KARABO MOKGONYANA: Green investments or green extractivism?

As the world grapples with the worsening climate crisis, the narrative around green investments has gained substantial traction. These investments, which are aimed at fostering sustainable development and reducing carbon emissions, have become crucial in the global effort to transition towards a greener economy.

In Africa, a continent rich in natural resources yet grappling with significant developmental challenges, green financing has emerged as a beacon of hope. However, as we delve into the nuances of this financing a critical dichotomy emerges: the promise of green investment versus the reality of green extractivism. It is important to explore both sides, highlighting the urgent need for scrutiny and accountability in the realm of green financing. 

Green investments are essentially financial investments made in projects and industries that are environmentally sustainable, such as renewable energy industries, sustainable agriculture and green building and construction. Like the rest of the world, these investments are essential for Africa because it has a significant energy deficit, with about 600-million people lacking access to electricity. Green investments in renewable energy sources such as solar, wind and hydroelectric power are crucial to bridging this gap. These investments can help build infrastructure, provide clean energy and foster economic development. 

Africa is vulnerable to the impacts of climate change. Green investments can support climate adaptation and resilience projects, including sustainable agriculture, water management and disaster risk reduction. These initiatives can mitigate the adverse effects of climate change on communities and ecosystems. The transition to a green economy can further stimulate economic growth and create jobs. Investments in green technologies and industries can generate employment opportunities, particularly in sectors such as renewable energy, sustainable agriculture and eco-tourism. 

Thus far, green financing for Africa has come from various sources. Multilateral development banks such as the World Bank, African Development Bank and institutions such as the International Finance Corporation play a significant role in green financing. They provide loans, grants and technical assistance for sustainable development projects including those that focus on environmental sustainability. In addition, many developed countries such as the US, China and Germany offer financial assistance to African nations through bilateral aid programmes. This funding often supports climate mitigation and adaptation projects, as well as sustainable development initiatives.

Increasingly, private sector entities are also investing in green projects in Africa. These investments are driven by the growing recognition of the business opportunities presented by the green economy. Various international climate funds, such as the Green Climate Fund and Global Environment Facility provide financial resources to support climate action in developing countries. However, while the influx of green financing holds promise, there is a growing concern about the phenomenon of green extractivism. This refers to the exploitation of natural resources under the guise of sustainable development, often leading to environmental degradation and social injustice.

A big part of green extractivism is resource exploitation. In the name of green development there are instances where large-scale renewable energy projects, such as hydroelectric dams and biofuel plantations, have led to the displacement of communities, loss of biodiversity and destruction of ecosystems. Many of these green projects are designed to benefit foreign investors and corporations rather than local communities. The profits and benefits of these projects often flow out of the host country, leaving local populations with minimal gains. 

Green extractivism can have significant social and environmental costs. Projects that prioritise profits over sustainability can result in pollution, land degradation and social conflicts. For example, mining for minerals essential for green technologies, such as lithium and cobalt, has led to environmental damage and human rights abuses in some African countries, such as in the Democratic Republic of Congo. 

To ensure green investments truly benefit Africa and do not devolve into green extractivism, several measures must be taken. Local communities must be actively involved in the planning and implementation of green projects. Their rights and interests should be prioritised to ensure they benefit from these investments. Transparency in decision-making and financial flows is crucial. Governments and investors should engage in inclusive processes that involve civil society, local communities and other stakeholders. 

Further, strict sustainability standards and regulations should be enforced to ensure green projects do not harm the environment or violate human rights. This includes conducting thorough environmental and social impact assessments. Robust accountability mechanisms should be established to monitor and evaluate the impact of green investments. This includes independent oversight bodies and grievance mechanisms for affected communities.

Lastly, an effective approach to the problem of green projects disproportionately benefiting foreign investors lies in establishing robust frameworks that prioritise local involvement and benefit-sharing. Governments and policymakers should mandate local ownership stakes, ensure community participation in decision-making and implement regulations that require a significant portion of profits to be reinvested in local development. Transparent and enforceable agreements must be in place to guarantee that the economic and social benefits of green projects are equitably distributed among local populations, thereby fostering inclusive and sustainable growth. 

The dichotomy between green investment and green extractivism highlights the complexities of financing Africa’s green economy. While green investments are essential for addressing energy poverty, fostering economic growth and building climate resilience, they must be implemented in a manner that prioritises sustainability and social justice.

Scrutinising these investments and holding all stakeholders accountable is crucial to ensuring that the promise of a green economy does not turn into a new form of exploitation. As Africa navigates its path towards sustainable development, it is imperative to balance the promise of green financing with the realities on the ground, ensuring that the benefits are equitable and long-lasting. 

Mokgonyana is a renewable energy campaigner at Power Shift Africa, focusing on renewable energy in Africa, just transitions and climate security.