Africa’s Cleantech Imperative

Africa’s Cleantech Imperative
January 31, 2020 Admin


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Demography as Destiny

In the 21st century, Africa is unavoidable. Thanks to an unmatched demographic explosion, the continent finds itself in a wonderfully Dickensian position: it is at once the best of times and the worst of times. The best, because the kind of demographic changes sweeping through Africa is the stuff that economic booms are made of; the worst, because that demographic dividend can easily turn into a demographic catastrophe if the status quo holds. Consider the fact that 60% of Africans today are under the age of 25; or the fact that, according to the United Nations, one in four people walking the Earth in 2100 will be African; or the fact that 450 Million Africans will be entering the workforce in 16 years.

The most striking feature of these shifting demographic plates is that the developed world is going in the complete opposite direction. Thanks to a birth rate per woman well below 2.1% — the demographic sweet spot for a nation to maintain its current population — Europe is projected to lose 30 million working-age individuals by 2050. In 1963, Europe represented 12.5% of the world’s population. Today that figure is 7.2%, and if current trends continue, by 2050 only 5% of the world will be European. Things are no better in Japan, where diapers for the elderly regularly outsell baby diapers. This is not an aberration; it is a trend throughout the developing world. In other words, the future does not belong to either Heinrich, Akira, or Megan. It belongs to Mamadou.

The African Apocalypse

Of course, none of these demographic gains matter in a world in which the Global Warming tab has come due. Although Sub-Saharan Africa produces less than 4% of the world’s greenhouse emissions, the region’s ecological systems have already been impacted by planet-scale warming. In fact, Africa has been dealing with the impacts of climate change since the seventies. The IPCC, a global authority on climate change science found that:

Temperature increases in the region are projected to be higher than the global mean temperature increase; regions in Africa within 15 degrees of the equator are projected to experience an increase in hot nights as well as longer and more frequent heatwaves…Every bit of additional warming adds greater risks for Africa in the form of greater droughts, more heatwaves and more potential crop failures. West Africa has been identified as a climate-change hotspot, with climate change likely to lessen crop yields and production, with resultant impacts on food security…The western part of Southern Africa is set to become drier, with increasing drought frequency and number of heatwaves toward the end of the 21st century.”

Perhaps more worryingly, the IPCC asserts that drought, desertification and scarcity of resources have led to “heightened conflicts between crop farmers and cattle herders, and weak governance has led to social breakdowns…The shrinking of Lake Chad is leading to economic marginalization and providing a breeding ground for recruitment by terrorist groups as social values and moral authority evaporate.”

To add more insult to injury, Africa’s agricultural sector is already hampered by its reliance on rain-fed irrigation, poor soils and technologically deficient farming methods. These inadequacies mean that rural areas will be hit the hardest as droughts, floods, and temperatures get worse. Given that farming makes up 70% of the continent’s economy, the humanitarian disasters at hand are enormous. As the difficulties mount, the UN projects that 50 million people will emigrate from Africa to join the pool of migrants already making their way across the Atlantic and the Mediterranean to Europe and America. In other words, however, the global warming cookie crumbles within the next few years, there is no ignoring the continent. As Africa goes, so will the world.

Potential Conflict

The combination of unbridled population growth, mass urbanization and worsening environmental conditions create a perfect recipe for conflict. As economic theory has shown us, scarcity creates value, and value attracts competing interests who will fight to claim the scarce asset. Agglomeration has been the story of the century across African cities. While some view this as a source of good, there are signs that point to the contrary. Case in point, the pastoral conflict unfolding in Nigeria. In response to the environmentally-induced depletion of arable lands in the north, herdsmen have taken it upon themselves to encroach on farming settlements in central states.

So far, the conflict has claimed more than 1000 lives and led to the flight of over 30,000 Nigerians from their homes. As mentioned in the ICG report, “The conflict is fundamentally a land-use contest between farmers and herders across the country’s Middle Belt. It has taken on dangerous religious and ethnic dimensions”. Whatever the causes, they are not particular to Nigeria, as countries such as Somalia have suffered from climate-related unrest.

A paper published in the American Journal of Agricultural Economics notes that “globally, intergroup conflicts (such as civil war) rose by 14% with each one standard deviation change in climate toward higher temperatures or more extreme rainfall; projected temperatures by 2050 for most parts of Somalia correspond to an increase of three standard deviations”. In other words, unless something is done urgently, violence will increase in lockstep as the climate continues to remain a problem.

The Cleantech Imperative

What is unique about the global climate crisis is that it is a challenge which demands the one skill that has long evaded modern political institutions not only in Africa but across the world: precise, effective coordinated action. The rise of startups around the world is symptomatic of the failure of states and local institutions to do just that. This is especially true in Africa where, most recently, motorcycle hailing startups have raised over $70 million to solve chronic mobility issues that local governments have neglected. Due to technological improvements such as increased high-speed internet and mass adoption of mobile, Africa has seen the steady rise of startup ecosystems in Lagos, Nairobi, Cape Town and Accra. More specifically, the explosion of fintech options has laid the foundation for the ecosystem (startups can now charge customers for products) while at the same time providing an opportunity for future growth in other sectors.

