to the green economy. Or, in the words of a recent World Bank report on Europe and Central Asia, the transition from ‘Brown to Green’.

Africa has the right credentials to lead the way to more stability and resilience. Africa’s Consensus Statement to Rio+20 in June 2012 demonstrates that governments realise there is no other way forward. African economists, financiers and bankers are ready to work towards a green economy in Africa. The African Development Bank has placed inclusive growth and the transition to green growth at the center of its new Ten-Year Strategy (2013-2022). Africa’s scientists have sufficient knowledge. Africa’s engineers and technicians know the technologies they need. Africa’s businesses see the need to go green and are matching this with high levels of innovation and responsibility. Many of Africa’s foreign partners are investing in Africa’s green, green revolution. Organisation and management tools are being developed. Africa’s demographic dividend is unequalled. The countless green success stories around the continent today - initiatives, innovations and inspirations - are Africa's untold story.

If the green economy is the only viable pathway towards developing sustainable and resilient economies in each of Africa’s 54 countries, the pace at which they move forward must be accelerated. The brown economy, or business-as-usual, in Africa is expanding at an unprecedented rate. The scale and complexity of the challenges cannot be over-estimated and will require a coordinated, multi-pronged effort. At the historic Lem, or Green, Meeting in Addis Ababa in June 1992, the late Meles Zenawi, Ethiopia’s leader for 21 years and one of Africa’s green pioneers, called this ‘a multi-discipline, broad-spectrum approach [to development] for there are no piecemeal solutions to the problems at hand’.

The route towards green economies in Africa will therefore need to be approached from different angles beginning with the measurement of green economies, creating green institutions and developing sustainability frameworks.

Measuring green economies. Over the past 20 years, attempts have been made by governments around the world to measure green growth including experiments with green accounting, i.e. green gross domestic product. Since the launch of the UN’s Green Economy Initiative in October 2008, a vast amount of work has been done to further our understanding of how to measure a green economy. Much more, however, needs to be done. Africa’s greatest comparative advantage in a global economy that must eventually become green if we are to avert catastrophe is in its underdeveloped brown economies or lack of brown development. In this sense, the so-called Least Developed Countries are in the best position to develop something new.  

Creating green institutions. Institution building has always been seen as a prerequisite to African stability. However, African institutions must be designed and developed to meet the needs and challenges of the 21^st century. The current institutions, inherited from the colonial powers, reflect the lack of understanding of Africa by foreigners and need to be rapidly restructured and updated. For instance, many countries do not even have a minister for environment whereas traditional (pre-colonial) African institutions, such as Elders, would put the environment central to survival. Without greener institutions the transition to a green and therefore sustainable economy in Africa will be impossible. 

Developing sustainability frameworks. Green growth plans will only work if there is a level playing field for investors. In other words green investors who include social and environmental costs in their accounting will be at a disadvantage to a brown investor who ignores such externalities. A suitable framework for beginning to think about green growth planning, particularly in Africa’s vast and sometimes remote and challenging areas, is the river basin. The river basin is an independent ecological unit where the actions (positive or negative) of one development affect the outcomes of others. The river basin in Africa is where traditional interdependency has been practiced for millennia and sustainability has been most successful. Integrated River basin Management (Meles Zenawi's broad spectrum approach) has been well developed over the past 20 years and is one of the best tools available to Africans for making green growth plans.

A glance at articles on the Economist website (six free articles a week allowed) shows that the global economy is entering another unknown unknown - a cooling down of the emerging economies after 15 years of unprecedented expansion which has driven global growth: ‘Welcome to the post-BRICS world’ (06/05); ‘When giants slow down’ (07/07); ‘The BRICS: Life after the boom’ (video 25/07); ‘Emerging economies - the Great Deceleration’ (27/07); ‘Catching up is hard to do’ (31/07). In the recent on-line debate by the paper (20/08 – 31/08): ‘The BRIC economies – is the fastest period of emerging market growth behind us?’ 59 per cent of voters thought YES it is over and 41 per cent thought NO.

Although there is a general belief that the emerging economies are slowing there is no fear yet of them crashing like they did in the Asian financial crisis of 1997. These countries are much better prepared. But is Africa prepared for a such a slow down? Although there was a temporary respite for the emerging economies in September due to the US Federal Reserve keeping the printing presses running, what happens when the tapering of QE3 finally begins and Africa's new partners take another, bigger hit? What happens if China, on whom Africa depends so much, has the much-feared 'hard landing'?

Perhaps the most important question we should all be asking is whether Africa, through a series of coordinated and integrated green growth plans, can become a green growth engine the global economy urgently needs?