Addis Ababa, 26 August 2023 – The Economic Commission for Africa (ECA) organized a Green Investment Advocacy Forum for the Southern African Development Community (SADC) on August 24, 2023. The virtual event, which was organized in partnership with the SADC Secretariat under the theme "Leveraging Green Investment Opportunities under the AfCFTA," brought together a diverse array of stakeholders, including policymakers, experts and private-sector representatives, to deliberate on strategic pathways to harness sustainable and green investments in the region.
The African Continental Free Trade Area (AfCFTA), signed by fifty-four African Union Member States in 2018, aims to create a single continental market for goods, services, and investments, facilitating business movement and fostering the groundwork for a Continental Customs Union. As the manufacturing sector is expected to significantly benefit from increased intraregional trade and investment under the AfCFTA, estimates from the ECA project a potential 39% increase in intra-African trade within the sector by 2045 if the AfCFTA is implemented as compared to a baseline scenario without the AfCFTA.
However, current emissions from the African manufacturing sector—accounting for about 30 to 40 percent of total African emissions—highlight the critical need for investments that support low-carbon or green manufacturing. At the same time, investments into climate-resilient solutions across all sectors will be key to help the region adapt to the impacts of climate change.
Speaking at the forum, Ms Eunice Kamwendo, Director of the ECA Subregional Office for Southern Africa said: “Amidst our pursuit of industrialization, let's remember the essence of Green Growth. Climate change is not a distant threat; it's entwined in our daily reality, shaping how we trade and do business.” She pointed out that in order to secure our future, investing in climate adaptation and low-carbon industrialization is paramount.
The AfCFTA's Investment Protocol provides a framework for countries to attract green investments by simplifying investment regulations, establishing transparent and predictable regulatory environments, and promoting cross-border green investment flows. By aligning with the AfCFTA, countries can enhance the adoption of critical green technologies, stimulate innovation, and increase market size.
The Southern African Development Community (SADC) has already laid the groundwork for attracting investment and fostering entrepreneurship through its Protocol on Finance and Investment. The AfCFTA, building on SADC's progress, offers an ideal platform for exploring extensive green investment opportunities presented by the expanded continental market.
During the Forum, policy instruments to de-risk early-stage green investments emerged as essential, particularly to develop proof-of-concept cases for domestic investors and to reduce perceived risk for international investors. At the same time discussions highlighted the need for tailored policy solutions: while South Africa might benefit most from developing a bankable project pipeline, other SADC countries may want to concentrate on promoting Green Bonds through national champions.
In conclusion, the Green Investment Advocacy Forum provided a vital platform for sharing best practices, fostering dialogue, and exploring collaborative avenues for promoting green investments across SADC Member States. The event underscored the significance of aligning green investments with the AfCFTA to drive sustainable economic growth and environmental resilience.
About the project:
Supported by the Danish International Development Agency (DANIDA), the Economic Commission for Africa (ECA) is committed to enhancing awareness within Africa's Regional Economic Communities (RECs), including the Southern African Development Community (SADC), regarding the emerging green investment prospects fostered by the African Continental Free Trade Area (AfCFTA). Through a series of targeted advocacy forums at the REC level, ECA will engage with pertinent stakeholders to facilitate informed discussions.