According to Disrupt Africa, in 2018, fintech startups received $284.6 million, which is double the amount of capital received by startups in the cleantech sector ($143.5 million) and almost triple the amount received by startups in the e-commerce sector ($97.7 million). However, it is now time for the ecosystem to mature to even hairier problems. Indeed if Africa is to face its climate challenges head-on, it must turn to startups to do so. In desperate times, it is better to ask for forgiveness than wait for permission. Consequently, we are calling for the creation of continent-wide African cleantech startup ecosystems to exponentially increase the slate of innovative solutions to the continent’s climate problems. Specifically, the involvement of venture firms and other capital institutions will be crucial to the formation of these ecosystems.

The Solution Shift

In the last few years, the sector of cleantech has been on a resurgence of sorts – because these aforementioned challenges are no longer simply ideas on the minds of climatologists – but rather actual events that impact Africa and beyond. We have been seeing a number of African born entrepreneurs utilize the venture institutions in the United States to create solutions that are uniquely focused on solving issues in their home countries.

As an example, the Los Angeles Cleantech Incubator (LACI) is one of the largest cleantech incubators in the United States that focuses on the energy, transportation, and smart sustainable cities. LACI hosts two annual competitions to find the most innovative cleantech companies in energy and transportation – the California Climate Cup (in partnership with New Energy Nexus) and the New Mobility Challenge (in partnership with the NewCities Foundation).

The two awardees of both of the competitions had a similar background – native Nigerians who decided to take their western education and disrupt their home markets rather than the typical approach of Silicon Valley first – taking capital from US firms and deploying elsewhere.

Ugwem Eneyo is the founder of SHYFT– a company focusing on smart energy technology, bringing intelligence to solar, generator, investor, and utility power – allowing users to save money. SHYFT’s technology enables users to manage distributed energy resources in markets that struggle with grid reliability and resiliency. Because its grid is so unstable, Nigerian households and businesses that can afford it have backup energy sources such as solar panels or traditional diesel generators. SHYFT’s technology optimizes the usage of such varied power sources for both uptime and cost. Among its successes, SHYFT counts awards from Cisco, the National Renewable Energy Laboratory, and the California Clean Energy Fund.

There is also the case of Chinedu Azodoh, co-founder and CTO of Max Africa Express – a startup which recently raised $7M USD to reimagine the logistics and consumer transportation focus in Nigeria, with the company having completed over 1 Million rides. Most impressively, Max intends to use a large portion of their new funds to pioneer EV development in the African startup market. The resulting effects of this, when compounded, mean a growing African EV charging station network, which signifies a tremendous addition to Nigeria’s grid operations. In short, Azodoh’s company is positioned to play a major role in making the dream of electric motorcycle taxis in African cities powered by renewable energy a reality.

Both Ugwem and Chinedu are two of many examples of founders realizing that these issues in climate change are important enough to focus their entrepreneurial activities towards this issue – not in the United States – but in Africa.

Lastly, there is M-KOPA, a Kenyan startup which sells solar home systems to low-income earners by allowing them to pay in instalments over the course of a year using M-Pesa, Kenya’s pioneering mobile money system. In so doing, M-KOPA manages to make affordable, high quality solar accessible to anyone. The startup is supplying safe power to millions of off-grid homes. Not yet a decade old, M-KOPA has spread to the rest of the continent, specifically to Uganda and Tanzania. Were they connected to dense networks of talent and capital, their progress would likely even more impressive than it already is.

Conclusion

In 2006 there was a show which combined the superhero aesthetic of today’s Marvel Cinematic Universe with the blockbuster mania of Game of Thrones; it was called Heroes. The show told the story of a few super-powered individuals who worked together to stave off a series of catastrophic futures. The catchphrase, as told in the first season prophecy, was “save the cheerleader, save the world”. This phrase—specifically in the context of global climate change and its geopolitical implications—is perhaps even more applicable than ever where Africa is concerned. Proactively attacking Africa’s global warming challenges through the development of cleantech ecosystems across the continent is the highest leverage activity anybody who wants to see 2050 could do. In other words, Save Africa, Save the world.

Editor’s note: This was a loving read on the Future of energy from contributor Alpha Barry and Taj Eldridge. Alpha Barry is the founder of Junto, a platform helping aspiring entrepreneurs apprentice under great founders. He previously worked at Los Angeles Cleantech Incubator (LACI) for the Unlocking Innovation group working with teams focusing on fundraising, impact, and incubation. Alpha was also part of the first cohort of the Annenberg Foundation/PledgeLA VC Fellowship. You can find him on Twitter.

Taj Ahmad Eldridge is the current Senior Director of Investment for Los Angeles Cleantech Incubator (LACI). Previously, Taj was Accelerator DIrector at the University of California-Riverside and an investor/founder in e-commerce, mobile, SaaS, and energy. Taj began his career as a banker.

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