Africa is rich in natural resources, from solar and wind power to minerals and agricultural land. This is why many international companies operate on the continent, and demand for the skills of foreign workers is high. But African countries are facing a big challenge – how can they drive economic growth and investment while still meeting sustainability expectations?
With the right support and infrastructure, Africa is well placed to take a greener approach to energy and manufacturing that could provide a wealth of new financial opportunities and jobs for your clients for years to come.
Renewable energy in Africa
The shift away from fossil fuels like oil, gas and coal has been a slow burner in Africa as billions are still pumped into these industries every year. But Africa has enormous potential for renewable energy development.
Being the world’s least industrialised region gives many African countries the opportunity to side-step traditional greenhouse gas-emitting fuels and infrastructure and go straight to building sustainable energy systems.
The International Renewable Energy Agency (IRENA), which supports countries in their transition to sustainable power, estimates that, with the right framework and international investment, Africa could meet nearly a quarter of its energy needs from indigenous and clean renewable energy by 2030.
The development of renewables could create millions of jobs and bring further economic benefits such as improved healthcare services, especially in the most remote areas where energy poverty is rife.
What’s driving the demand for green energy in Africa?
Like in the rest of the world, there is an increased understanding that action to prevent climate change in Africa is urgently needed. Rising temperatures are likely to lead to reduced crop yields, water shortages, falls in productivity, health problems and an increase in disruptions due to extreme weather.
As the continent’s manufacturing sector continues to grow, it’s more important than ever to make the transition from energy generated through fossil fuels to energy produced by renewable resources.
The impact of the COVID-19 pandemic has also accelerated the need for green energy in Africa. A quarter of hospitals in sub-Saharan Africa have no electricity, while around 600,000 million people are also without access to it.
What are the options for renewable energy in Africa?
Africa has the resources to play a leading role in global green efforts and make itself more resilient to economic shocks like the pandemic. But governments, businesses, investors and communities will all need to work together to fulfil Africa’s green manufacturing potential.
The four key renewable areas with the most potential are:
- modern biomass for cooking
- solar power
- wind power
Some of Africa’s most oil-rich nations, including Nigeria, Angola and Algeria, are at the forefront of the move to renewable energy to diversify their economies and reduce their dependence on oil.
Hydroelectricity could be a viable option for up to a third of African countries. But on a continent where severe droughts blight many regions, using rivers to generate power is a controversial solution.
It may be the case that smaller regional renewable projects focusing on wind, solar and geothermal, along with micro-hydro solutions, will become more important in future energy planning for Africa.
Investing in renewable energy in Africa
To achieve net-zero emissions by 2050, McKinsey’s Africa report 2021 estimates that Africa will need around US$2 trillion of additional investment over the next 30 years.
Of this, about US$600 billion would be needed to decarbonise existing manufacturing industries and energy networks. The remaining US$1.4 trillion would be needed to create new sustainable businesses to replace or complement existing coal, oil and cement producers.
A green manufacturing programme in Africa could create about four million net new jobs by 2050, primarily in electric vehicle charging infrastructure and cross-laminated timber, and also in the wind and solar industries.
Since 2000, countries including Nigeria, Kenya, Guinea and South Africa have taken action to adopt mineral development strategies aimed at attracting foreign investment.
Subsequently, international input can help implement best practices in health and safety and the sustainability of projects.
What green businesses can entrepreneurs build in Africa now?
There are steps Africa can take now to move towards the global target of net-zero emissions by 2050. Tapping into the wealth of green manufacturing opportunities available can create new jobs, eco-friendly products and emission-reducing production processes.
McKinsey has identified 24 new business opportunities across several sectors, including energy, agriculture, biofuels, packaging, transportation and recycling. One key agricultural-based technology could be producing plant-based protein to feed a world hungry for healthy meat-free alternatives.
Central and western African countries with ample land to grow timber are ideal locations to develop cross-laminated timber businesses, while North Africa is a great region for making wind turbine parts. Elsewhere, the manufacture of electric vehicles is well suited to Africa’s relatively mature economies such as South Africa, Morocco and Kenya.
Ultimately, an abundance of renewable energy can be a major facilitator of green-by-design real estate development and environmentally-friendly buildings that can make the continent a safer and healthier place to live and work for your clients – and benefit generations to come.
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