Inclusive green economy policies and structural transformation in selected African countries Inclusive green economy policies and structural transformation in selected African countries Ordering information To order copies of Inclusive green economy policies and structural transformation in selected African countries by the Economic Commission for Africa, please contact: Publications Section Economic Commission for Africa P.O. Box 3001 Addis Ababa, Ethiopia Tel: +251 11 544-9900 Fax: +251 11 551-4416 E-mail: isulcnI vilop y mono ce ne rg e ic itamrocu fsna rts dna se rt la rut i no irf celes n A de t irt nuo c c na se Contents ABBREVIATIONS AND ACRONYMS VI ACKNOWLEDGEMENTS VI OVERVIEW VI 1. INTRODUCTION 1 1.1 Background 1 1.2 Africa’s structural transformation 1 1.3 Inclusive green economy 2 1.4 Objective of the report 4 1.5 Methodology and analytical framework 5 1.6 Limitations of the report 8 1.7 Outline of the report 8 2. THE MACROECONOMIC ENVIRONMENT FOR AN INCLUSIVE GREEN ECONOMY 10 Key messages 10 2.1 Introduction 10 2.2 Overview of macroeconomic conditions 11 2.3 Responsiveness of the macroeconomic environment to the inclusive green economy 15 2.4 Implications for the inclusive green economy 28 2.5 Challenges and opportunities 30 2.6 Conclusions and recommendations 31 3. INCLUSIVE GREEN ECONOMY POLICIES AND THEIR ROLE AND SIGNIFICANCE IN FOSTERING STRUCTURAL TRANSFORMATION 33 Key messages 33 3.1 Introduction 34 3.2 Structural transformation strategies 35 3.3 Inclusive green economy policies and strategies 37 3.4 Synergies among inclusive green economy and structural transformation strategic frameworks 40 3.5 Win-win attributes of inclusive green economy and structural transformation policies 44 3.6 Trade-ofs between inclusive green economy and structural transformation policies 48 3.7 Integrated assessment methodologies and tools for inclusive green economy analysis 49 3.8 Challenges and opportunities 51 3.9 Conclusions and recommendations 54 4. EXPERIENCES, GOOD PRACTICES AND LESSONS LEARNED 58 Key messages 58 4.1 Introduction 59 4.2 Promoting coordination and multidisciplinary approaches 59 4.3 Good practice and lessons in the implementation of green economy approaches in selected sectors 61 4.4 Key success factors 74 4.5 Challenges and opportunities 78 4.6 Conclusions and recommendations 80 iii isulcnI vilop y mono ce ne rg e ic itamrocu fsna rts dna se rt la rut i no irf celes n A de t irt nuo c c na se 5. ENABLING MEASURES FOR AN INCLUSIVE GREEN ECONOMY THAT SUPPORTS STRUCTURAL TRANSFORMATION 83 Key messages 83 5.1 Introduction 83 5.2 Policy instruments for an inclusive green economy 84 5.3 Technology development and innovation 86 5.4 Capacity development 89 5.5 Financing the transition to an inclusive green economy 93 5.6 Other enablers of the transition to an inclusive green economy 97 5.7 Linking inclusive green economy enablers to structural transformation 98 5.8 Challenges and opportunities 99 5.9 Conclusions and recommendations 104 REFERENCES 107 ANNEX I: PRACTICAL APPLICATION OF METHODOLOGIES AND TOOLS IN AFRICA 118 ANNEX II: LIST OF PARTICIPANTS AT THE AD HOC EXPERT GROUP MEETING HELD IN NOVEMBER 2015 TO REVIEW THE DRAFT REPORT 125 LIST OF FIGURES Figure 1: An integrated framework for relative decoupling in Africa 4 Figure 2: Analytical framework for the report Figure 3: Value added by economic activity (shares of GDP), 2013 15 Figure 4: Employment and value added by economic activity (shares of GDP), 2013 17 Figure 5: Percentage of the population below the poverty line 19 Figure 6: Percentage of the population with access to (a) improved sanitation facilities and (b) improved drinking water sources in 2015 21 Figure 7: Percentage of the population with access to (a) improved sanitation facilities and (b) improved drinking water sources, 1990-2015 22 Figure 8: Percentage of the population with access to electricity, 1990-2012 22 Figure 9: Mortality rate for children under fve (per 1,000), 1993-2003 23 Figure 10: Primary energy supply as a percentage of total, 2012 25 Figure 11: Trends in carbon dioxide emissions and GDP in sub-Saharan Africa, 1992-2011 27 Figure 12: Trends in carbon dioxide emissions (kg CO2 per US$1 GDP PPP) between 1990 and 2010 in fve countries 28 Figure 13: Ethiopia: Integration between the GTP and the CRGE strategy at the policy develop- ment stage 43 Figure 14: Kenya: Average agricultural yield, 1980-2030 62 Figure 15: Development of organic agriculture, 2000-2012 63 Figure 16 : Electricity production from renewable sources, excluding hydroelectric (Gwh) 2000-2013 66 Figure 17: Composition of Africa’s energy mix, 2000-2012 (millions of tons of oil equivalent) 66 LIST OF TABLES Table 1: Macroeconomic overview 12 Table 2: Value added by economic activity (shares of GDP), 2000 and 2014 16 Table 3: Composition and share of merchandise exports 17 Table 4: Contribution of natural resources to GDP, 2013 (per cent) 18 Table 5: HDI and Gini coefcient 20 iv isulcnI