Egypt has positioned itself as Africa’s climate leader by hosting this year’s UN climate summit, the 27th Conference of the Parties (COP27). The conference aims to secure funds to help developing countries’ adaptation efforts.
Paying a High Price
Everyone suffers from climate change, but some regions suffer disproportionately from its negative consequences. Africa contributes only three percent of global greenhouse gas emissions, the least of all regions. Yet increasing temperatures, extreme droughts, and floods threaten human health and safety, food and water security, and socioeconomic development in Africa.
African leaders meeting recently at the Africa Adaptation Summit in Rotterdam called on their counterparts from wealthier nations to increase funding for projects to help them adapt to climate change. This topic was already addressed at the COP26 meeting last year, where world powers pledged to double the funding for developing countries to around $40 billion a year by 2025, but adoption has been slow.
“If we want our continent to thrive, we have to adapt to climate change — and to achieve this, financing needs to start flowing at scale,” said Ghana President Nana Afuko-Addo at the summit. The African Development Bank has already committed half the amount needed for the Africa Adaptation Acceleration Program, but African leaders are looking for the world’s big CO2 emitters to step in.
These discussions will be the focal topic at the 27th Convention on Climate Change this month in Egypt. With a volatile geopolitical backdrop dominating world dynamics since early 2022, leaders at COP27 have their work cut out to achieve goals around climate.
In the meantime, businesses can play a key role in improving people’s lives.
Harnessing the Power of People
By 2050, Africa will be home to some of the world’s largest cities, including Lagos and Kinshasa, and a $29 trillion economy. The continent boasts the largest youth labor market in the world and is at the forefront of digitalization and cloud technologies. Tech-savvy young people equipped with the right skills and vision can dramatically impact productivity and sustainability, making education and vocational training vital to success.
While connectivity has improved over the last decade, its reach varies. About 600 million Africans still lack access to electricity, and frequent power outages keep the existing supply unstable. Political, economic, and social instability exist in many countries, but the most significant problem remains the high unemployment rate across the entire continent.
“In a world where one employee may be supporting ten family members, sustainability and compliance to environmental, societal, and governance factors may seem a luxury,” says Cathy Smith, managing director of SAP Africa. “African enterprises don’t want their growth to be hampered by restrictions from outside their region. At the same time, they realize the need for greater efficiency, lower costs, and less waste in running their business. It’s common sense.”
Africa is vast and diverse. Whereas some countries like Kenya, Ruanda, and Nigeria have digitally savvy populations striving towards digital transformation, others depend on traditional industries such as mining and oil and gas, where change happens at a slower pace. Small and midsize businesses remain the backbone of most economies on the continent.
Businesses have never been a more critical player in responding to significant global volatility, disruption, and conflict. Still, regional enterprises must develop at their own pace based on their strategic objectives and customer needs.
Understanding Human Needs
Like elsewhere, consumer behavior shifts have impacted the African continent since COVID-19. As opposed to many Western countries, where consumers focus more on sustainability, African shoppers are more concerned with household spending. According to a study by Nielsen IQ 2022 on South African Consumer Outlook, brand loyalty has weakened as consumers more frequently select the lowest-priced product to meet their needs and budgets.
“It’s very critical for consumer goods companies to ensure their portfolio accommodates the changing circumstances of shoppers,” Smith says. “Our job is not to mandate how those companies manage their green lines. Our job is to help them move beyond disconnected, piecemeal approaches and use technology’s power to build inclusive, sustainable, and resilient value chains.”
That said, shifts in consumer behavior toward sustainability are not impacting Africa. According to research published by De Beers Group, sustainability considerations are now on par with price and design for consumers when purchasing diamonds. While there is undoubtedly a dark side to how people have acquired their sparkling stones, the upside is that the industry creates high employment levels and contributes significantly to the GDPs of the countries producing them.
As quoted in the report, De Beers Group CEO Bruce Cleaver says the research provides important insights on how sustainability factors influence consumer attitudes toward diamonds. A tipping point is happening: sustainability is no longer a trend; it’s already one of the critical considerations in diamond purchases.
Finding the Right Balance
For business leaders, it is a matter of weighing the pros and cons and finding the right balance to benefit people, profit, and the planet. In addition, government policies need to align all relevant parties. Consistent collaboration among governments, businesses, and partners can help maintain the sense of urgency required to ensure the well doesn’t dry.
This approach will help African enterprises of all sizes in all industries chart a sustainable path for the future.
For more information on how SAP helps companies record, report, and act on their sustainability goals, visit sap.com/sustainability.