Climate change is one of the leading factors contributing to urbanization in Sub-Saharan Africa. Extreme temperatures and unpredictable rainfall have already affected income from agriculture in the region, pushing people to migrate from rural to urban areas.
Cities in Sub-Saharan Africa have instituted measures by setting urban planning goals that emphasize climate-related targets. For example, eight cities in the region, including Accra, Addis Ababa, Dar es Salaam, and Lagos, have pledged to achieve zero-carbon economies by 2050 by eliminating emissions from transport, buildings, energy production, and waste management.
In South Africa, Cape Town’s Climate Action Plan seeks to source 10 percent of its electricity needs from renewable sources by 2020, up from 2 percent in 2016 excluding nuclear energy.
There is a significant opportunity to fill this gap, and IFC estimates a climate-smart investment potential of $1.5 trillion in small, medium, and large cities in Sub-Saharan Africa from 2018 to 2030.
According to IFC, some of the key areas that present significant opportunities for investment include green buildings ($768 bn), electric vehicles ($344 bn), public transport ($159 bn), climate-smart water ($101 bn) and renewable energy ($89 bn).
“The green economy presents a tremendous opportunity for not only Kenya but also all of Africa in so far as innovation and shared value. As we seek to address the effects of climate change, a collaborative approach is necessary to shift the global and pan-African financial system to become a primary enabler of sustainable development. We are thankful that IFC has demonstrated this leadership,” said Nuru Mugambi, Kenya Bankers Association, Lead on Sustainable Finance.
With the current population growth rate of growth rate of 4.7 percent, Nairobi is among the fastest growing cities in Africa, with a GDP per capita of $6,000, about three times the average for the country.
The IFC has broken down the city’s climate investment opportunities between 2018 and 2030; the key areas include electric vehicles ($5 bn), public transport ($1.6 bn), green buildings ($1.1 bn), urban water ($360m) and renewable energy ($240m). These represent total investment potential of $8.5 bn in climate related industries in Nairobi alone during that period.
The city is already gearing up for the expected large-scale adoption of electric vehicles, given impetus by the national government’s development of environmental, health, and safety standards for importing electric cars and motorcycles. Nairobi is home to one of two inspection center that are undergoing automation in anticipation of the influx of electric vehicles into the city.
First-movers from the private sector have already stepped up to the plate; Finnish company EkoRent in 2018 launched Nopia Ride, a full electric taxi service in Nairobi, while Nigerian company Nigus Enfinity plans to establish a local assembly plant by 2020.