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How green is Africa’s future in reality?

BRICS countries want green growth, but this is contradicted by its support for coal-fired power plants in South Africa. Picture: Bloomberg

BRICS countries want green growth, but this is contradicted by its support for coal-fired power plants in South Africa. Picture: Bloomberg

Published Aug 11, 2018


The recent BRICS Summit in South Africa highlights not only a shift in global geopolitics but also the importance of BRICS’ New Development Bank’s growing footprint in the infrastructure space, write Saliem Fakir and Yemi Katerere.

The New Development Bank’s portfolio contains extensive commitments and policy direction towards green technologies, but it is unclear how green or sustainable the rest of its infrastructure investments look like or will be.

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The Bank has an opportunity to make a difference and do things differently on the African continent. This includes adopting lending practices that are different from other traditional lending practices.

The most troubling aspect is the way the lending patterns are done not only in South Africa, but in Africa more broadly. They are often uneven and don’t take into account the need for the types of growth models that meet a broader set of development objectives. These include protecting the natural assets and ecological infrastructure of Africa.

Current plans for infrastructure development that are in the African Union’s (AU) Programme for Infrastructure Development in Africa (PIDA) show a strong bias towards extractives (in other words the mining industry) especially in linear infrastructure such as roads, and power generation.

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Africa remains a continent subject to resource demands and even more so for a suite of new technologies such as electric vehicles, solar power and other clean technologies where valuable and strategic resources continue to be critical components and the mainstay of many countries on the African continent.

The clamour for technology-led economic dominance by various advanced economies places Africa in the throes of a new geopolitical scramble and types of investment flow for infrastructure that prioritise lender interests rather than holistic development objectives. These investments seem increasingly one-sided and, in some respects, anti-developmental.

This can be clearly seen with Africa’s urban futures. Urban infrastructure investment, compared to Asia, lags significantly in terms of capital intensity and the city centre enjoys the largest share of capital investment relative to non-core and peripheral parts of the city.

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Cities are Africa’s future and their engines of growth will need significant investments influenced by futures thinking.

Foreign Direct Investment (FDI) is much needed, but one of the fundamental requirements of FDI is transparency to ensure that the investment is development appropriate. But, such transparency should not only extend to the size of the investment envelope, but also to short and long-term risks. Africa’s wealth is not just its mineral endowment, but it is also its people and nature.

Growth statistics tend to tell a good story of Africa rising but often Africa rising does not tell us whether the long-term growth of countries and the African continent as a whole builds both sustainable economies and enhances its existing ecological systems.

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There is a saying that there are no sustainable mines but rather sustainable economies - such a switch still seems to be a distant dream for Africans.

Infrastructure development trajectories can often be done for short-term considerations as politicians want visible progress to boost their image while paying little attention to the long-term consequences.

BRICS countries want to facilitate green growth but this is also contradicted by the continued support for coal-fired power generation plants in South Africa. This trend is evident in the development of a pipeline of coal and power plant infrastructure elsewhere in Africa such as in Zimbabwe. Such investment effectively results in outsourcing pollution to Africa, while other countries benefit economically without bearing the cost of externalities of such activities.

Concern should also extend to debt obligations that can make countries more vulnerable to inappropriate infrastructure models and pressure from countries with vested interests which are often at the expense of the national interests of indebted countries. They could be akin to the IMF and World Bank structural adjustment and austerity policies but with just another face.

Ironically, BRICS countries present themselves as a counter to the Washington Consensus, however, such investment action can perpetuate the poverty trap if such investment practices reinforce the existing inequality.

In the face of these pressures which non-African BRICS countries could exert, one important challenge for Africa is how to deal with power relations between influential foreign direct investment institutions from non-Western countries and investee countries.

African countries need to act in concert and not individually in defining a development trajectory that embeds African interests rather than the interests of other non-African parties. The fact that Africa doesn’t act in concert, or that BRIC members often act bilaterally outside of BRICS co-operation makes individual nations vulnerable to external pressure.

The future of sustainable economies in Africa will largely depend on how these asymmetries are resolved.

Ultimately, the underlying premise for BRICS countries is not just geopolitical but it is to drive new business for each of them by forging regional and bilateral alliances across continents.

For example, Russia is trying to sign deals with South Africa on nuclear, despite the fact that the country’s President Cyril Ramaphosa has issued a directive that South Africa cannot afford nuclear. The Russian push for nuclear in South Africa is to present South Africa as a lighthouse for future nuclear deals in Africa. Egypt is already being wooed to sign up with Russia’s Rosatum.

China is also trying to push its own companies. At the 2018 summit, despite their poor financial and corruption track records, New Development Bank loaned Transnet $200m and activated the $180m it had granted to Eskom in 2016.

In 2015, China South Rail’s and China North Rail signed a deal to supply Transnet with locomotives. A deal which was later revealed as a massive corruption scandal with kickback agreements totalling R5.3billion along with other transgressions.

Africa is the next frontier of infrastructure development if done wisely. With broader development goals and the protection of its natural assets, the continent can build sustainable economies and a prosperous future.

We need to constantly ask ourselves - what is the future we as Africans want? We need to ask ourselves, and have a conversation about, what role should development finance institutions like the New Development Bank play in realising development goals such as the African Union’s Agenda 2063?

* Fakir is the head of WWF South Africa’s Policy and Futures Unit and Katerere is the Project Manager of the WWF Regional Office for Africa’s African Ecological Futures II project

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