Africa has long been renowned as a continent rich in resources, such as precious metals and minerals. But as the world grapples with transitioning to a more sustainable future, it is perhaps Africa’s greenest natural resources, such as its forests, that should be most highly valued.
The central African forest region, an area the size of western Europe and home to more than 10,000 plant and animal species, is a prominent example. Crucially, it also sucks up 4% of the world’s carbon dioxide emissions every year, according to the UN-backed Central African Forest Initiative (CAFI), making it a resource of vital global importance.
Carbon capture
“The region represents the world’s second-largest tropical forest basin, which means it has huge carbon stocks and absorbs hundreds of millions of tonnes of carbon dioxide from the air every year,” says Berta Pesti, head of the CAFI secretariat. “This is something that we have known for some time. What is relatively new is that research in recent years has shown the central African forests are some of the few remaining forest regions that emit less carbon than they absorb.”
Research in recent years has shown the central African forests are some of the few remaining forest regions that emit less carbon than they absorb
Despite the region’s significant global importance, Ms Pesti says it “has been largely bypassed by international climate finance”.
Although the global community is beginning to wake up to this, she believes there is still much further to go. “There is increased awareness — both at the public opinion level and also at the political level — as was signalled at COP26 in Glasgow, but I don’t think it is enough. I don’t think that enough people understand well enough that if these forests disappear, or really go down the path of major destruction, it is going to be a huge catastrophe for the larger sub-region here.”
CAFI has already secured donor support from multiple European countries, plus South Korea, to be “the largest UN-managed climate trust fund, at about $800m of pledges of funding,” Ms Pesti says. She adds: “We hope that the growing trend of investing in this region will continue.”
Sustainable forest use
Central to its approach, she says, is its comprehensiveness, working “at the political level across the different government entities and ministries that have an impact on land use. And, we also have integrated rural investment programmes that work directly with the communities.”
This is vital, she says, because “like every forest, this forest is under pressure from many different human activities, and very difficult choices have to be made about land use: what makes most sense economically, what is important culturally and what is important for the ecosystem.”
Unfortunately, this potentially creates conflicts across different levels of government, sectors and stakeholders, she explains. As such, this comprehensive approach helps ensure that everyone reaches a compromise that is sustainable over the long term.
This is a sentiment echoed by Alan Bernstein, founder and executive chairman of African Conservation Development Group (ACDG), an organisation focused on integrated land-use projects in Africa, specialising in “climate-smart, conservation-led” development.
Mr Bernstein says: “If you go back to the value system, which lies at the heart of what we do, it’s a classical sustainability ethos: optimise, maximise and use the resources available in your hands and at your fingertips now, but on a basis that allows future generations to make the same choices. That’s a catch all, but it does broadly guide us.”
The ACDG has leased, on a long-term basis, 731,000 hectares of forested and savannah land in Nyanga Province, southern Gabon, for its Grande Mayumba project, with plans to invest $160m into developing commercial activities and infrastructure, alongside preserving one third of the project area as a conservation arc. “Over 25 years, we expect to avoid [around] 200 million tonnes of carbon emissions in the project area, preventing unplanned development, deforestation and degradation of the ecosystem while delivering sustained commercial value,” the company’s website states.
Mr Bernstein stresses the importance of having appropriate land rights for a project such as this, to ensure long-term investment. “A key focus is to ensure that we have adequate land use rights, [effectively] how one secures those land use rights, how one optimises them and integrates the whole process of investment.” He makes a comparison with the safari industry where in the early years some five-year concessions were awarded, which led to low levels of investment and degradation of the safari areas over the life of the concession. With longer arrangements in place, these issues have been resolved.
On the one hand, Gabon has this vast resource, which it has to develop and utilise properly for the good of the country. But there are many people who would argue vociferously against any impact on the rainforest. It’s a delicate balance
He also acknowledges the difficulty of enabling important economic development while also preserving the natural habitat. “If one looks at the Congo Basin, which contains this vast resource of extremely high-value hardwood, alongside an astonishing reservoir of biodiversity, one has to be very careful in terms of setting the boundaries for optimisation models.
“On the one hand, Gabon has this vast resource, which it has to develop and utilise properly for the good of the country. But there are many people who would argue vociferously against any impact on the rainforest. It’s a delicate balance.”
Green Gabon
Such initiatives are part of Gabon’s broader plans to diversify its economy away from oil, a key pillar being ‘Green Gabon’ which focuses on the country leveraging its natural capital in a sustainable way.
Although the government’s approach to deforestation has evolved over the decades, the pace appears to be accelerating, with significant developments in the past year. For instance, in June 2021 Norway, via CAFI, paid Gabon $17m as the first instalment in a $150m agreement for reducing emissions from deforestation and land degradation.
In September 2021, Gabon also passed its Climate Law, which laid the groundwork for it to begin trading carbon credits on the international markets.
Capital market forces
Mr Bernstein is hopeful that the activities in Gabon may act as something of a blueprint for similar initiatives elsewhere, both in approach and, crucially, in how to attract international investment. “The role that this work might play as a model internationally and for the rest of Africa becomes extremely exciting … We’ve been able to play the role of a private-sector partner in this evolutionary process, and we now are in a position where we can start bringing in the larger scale capital market forces.”
The ACDG is currently making plans around a potential initial public offering that would enable investors to benefit from a future stream of carbon credits, linked to the Grande Mayumba project. It is also exploring launching a securitised bond, fully or partially underpinned by carbon credits. Its work utilises a model that measures the difference in carbon emissions between planned development, which is carefully planned to minimise deforestation, and unplanned development, specifically within so-called ‘high forested, low deforestation’ countries — such as Gabon and its neighbours.
Measurements and benchmarks
One of the key benchmarks for measuring the delta between planned and unplanned development scenarios is levels of stored carbon in the forest. The accounting process for measuring that has become a very well understood science and engineering practice, says Mr Bernstein. “It has evolved through very careful development and testing. We’ve drawn together groups of experts and consultants, and our team has been in the field for many years.”
In a broader context, developing tools and frameworks to measure the success of nature-related initiatives, or to make the case for their urgency, will be crucial in the coming years to attract investment and engagement. This will include creating tools to enable banks and investors to make informed decisions about capital allocation.
This is a broader challenge within Africa and at a global level. The Taskforce on Nature-related Financial Disclosures (TNFD), a body which is replicating the approach of the Task Force on Climate-related Disclosures, recently launched the beta version of its framework. It aims to help organisations worldwide to identify, define and report on nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.
This is an issue that requires significant focus from the investment community, not just in terms of preserving Africa’s rainforests. “In the African context, all types of nature-related risks are relevant,” says Elizabeth Mrema, co-chair of the TNFD. “Looking at soil, Africa is the most affected region globally when it comes to land degradation. Almost half of Africa’s land is affected by desertification, meaning that previously fertile land is turning into desert. Water risks in many African countries is also among the highest in the world, though it is highly location-specific.”
When it comes to biodiversity, Africa has, according to World Wildlife Foundation, experienced a 65% decline since 1970. These nature-related risks have huge consequences on the livelihoods of local populations, she adds.
She believes that by integrating nature-related financial risks, impacts and dependencies into investment decisions, by scaling up nature positive investments such as nature-based solutions, restoration of degraded ecosystems, sustainable agriculture, fisheries and infrastructure, and finally by disclosing nature-related financial risks and opportunities, the financial sector will make the difference. “But as of today, biodiversity is still not enough on the radar of the financial sector as climate change is, whether from the perspective of risk management or investments,” she says.
