Finding opportunities in green business to boost investment and trade between the UK and Africa.

This initiative of The Growth Gateway explores green business opportunities between UK and Africa and how they can help improve development impact.

Africa is among the region’s most susceptible to the effects of the climate crisis (African Development Bank Group the COP 25, December 2019) despite making a relatively small contribution to global emissions. It is in huge collateral damage, posing a significant risk to its food systems and livelihoods. The major challenges African nations face due to climate change are:

  • The effect on livelihoods and food security of lower production and productivity of agricultural products.
  • The inaccessibility of capital, technology, and the necessary skills for transition and adaptation to economic conditions.
  • Inadequate governance and capacity of institutions to manage conflict about scarce resources and displacements that result from extreme weather extremes

Although these issues are serious, African countries have a chance to play an important component in the solutions to the challenge of climate change and help achieve a global Net Zero. This might be accomplished by using energy possibilities from renewable sources, climate-smart manufacturing, and smart agriculture, for example. The UK is a top producer of environmentally friendly products and services and is in a great position to aid Africa in making the most of the opportunity to develop sustainable, sustainable, inclusive, and resilient companies to help drive the transition that is increasingly vital due to climate change.

Green businesses are not responsible for any negative effects on the environment, the economy, or the communities. They use environmentally sustainable resources and adhere to socially responsible practices (Harvard Business School: What exactly does “sustainability” mean in the business world? October 2018).

The support for the growth of these businesses can help create climate-friendly jobs, stimulate economic growth, and ensure sustainable growth.

The brief Growth Gateway project considered eight topics and more than thirty subsectors in the larger green business sector. Three dimensions were employed to choose the sub-sectors that were to be focused on:

  • Africa has a structural benefit: has commercial potential in Africa been confirmed, or are the proper circumstances in place?
  • UK comparative advantage Do UK companies have a solid right to play and win?
  • Impact potential: What’s the possibility of social, environmental, and economic impacts?

Opportunities for green investment and trade

In the overall landscape of more than 50 potential opportunities, the study identified eight high-potential areas with the most potential for trading and investments. They are mostly in clean energy, agriculture, and green financing areas. Opportunities are plentiful in six countries: Nigeria, Ghana, Kenya, Ethiopia, Egypt, and South Africa.

Opportunities in these areas tend to be more technologically inexperienced (e.g., recycling of waste as opposed to reducing carbon emissions), located at various stages of maturity, and primarily in regions where Africa can benefit from advantages in natural resources. The potential for environmental impact within the pipeline of opportunities covers many outcomes ranging from reduction of carbon emissions, strengthened adaptability and resilience, and even waste reduction.

Finding opportunities in green business to boost investment and trade between the UK and Africa.

The most lucrative areas are:

Clean energy

Investment opportunities                                                                           Countries

Green hydrogen                                                                                                South Africa, Egypt, Morocco, Namibia

Onshore wind farm advice                                                                                         Egypt

Development of a wind farm on the shore of                                                     South America

Residential and Commercial & Industrial (C&I) solar systems                       Nigeria and Kenya

Projects for solar power in the utility sector in                                                  South Africa and Egypt

Agriculture

Investment opportunities                                                                                  Countries

Sustainable animal feed in                                                                                                 Kenya

Micro storage that is tech-enabled in                                                                       Kenya and Nigeria

Cold storage with tech-enabled technology in                                                                 Egypt

Green financing

Investment opportunities                                                                                       Countries

Generation of carbon credit

(e.g., forest management or switching to fuel) in                                              Kenya, Tanzania, Namibia, and DRC

Green bond issuance and advice for                                                                           South Africa and Egypt

Green hydrogen production

The forecast is for it to become about 25% of global energy sources in 2050. Africa has the potential to gain an important share, particularly concerning South Africa, Egypt, Morocco, and Namibia. UK businesses are positioned to participate across the continent by providing capital to power plants and advice services.

Development of a wind farm onshore

Wind energy is predicted to increase from two Gigawatts in 2013 to around 80 Gigawatts by 2030, and there are opportunities for growth in South Africa and Egypt in particular. It is believed that the UK is a world-leading player in this field, and there’s a great potential for UK firms to expand their investments in Africa to set up and expand wind farms.

Solutions for distributed solar energy

Solar energy is likely to perform a vital role in Africa’s journey to electrification. The UK is well placed for investment in residential, Commercial & Industrial (C&I) solutions, specifically in countries like Nigeria, Africa, and Kenya.

Development of solar utility projects

There is an opportunity for UK firms to use their solar expertise to play a leading role in utility solar power projects across countries like South Africa and Egypt. UK investors can help finance the establishment and grow solar utility projects that capitalize on the increasing significance of solar power in Africa’s power mix and help bring about the electrification of all of Africa’s communities.

Sustainable production of animal feed

The UK’s need for sustainable animal feed (e.g., insects-based) is expected to increase dramatically over 30 years, and Africa offers a lucrative investment opportunity for investors. For example, the black soldier fly larvae feed on agricultural waste and are essential nutrition for the aquaculture industry. This provides a fantastic possibility for UK investors to supply the necessary capital for growth to local farmers in nations like Kenya.

Tech-enabled micro-storage

Population growth and urbanization are the main reasons for the demand for tech-enabled small storage in countries like Nigeria and Kenya and the growing demand for storage cold from Egypt’s aquaculture industry. UK investors can offer companies the necessary capital for growth in these areas.

Carbon-credit generating projects

Projects in Africa are more efficient than those in the UK and the UK, where the cost per tonne of carbon credit generation is more than 24 times the average for all of the world. UK investors can finance projects (e.g., the forestry sector or switching to fuel) in countries such as Kenya, the Democratic Republic of the Congo, Namibia, and Tanzania.

Green bond issuing

It is projected that the Green Bond industry may be PS10 up to PS15 million by the year 2030 when the demand for sustainable finance grows. Positive developments in South Africa and Egypt can serve as proof of concept. The UK is the leader in the market for green bonds globally. In addition, UK institutions and banks could assist in issuances within Africa.

Solutions to boost the participation of green businesses in Africa

  • Assist UK investors in connecting to potential African companies and projects, help accelerate trade agreements and create awareness about potential opportunities and success stories
  • Companies and governments could work together to develop projects aggregation systems and funding rounds that jointly enhance scale and risk reduction and address the limited dimensions of market opportunities and markets in Africa
  • multilateral organizations and Development Finance Institutions (DFIs) can look into local currency loans at a low cost and low-cost foreign exchange hedge products.
  • Support knowledge exchange programs and scaleable pilot projects. They also help with technical issues for African governments to develop regulatory and policy frameworks.
  • UK companies, aided by the government, may invest in infrastructure that catalyzes growth (e.g., pipelines, grid infrastructure, and so on) to increase chances of success and increase their availability on a larger scale.

If this pipeline is activated, it could lead to positive development impacts that last for a long time across Africa and advance the commercial interests of African and UK companies. Additionally, it could be a key factor in supporting the UK’s efforts to become a world pioneer in climate action.

To open the pipeline for information sharing, targeted matchmaking of businesses and advocacy for policy, technical assistance, and catalytic investment (from firms and perhaps from the UK government) are required to open up opportunities.

This will increase investment and trade in the green industry. The initial successes will show that there is value to the UK and African participants in opportunities that result in positive social and environmental results and will encourage other deals naturally. Growth Gateway will facilitate this through targeted information dissemination, business networking events that connect with other UK Government organizations providing export guidance and financing, and continuous advisory assistance.

By Mia

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