/ 2 March 2020

The green economy – a win-win strategy for South Africa

Green Bonds Take Root In China
The green economy can pave a way to a thriving South African society by unlocking economic value, fighting climate change and improving human wellbeing. It is a win-win-win.

In the face of the global climate emergency and local economic crises, a transition to a green economy has the potential to drive sustainable economic growth in South Africa. The notion of a green economy was first coined in 1989, but publicised 20 years later by the United Nations Environment Programme in its global response paper to the 2008 economic crisis, titled: Rethinking Economic Recovery: A Global Green New Deal

The green economy is considered an approach to achieving sustainable development that advocates for meeting present global population needs without compromising those of future generations. It is characterised by an economy that is low carbon, resource efficient and socially equitable, and at its core aims to improve human wellbeing while drastically reducing environmental risks and ecological scarcities.

The green economy tends to be poorly understood outside a small circle of practitioners and proponents. One misconception is that it is a distinct economic sector, as opposed to a broader philosophy for economic growth that is pervasive across sectors. Another is that it tends to reduce the concept to the mere planting of trees and the cleaning of the surrounding environment. 

Although these activities serve some ecological benefit, the green economy is broader and advocates for the decoupling of economic growth from environmental degradation and resource use. These principles apply to all businesses, small and large alike. The goal for industries is to create more with the same input through efficient production systems, resulting in reduced waste generation and pollution. These responsible business practices tend to contribute positively to a company’s bottom line. 

South Africa does not have a national green economy strategy, although there are plans to develop one according to the National Strategy on Sustainable Development and Action Plan (2011-2014). That said, there is no shortage of enabling and supportive policies that advance this new economic developmental path. In the past decade alone, all spheres of government (national, provincial and local) have developed policies, strategies and pricing reforms that enable the green-economy transition. 

For instance, the National Climate Change Response white paper (2011) was specifically developed to address climate change challenges. On the energy front, most of these interventions are aimed at driving energy efficiency and a transition to a low-carbon energy mix for the country. 

For instance, the recently adopted Integrated Resource Plan spells out the details on the share of renewables in the national electricity mix until 2030. The execution of this plan is enabled by the Renewable Energy Independent Power Producers Procurement Programme, which contributes to both national climate change imperatives and a diversified energy supply. 

Yet other policies enable the greening of existing industries and support the development of new industries with green products. The industrial policy action plan and the recently promulgated tax regime, the Carbon Tax Act of 2019, are two such examples. The waste sector’s green economy initiatives are informed and enabled by the Waste Act of 2008. To address issues of innovation that will anchor the transition, there is a 10-year innovation plan for the country.

Bringing it closer to home

At a subnational level, provinces have recognised that the green economy trajectory can boost employment; stimulate sustainable economic growth through improved process efficiencies, emerging and innovative technologies; and create new business models that advance a low-carbon economy, efficient use of resources and promote social equity. The provinces have, therefore,  developed their own specific strategies. 

The Gauteng provincial government’s plan is called the Gauteng: Green Strategic Programme. One of the focus areas of the programme is developing a mechanism to support innovation and entrepreneurship. 

The Green Economy Unit at Gauteng’s The Innovation Hub gives effect to the dual mandate of promoting innovation and entrepreneurship — specifically, among the small-, micro- and medium-enterprises in the green economy. 

The unit fosters innovation and entrepreneurship for the Gauteng government through its business incubation programme: the Climate Innovation Centre South Africa (Cicsa) established in collaboration with the World Bank programme, Infodev, about five years ago. Cicsa has chosen to focus on the key areas of energy, water and sanitation, and waste management because of the potential for these sectors to create jobs and to grow the economy. Cicsa provides business incubation for enterprises that align to these sectors through access to advisory and skills development, infrastructure, markets and funding opportunities (largely from partners).

The incubation term is about four years and comprises two phases. The first is the pre-commercialisation phase known as the “factory”, with the aim to take a minimum viable product to market. Once in the market, these companies are promoted to the second phase, known as the “core”, which involves several years of scaling up. Cicsa has achieved some notable success in the past five years, including exporting more than R100-million of products and services, and disbursing R9-million from the national Green Fund as grants to a number of startups, which were able to attract and leverage an additional R65-million.  

Initiatives such as Cicsa and similar programmes run by The Innovation Hub are well poised to make a significant contribution, however, there are barriers that hinder progress. Chief among them is access to the public sector market because of prohibitive legislation and regulatory frameworks that limit the public sector’s ability to procure innovation. For instance, it is extremely difficult to build tender requirements for solutions you can’t imagine, and so many great ideas are overlooked and never adopted. 

To help in overcoming this, the Green Economy Unit also plays an advisory role and provides technical support to municipalities, assisting in some instances by scoping the terms of reference for projects in its focus sectors. Cicsa has sat on a number of steering committees to assist in the development of business cases for big infrastructure projects, for example. The aim is that this is one way for green economy companies to  access municipal markets. 

The vision is for a handful of Cicsa graduates to list their companies on the JSE, make a significant dent in solving Africa’s most pressing problems and contribute to sustainable development. It will also be fulfilling to have talented youth at the helm of big businesses that are solving our local and global challenges. To reach this future, we need to be able to provide small businesses with access to world-class technical infrastructure. 

It is my hope that The Innovation Hub builds state-of-the-art strategic infrastructure that enables startups to design, develop, prototype and begin to manufacture components for these technologies. It won’t happen overnight, but through strategic partnerships and local investment we could help give flight to the many great ideas brewing at The Innovation Hub. 

The green economy can pave a way to a thriving South African society by unlocking economic value, fighting climate change and improving human wellbeing. It is a win-win-win. 

Dr Rethabile Melamu is general manager of Green Economy at The Innovation Hub