vilop y mono ce ne rg e ic itamrocu fsna rts dna se rt la rut i no irf celes n A de t irt nuo c c na se Table 6: Key health indicators 24 Table 7: Unemployment rates, 2013 24 Table 8: Energy production, energy use and growth in energy use, 1990-2012 26 Table 9: Electricity production, source of production and access 27 Table 10: Structural transformation plans of the case study countries 38 Table 11: Inclusive green economy-related policies and strategies of the case study countries 41 Table 12: Win-win attributes of inclusive green economy and structural transformation policies and strategies 47 Table 13: Trade-ofs between inclusive green economy interventions and outcomes and those of structural transformation strategies 50 Table 14: Examples of policy instruments by sector 87 Table 15: Benefts of green technologies in South Africa and Tunisia 88 Table 16: The role and signifcance of capacity development in an inclusive green economy 90 Table 17: Capacity development needs and gaps in national green economy frameworks 93 LIST OF BOXES Box 1: Policy mix in Ethiopia 14 Box 2: Rwanda’s National Strategy on Climate Change and Low Carbon Development and its integration into the National Development Plan 45 Box 3: Organic agriculture in Uganda 63 Box 4: Sustainable land management in Ethiopia 64 Box 5: Tapping the trade potential in the renewable energy subsector in Morocco 67 Box 6: Solar water heater loan scheme in Mauritius 68 Box 7: Replacement of incandescent bulbs with compact fuorescent lamps in Ghana 68 Box 8: National railway and bus projects in Ethiopia 70 Box 9: Fossil fuel subsidy reform in the Niger 71 Box 10: Waste recycling in Kenya: EcoPost 71 Box 11: The Working for Wetlands programme in South Africa 72 Box 12: Community forestry and joint forest park management in the Gambia and community management of protected areas in Namibia 73 Box 13: The Green Fund of South Africa 75 Box 14: The Climate-Resilient Green Economy Facility of Ethiopia 76 Box 15: Rwanda’s Environment and Climate Change Fund 77 Box 16: Bujagali hydroelectric power plant in Uganda: Financing through public-private partner- ships 7 Box 17: Factors that contribute to success in the formulation and implementation of an inclu- sive green economy strategy 78 v isulcnI vilop y mono ce ne rg e ic itamrocu fsna rts dna se rt la rut i no irf celes n A de t irt nuo c c na se Abbreviations and acronyms ACET African Center for Economic Transformation AfDB African Development Bank AGRA Alliance for a Green Revolution in Africa AUC African Union Commission BAU Business as usual CGE Computable general equilibrium CRGE Climate-Resilient and Green Economy strategy (Ethiopia) ECA Economic Commission for Africa FONERWA Fund for Environment and Climate Change in Rwanda GDP Gross domestic product GGBP Green Growth Best Practice GTP Growth and Transformation Plan (Ethiopia) HDI Human Development Index IFPRI International Food Policy Research Institute IGE Inclusive green economy ILO International Labour Organization IMF International Monetary Fund IRENA International Renewable Energy Agency MDGs Millennium Development Goals NEPAD New Partnership for Africa’s Development OECD Organisation for Economic Co-operation and Development PPP Purchasing power parity PSGE Plan Stratégique Gabon Émergent (Gabon) REDD United Nations Programme on Reducing Emissions from Deforestation and Forest Degradation REFIT Renewable Energy Feed-in Tarif SCADD Stratégie de croissance accélérée et de développement durable (Burkina Faso) SDGs Sustainable Development Goals SEEA United Nations System of Environmental-Economic Accounting SLM Sustainable land management UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme UNEP United Nations Environment Programme UNESCO United Nations Educational, Scientifc and Cultural Organization UNIDO United Nations Industrial Development Organization UNRISD United Nations Research Institute for Social Development VAT Value-added tax WHO World Health Organization vi isulcnI vilop y mono ce ne rg e ic itamrocu fsna rts dna se rt la rut i no irf celes n A de t irt nuo c c na se Acknowledgements The present report benefted from the overall guidance of Fatima Denton, Director of the Special Initia- tives Division of the Economic Commission for Africa. Isatou Gaye, Chief of the Green Economy and Natural Resource Section, led the preparation of the report, with Mathilde Closset and Benjamin Banda as core team members. Andrew Allieu, Yacouba Gnegne and Charles Akol are acknowledged for their contribution to chapters 2 and 3, respectively, of the report. The substantive contributions of Richard Scotney of the United Nations Environment Programme, Regional Ofce for Africa, and Richard Osaliya, a former young African research fellow in the Green Economy and Natural Resource Section, to chapter 4 of the report are acknowledged with thanks. The Economic Commission for Africa extends its gratitude to Juliette Biao Koudenoukpo, Director