African governments and financial institutions could drive a new nature-positive development pathway if high-level discussions in Nairobi this week succeed in reaching consensus on how to harness the natural capital of the continent.
The Convention on Biological Diversity defines natural capital as the world’s stocks of natural assets including geology, soil, air, water and all living things, from which are derived a range of ecosystem services, such as pollination and water for example, which make human life possible.
This continent is well positioned to reduce the threats to biodiversity through nature-based solutions, helping the world deliver on the sustainable development goals by 2030 and objectives of the Paris Agreement.
Africa has the lowest share of global greenhouse gas emissions, at just 3.8%, and a high natural capital endowment — home to the world’s largest intact ecosystems and supporting nearly a quarter of global biodiversity and iconic species.
The continent already plays a vital role in the preservation of our planet and species.
Undervaluing nature has created an insolvent global economic model
The collapse in currently undervalued and unpriced ecosystem services such as wild pollination, provision of food from marine fisheries and timber from native forests, could result in a significant decline in global GDP, at a conservative estimate of $2.7 trillion in 2030.
Negative impacts would be the most pronounced in low-income and lower-middle-income countries — or at least half the African continent, where drops in 2030 GDP could be more than 10%.
High on the agenda for the African Climate Summit should be today’s extractive economic model, which uses nature like a limitless resource. For centuries, this model has enriched some people and countries, largely in the Global North, at the expense of citizens and countries of the Global South, and crucially, at the expense of the health of our planet.
According to a 2021 study, between 1960 and 2018, the Global North appropriated from the South a total of $62 trillion, or $152 trillion (in constant 2011 dollars) in commodities when accounting for lost growth.
Africa remains acutely affected by the twin climate and biodiversity crises, worsened by high debt burdens that have undermined hard-won development gains, deepened cycles of poverty, food insecurity, and exposed many vulnerable countries and communities to greater volatility.
The debt burden in Africa is undermining global climate and biodiversity efforts
Public debt has doubled in Africa since 2010, reaching 65% of GDP in 2022. This has severely constrained African governments’ fiscal freedom to prioritise nature and is a growing barrier to resilience, on a continent facing wave after wave of record-breaking floods, cyclones, droughts and heatwaves.
With more than 60% of public debt denominated in US dollars for most African countries, exchange rate depreciations have contributed to the region’s rise in public debt by about 10% points of GDP on average by end-2022.
The combination of these factors has resulted in Africa’s debt being the highest level in over two decades, with 21 lower-middle income African countries either in default or at high risk of debt distress, including leading economies such as Kenya.
To ensure Africa strengthens action on the climate and biodiversity crises, the debt burden must be reduced and or forgiven. Innovative sovereign financing solutions that embed nature into public debt management can tackle this debilitating debt burden, such as Gabon’s recent debt-for-nature swap as well as sustainability-linked bonds tied to biodiversity commitments.
Since many African sovereigns are currently locked-out of bond markets, these financing arrangements require credit enhancements from multilateral development banks and development finance institutions to bring them to the market. This will also be high on the agenda of the Africa Climate Summit.
Nature must be worth more alive than dead
We could work with nature and not against it by mainstreaming and embedding African natural capital throughout financial institutions, companies, regulators, governments and policymakers. This would involve an integration of risks and opportunities tied to Africa’s ecosystems and biodiversity.
From the Kalahari to the Congo Basin, the Nile Delta, and the many marine protected areas across Africa’s coastline, holistic policies are needed to create financial incentives for local communities, governments and private entities to protect and restore natural ecosystems, instead of destroying them.
Embedding this natural capital as infrastructure into the economy necessitates accurately measuring the state of nature — for example, reflecting not only a company’s carbon impact but also their water, soil, and biodiversity impact — not just in a sustainability report but also on the balance sheet.
Natural capital accounting has a long history. Including the UN Natural Capital Accounting and Valuation of Ecosystem Services which helped establish the African Community of Practice on Natural Capital Accounting.
Innovative approaches to effectively count nature have continued to develop, including the African Natural Capital Alliance, the Landbanking Group and the Intrinsic Exchange Group as well as efforts to more accurately measure the state of nature, such as SEED and a recent case for a global nature-related public data facility.
More broadly there must be an economy wide alignment of purpose, instruments, and institutions. The NatureFinance alignment tool which scores the alignment of financial data with net zero and nature positive goals, is one place to start.
African countries can assert their natural capital and demand better prices for high integrity ecosystem services. This could mean establishing a coalition of African suppliers, or an African natural capital “sellers’ club”. Such developments already exist in various forms from Opec and recent attempts by the Democratic Republic of the Congo to establish a sellers’ club for cobalt.
A sellers’ club could urgently bridge financing gaps to conserve standing tropical, mangrove and kelp forests that are vital to addressing the climate and biodiversity crises. This approach could be linked to biodiversity credit markets and build on the recently launched Global Roadmap to Harness Biodiversity Credits for People and Planet.
These recommendations, as mapped by the Taskforce on Nature Markets, recognise that any solution to the climate and biodiversity crises, whether policy or market-based, will not succeed without engaging nature’s stewards in formulating and executing solutions in design, governance, ownership and in the distribution of benefits. Namely, local communities and indigenous peoples, who steward 80% of the natural world.
The Africa Climate Summit is an unprecedented moment to leverage the critical role of the continent in preserving our planet and species, charting a new development model.
Saliem Fakir is the executive director of the African Climate Foundation. Monique Atouguia is the Knowledge Manager at NatureFinance.
