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Drawing Investors To Africa’s Green Economy Projects

Drawing Investors To Africa’s Green Economy Projects

When it comes to drawing investors to Africa’s green economy projects, perception can be everything, according to U.S.-based consultancy Dual Citizen LLC.

The 4th edition of Dual Citizen’s Global Green Economy Index took an in-depth look at how 60 countries and 70 cities are developing their environmentally friendly economies and found that actual performance of green economies and how experts perceive that performance can differ widely.

For Africa, the report – which is released every two years – looked at Burkina Faso, Ethiopia, Ghana, Kenya, Mauritius, Morocco, Mozambique, Rwanda, Senegal, South Africa, Tanzania and Zambia.

“The only one that was tracked in 2012 was South Africa,” Jeremy Tamanini, founder of Dual Citizen told AFKInsider.

The new report gives individual breakdowns of those countries where performance clearly exceeds perceptions, signaling significant opportunities for improved green country branding and strategic communications – most notably in Ethiopia, Mauritius, Rwanda and Zambia. In these cases, “global audiences simply aren’t registering the green merits of these states or country competitors are overshadowing them with a more strategic approach to communications and information exchange,” according to the report.

“I think it is much more nuance than that because it’s really difficult to find one size that fits all in terms of fixing perception,” Tamanini told AFKInsider.

Performance versus Perception

The Global Green Economy Index is sort of a com­munications tool for policy makers, international organizations and the private sector with both a reference point for green economy national performance and how investors rank that performance over time.

The performance index is defined by 32 underlying indicators and datasets, each contained within one of the four main dimensions of leadership & climate change; efficiency sectors; markets & investment; and environment & natural capital.

The perception survey targeted respondents on how they assessed national green perfor­mance on the four main dimensions of Leadership & Climate Change, Efficiency Sectors, Markets & Investment, and Environment & Natural Capital. To ensure the most accurate results, the perception survey was divided into four dis­tinct groups of respondents, defined by the proximity of their professional work to the four main dimensions of the Global Green Economy Index.

This approach ensured more informed responses such that an individual with knowledge about sector performance in the green economy (i.e. build­ings, transport, tourism and energy) wasn’t also asked to rank environmental performance in areas like agriculture or forestry where they lack a similar level of expertise.

Independent of the actual survey results, this work has revealed valuable insights into the topic.

“One such insight is the high level of uncertainty surrounding the definition of ‘green economy’ across geographies, sectors and particularly between different types of organizations and institutions,” states the report, which notes this finding “reinforces the need for a framework like the GGEI to better understand information flows and how perceptions vary about different aspects of the green economy.”

Another related insight suggests that while numerous individuals and institutions work on sector-based or thematic components of the green economy, there are only a few with a dedicated focus on knowledge generation and country-level capacity building in the green economy per se.

Tamanini told AFKInsider they looked at investment promotion agency websites and the extent to which green investments were highlighted, whether market data was provided that would be relevant for investors and whether specialists in these green economy sectors for investors to correspond with.

A red flag from this year’s Global Green Economy Index results was that many of the fastest growing economies – most notably Ghana – ranked poorly on the perfor­mance measure, highlighting an urgent need to reorient their economies to greener growth pathways by “reinforcing the importance of mainstreaming the green economy concept further so it can be better integrated to policy formulation in these markets,” according to the report.

“The point there was that many of the fastest growing countries in the world as defined by GDP perform relatively poorly on the Global Green Economy Index which begs the question of whether their growth is “green,” Tamanini told AFKInsider. “And there are a lot of aspects of that.”

Tamanini told AFKInsider you have to dig into whether its related to the environment and the management of natural resources; whether its more about the efficiency sector and high levels of emissions for example from buildings or transport. Or maybe they have really low renewable energy as a contribution to their energy mix.

Investor Perception

Where the perfor­mance scores exceeded the perception scores significantly signaled “an urgent need for better strategic communications and information exchange of their green merits and associated investment opportunities,” according to the report.

“For example in the case of the African countries, if you look at the markets and investment dimension, if they’re performing better than global investors perceive them to be performing, then that’s obviously an opportunity for the country to better position its market for consideration by these global investors that are controlling or allocating capitol,” Tamanini told AFKInside. “And that’s a trend we’re seeing in those African countries.”

The results suggest a need for some Africa states to better position their green econ­omies on the international stage if they want to draw greater investment.

“So that’s one area where it’s more about generally just positioning the country in the broad sense to appeal to investors,” says Tamanini.

But that is not always easy and certainly not easily defined generally.

Tamanini points out that a lot of African countries face challenges around be their political risk, or historic kind of stereotypes, or assumptions about the vitality of these different markets.

“I think the answer depends very much on where the gap is most pronounced,” Tamanini told AFKInside.

For example with the markets and investment dimension, that section of the report provides a grid with five or six key areas where perceptions are impacted from an investment point of view and why it’s important and how policy or business leaders in these countries can work towards better global perception.

“But then there’s other cases where it might be really market specific – there may be some recent case where a renewable energy investment went sour or where policy has been inconsistent or changed,” Tamanini told AFKInside. “And that can really impact perceptions in terms of how long-term and generally supportive the government is to the sector.”