and Regional Representative of the United Nations Environment Programme, Regional Ofce for Africa; Desta Mebratu, Deputy Director of the United Nations Environment Programme, Regional Ofce for Africa; and Samba Harouna Thiam, Head of the United Nations Environment Programme Liaison Ofce, for their va- luable comments and contribution to the report. Gratitude goes to all colleagues of the Special Initiatives Division and other ECA divisions and subregional ofces for their useful feedback and comments on the report. The report also benefted from the constructive comments and inputs provided by participants at the ad hoc expert group meeting held on 24 and 25 November 2015, to review and enrich the report (list of participants in annex II). The team is grateful for the valuable administrative and organizational support provided by Tsigereda Assayehegn, Tesfaye Wondu and Gezahegn Shiferaw. Lastly, Demba Diarra, Chief of the Publications Sec- tion, and his team including Megan Rees, Teshome Yohannes and Charles Ndungu are acknowledged for their efcient handling of the editing, text processing, proofreading, design and printing processes. vii isulcnI vilop y mono ce ne rg e ic itamrocu fsna rts dna se rt la rut i no irf celes n A de t irt nuo c c na se Overview Introduction development in the region. It reiterates and builds on the principles and strategic orientations of the Background New Partnership for Africa’s Development (NE- For more than a decade, African economies have PAD) of 2001, and earlier continental development recorded impressive and sustained growth rates. frameworks such as the Abuja Treaty establishing In 2014, growth rates averaged 3.9 per cent – only the African Economic Community of 1991 and the the East and South Asia region grew faster, at 5.0 Lagos Plan of Action of 1980. The Agenda is based per cent. However, this growth can be described on the need to, among other things, transform as largely non-inclusive because of among other the region’s economies to create wealth, reduce factors its limited contribution to job creation, poverty, minimize inequalities, strengthen pro- broad participation and overall improvement ductive capacities, improve social conditions and to people’s living standards. Furthermore, this achieve sustainable development (ECA, 2013). growth has not addressed market failures that re- sult in environmental pollution and degradation, Inclusive green economy and associated climate change challenges. The A green economy refers to an economic system consequences of such market failures provide a of production, distribution and consumption of strong rationale for a portfolio of public policies goods and services that results in “improved hu- that foster emissions reduction, the development man well-being and social equity, while signif- and adoption of environmentally benefcial tech- cantly reducing environmental risks and ecologi- nology, as well as the provision of environmental cal scarcities” (UNEP, 2011). The concept of green goods and services (Rodrik, 2013). economy rose to clear prominence and relevance in 2008/2009 during the search for solutions to The challenge confronting Africa is not only to the triple crisis- Financial, Fuel and Food, as well as maintain but to translate the rapid economic the challenges posed by environmental degrada- growth into sustained and inclusive development, tion and climate change. The Global Green New based on economic diversifcation that creates Deal, an output of the United Nation’s Green Eco- jobs, contributes to reduced inequality and po- nomy Initiative, launched by the United Nations verty rates, enhances access to basic services and Environment Programme, made a major contribu- corrects market failures that undermine environ- tion towards shaping the concept of green eco- mental sustainability. This underlies the renewed nomy. The concept gained further momentum calls by, and consensus among African countries in the run up to the United Nations Conference for, structural transformation that would efectively on Sustainable Development (Rio+20), which respond to the challenges highlighted above. was held in June 2012. The green economy in the context of sustainable development and poverty Africa’s structural transformation eradication was one of the two substantive the- agenda mes of the Conference. The Rio+20 Outcome Do- Africa’s structural transformation aspirations cument, The Future We Want, describes the green are embodied in continental development economy as one of several tools and approaches frameworks, the most recent of which is Agenda for achieving sustainable development. 2063. The Agenda was adopted in January 2015 by the Heads of State and Government of the Although the concept encompasses the econo- African Union as a shared strategy for inclusive mic, environmental and social dimensions of sus- growth, structural transformation and sustainable tainable development, it cannot be presumed to viii