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Revaluing Africa By Accounting for Natural Capital

By Travis Noland

At last, Sub-Saharan Africa is making headlines for reasons other than war, disease, humanitarian crisis or corruption. Registering seemingly inconceivable GDP annual growth rates - ranging from 6-12 percent - while the rest of the world has been bogged down by a global recession, countries from Nigeria to South Sudan are now discussed as serious players in the global economic conversation. As I argued nearly a year ago, the continent is now home to some of the most promising investment opportunities in the coming years. There is no doubt that Africa has achieved significant progress in recent years, but could we be deceiving ourselves by relying too heavily upon these all-conquering measurements for economic growth?

The first-ever World Forum for Natural Capital in Edinburgh, Scotland, unveiled the full story behind these numbers. As UK Shadow Minister of the Natural Environment and Fisheries, Barry Gardiner explained, “GDP has become a con imposed on developing countries by an economic system that regards ecosystem services on which they rely as mere externalities.” According to Gardiner, some of our world’s poorest countries only receive up to 30 percent of the real economic value of natural products like timber.

Who would sacrifice 70 percent of prospective value and why on earth would they do it? The examples are plenty and the reasons many. For decades, government leaders in Zambia have considered it a worthy trade to hand over their copper mines (which account for 80 percent of the country’s foreign exchange earnings) to irresponsible Chinese mining operations in exchange for infrastructure development. Similarly, Malawi – one of the few countries in Sub-Saharan Africa that is successfully feeding itself – has demonstrated its willingness to sacrifice agricultural land (responsible for 90 percent of it’s GDP) by cultivating sloped, escarpment land that should legally be forested to prevent soil degradation in order to export more tobacco, tea, cotton, coffee and sugar.

Stories like this abound across the continent and are largely driven by incentives tied to exporting more raw, unprocessed product to developed economies. Gardiner likens this exchange to the rich man who drops a penny in the hand of a starving African girl while snatching her single cob of corn so that he can run his car. “The message communicated from developed to developing countries is this: grow your economy and become poorer,” laments Gardiner.

The sad truth is that Africa is trading it’s bright future for quick, short-term growth. Yet in this sense, is Africa any different from the majority of publically traded companies who sacrifice their own long-term viability for the sake of Wall Street’s quarterly reports?

If these two dilemmas seem eerily similar, there is good reason. After all, many of the world’s largest product-oriented companies rely on raw materials that originate within the continent of Africa. This parallel is a bit of an aside, but consider the amount of resources and attention increasingly allocated toward shifting the behavior of the world’s largest companies in comparison to the relatively insignificant efforts at work to change the way the world regards Africa’s natural capital.

At least 70 percent of young people want to work for a company that is values-driven. Yet strikingly, according to Monde Nkosi, Ambassador at One Young World, only 12 percent of One Young World delegates - future leaders of Africa and our world - have ever heard the term “natural capital.” And only 2 percent of this group have contributed toward projects related to natural capital. Not that this should surprise you. The concept receives very little airtime even in sustainability conversations. If only we understood the seriousness of issues involving natural capital and how they will impact our future.

When we fail to value Africa’s natural capital, the environmental impact is obvious, but the social implications are equally disastrous. According to the World Bank’s Juergen Voegle, for those who live on less than $2 a day, at least $1 comes directly from the local environment and its biodiversity. This means that over half of people in Sub-Saharan Africa depend directly on natural capital for at least half of their daily income.

So how can we ensure that these people are able to sustain their livelihoods and that Africa achieves real progress? The short and obvious answer is to stop perpetuating the traditional systems that degrade Africa’s natural capital and instead support the emerging efforts that steward it.

At a global policy level, programs like the UN’s REDD+ & AFOLU combat deforestation by incentivizing developing countries for any emissions reductions associated with a decrease in the conversion of forests to alternate land uses. By offsetting carbon emissions through these programs, multinational corporations like Microsoft and Kering are contributing directly to projects that steward natural capital, benefit local communities and influence public policy at a higher level.

Increasingly, local policies incentivize African economies to combat natural capital degradation by rewarding progress in areas like sustainable agriculture and renewable energy. So far, only South Africa and Morocco have established a renewable energy independent power producer (IPP) procurement programs, yet several countries are now priming the pump for a cleaner and less destructive energy future through systems of feed-in tariffs and incentives for foreign investors. In response to Ghana’s 2011 Renewable Energy Act, Blue Energy is seeking to spark a renewable energy revolution in West Africa as it looks to complete Africa’s largest solar PV power plant by 2015. Similarly, Kenya and Ethiopia are leveraging the power of mega wind farms to achieve their bold ambitions for building climate resilient economies in the coming decades.

Finally, on a micro level, small enterprises are creating examples of how Africa can leverage its wealth of natural resources to generate more responsible and sustainable economic growth. EcoTours in Rwanda provides new livelihoods in responsible tourism for East African communities that historically depend on poaching endangered species of wildlife. Komaza works with smallholder farmers on Kenya’s coastline to develop sustainable tree farms and help them market wood as a cash crop.

This may strike you as a bit of a nebulous or distant concept, but it’s one on which your future depends, regardless of where you call home. As Gardinar explained at the closing plenary for the World Forum on Natural Capital, “Properly valuing natural capital is not simply our responsibility as good environmentalists. It is not even just our responsibility as good economists. It is our responsibility as human beings. It is our moral responsibility.” By supporting policy mechanisms like REDD+, investing in companies like EcoTours or simply educating your neighbor on the meaning of natural capital, you too can act on this moral responsibility.

Image Credit: UN-redd.org

Image Credit: TriplePundit at World Forum for Natural Capital

Travis heads up strategic partnerships here at TriplePundit.com. Previously, he has worked with several social enterprises including Calvert Foundation, SOCAP and Karisimbi Business Partners, a socially motivated management consulting start-up in Rwanda. He has also served in Guatemala as a Social Entrepreneur Corps Fellow and continues to support Wild River Organics, his family’s organic fruit farm. Travis received his BS in Business Administration from Pepperdine University. He can be reached at travis@triplepundit.com and followed on his responsible travel blog at <a href="http://www.brightspotstravel.com//">brightspotstravel.com</a&gt;

Read more stories by Travis Noland