Africa rising should factor in human, natural capital

Now is the time for Africa. But don’t just take US President Barack Obama’s word for it; in several respects this sentiment has been anchored on fact.

Steadily, sub-Saharan economies have chugged along with more than a dozen markets booking impressive growth fuelled by improved purchasing power, strong regional and domestic demand, and investment inflows all of which have kept average growth rates consistently around four to five per cent, compared to the global average of three per cent and below.

And the future appears to be brighter with more democratisation and regional integration which is sure to maximise resource wealth and create employment opportunities.

With new oil and gas prospects coupled with enviable clean energy potential in several emerging economies and infrastructure developments aimed at driving efficiencies across all sectors, it’s no wonder Shakira’s ode to Africa resounds five years after the South Africa World Cup.

But borrowing from the critique the gyrating Columbian received for upstaging indigenous musicians on their home turf, I can’t help but draw the correlation that Africa is at the centre stage of global economic development, however, are we merely dancing to the tune or singing the lead vocals?

Moreover, one cannot be sure that once the music stops, the society and environment will be better or worse off.

The present enthusiasm of global investors, including sovereign funds, is a welcomed change from the donor aid approach that has clouded mind-sets for several decades.

Nevertheless, we must remember that all this renewed attention comes with a price. And that price is not just the interest rate of the debt we are taking on as countries.

Our governments and political leaders have a real opportunity to ensure that our people are truly empowered and enabled to leverage this “kairos” well into the future.

The rate at which all Africans, including those who only seem to matter during a general election, will be delivered from perpetual poverty, food and water insecurity, wanting public services, and all the other effects of systemic waste and corruption, will depend on the leaders and their ability to put the pursuit of real, sustainable economic growth ahead of short-term, superficial – and often individualistic – gains.

So what are we giving up to foreign investors? Is the funding we seek bringing us full circle to when the social rights and economic opportunities of the majority were mortgaged for the benefit of the few?

I doubt the deals our governments are signing will be as dramatic as recolonisation.

There will be measured and substantial positive economic and social impacts. However, there also will be disadvantageous by-products in the process, especially in the environmental dimension.

We all agree that development must take place in Africa. But certainly not at all costs, including losing that which makes Africa unique – our natural capital.

There is an opportunity cost of the accelerated growth in terms of the potential adverse effects on cultural heritage sites, breathtakingly picturesque landscapes and diverse wildlife that compel tourists to pay a premium to enjoy, boosting our local currencies and fuelling further growth.

We, therefore, as Africans also need to have a mind-set shift. As Pope Francis put it, balancing financial gains with real economic growth, societal wellbeing and environmental conservation and resilience is an “ethical imperative”.

For the greater good, the sustainable or “green” approach is especially critical for governments to integrate into their fiscal and bilateral policies.

Thankfully increasingly sovereign investors, such as the Dutch and German investment banks, require that their funds be utilised in line with sustainability principles which seek to strike the profits, people and planet balance.

However, all too often the custodians of these funds may skirt some of the ethically-imperative conditions either due to a lack of capacity to implement such requirements or for sheer disregard for the greater good.

Yet others will turn to countries like China which come with fewer “green” strings attached.

What we need is a handful of visionary leaders within government to gain momentum for the sustainable growth agenda.

There are several examples where individual policymakers had an “enlightened moment” which inspired them to act as a catalyst for real impact — as was the case in 1993 when South Africa’s Mervyn King, a Supreme Court judge, led the development of a governance standard that embedded sustainability in the public and private sector.

Nigeria followed suit in 2012 when the then central bank governor Sanusi Lamido compelled lenders to adopt sustainable growth as a matter of regulatory compliance.

We recently saw similar inspiration in German Chancellor Angela Merkel when she steered her G7 peers to adopt a policy to decarbonise their economies and end extreme poverty and hunger by 2030.

Mr Obama’s remarks during the Global Entrepreneurship Summit in Nairobi had strong views on inclusive growth as well as creating more business opportunities for women and youth.

The concept of sustainable development which includes equitable growth through national policy and financial market reform may come across as a foreign talking point; however, it is not entirely imported – there are axillary buds of green policy in the east African region.

Of note are efforts that are underway in earnest in Ethiopia to build a climate resilient economy by 2025.

In Kenya, the ministry of Environment is leading a National Green Strategy supported by World Wide Fund and United Nations Environment Programme that will cut across the industrial sectors and integrate elements promoting quality enterprise growth, employment creation and social inclusion.

Meanwhile, the financial services sector is taking a cue from the public sector and is also recrafting its policies and priorities through efforts led by the Kenya Bankers Association, and the Nairobi Securities Exchange which recently signed on as a UN Sustainable Stock Exchanges signatory.

Ultimately these seemingly disparate efforts sparked in various pockets of government and industry will gain momentum and align.

The challenge then is for the stewards of the economy to ensure that the momentum is enabled, and the immediate and long-term wellbeing of our people and natural capital is genuinely interlinked with the pursuit of returns and prosperity.

Ms Mugambi heads the Sustainable Finance Initiative at Kenya Bankers Association.