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What the COP26 climate finance deal could mean for Africa

* 11 November 2021 8:08 AM
Tags:
Climate change
Standard Bank
ESG
COP26
Sponsored Content
ESG investing

What could the deals and agreements at the Climate Change Conference (COP26) mean for Africa... and are they all a good thing?

Standard Bank presents Investing in the Future: Acting Now and Acting Well - a podcast series dedicated to unpacking the current state of ESG in South Africa. 702’s Arabile Gumede hosts expert guests to discuss the shifts needed to make a fundamental change that can achieve a resilient and regenerative economy.

In this episode, Nicole Martens, Development Economist and Director at Martens Impact Advisory details what the green finance deals at the Climate Change Conference could mean for Africa and the small and medium enterprises operating in the green economy.

Click below to listen to the conversation while you read:

Research conducted by The World Bank found that small to medium enterprises represent about 90% of businesses and more than 50% of employment worldwide and, as much as 40% of the GDP in emerging economies. How crucial is SMEs access to finance in Africa's green growth?

There's been a lot of research that's been done into SMEs as the growth powerhouse for emerging markets and particularly across Africa. I focus on sustainable and green growth and the role of SMEs in that specific sector is so crucial.

Nicole Martens, Development Economist and Director at Martens Impact Advisory

A lot of the solutions that we need are at a micro-scale, a lot of the technology and the approaches we need to be testing are really innovative, out-of-the-box kinds of things that are not going to come from... mega-projects and big listed companies, they're going to come from social entrepreneurs trying to solve problems in their communities.

Nicole Martens, Development Economist and Director at Martens Impact Advisory

We can't understate the importance of the sector for growth and for sustainable and green growth going forward.

For this reason, funding initiatives like the Green Outcomes Fund, which supports and incentivises local fund managers to increase capital allocation to target high potential and fast-growing SMEs working toward sustainable solutions are so important, says Martens.

As the 26th session of the United Nations Climate Change Conference (COP26) reaches a conclusion in Glasgow, Nicole Martens is excited about the enormous sustainable opportunities and growth that SMEs operating in South Africa's green economy are about to witness in the next five years.

In terms of South Africa's role in the global initiative to reach net-zero carbon emissions by 2050, Gumede asks Martens if we could be getting too excited about this target.

The biggest risk with something like the net-zero by 2050 target is that it seems so far away, that it's very tempting not to start anything yet. A net-zero target by 2050 means absolutely nothing in the absence of a plan that starts today and you do have to start plugging in some of those holes because... it's cumulative.

Nicole Martens, Development Economist and Director at Martens Impact Advisory

She believes that South Africa needs strategies that are appropriately ambitious but also pragmatic and, cautions against over-excitement about the target in absence of the plan. The plan is far more important and can change and, as it's implemented, it might change the target.

The target is progress and progress is good... but we do need to focus more on the plan and that plan involves things that we need to do, right now.

Nicole Martens, Development Economist and Director at Martens Impact Advisory

African ingenuity knows no bounds – and according to Martens, there is reason to be optimistic following President Cyril Ramaphosa's recent announcement about South Africa's climate finance deal worth R131 billion that is set to help the country transition from coal to renewable energy.

This signifies that world leaders like the United States of America, the United Kingdom, France and Germany are recognising the opportunities that exist in emerging markets in Africa and, in the sector of climate and transition finance.

Whilst we await the details around this transition deal, Martens states that the hope is that the funds that South Africa has secured should go a long way in de-risking the transformation of Eskom and crowding in other finance.

It can't just be some of us moving towards this future, we have to be all in. For more information, visit Standard Bank Corporate and Investment Banking.




* 11 November 2021 8:08 AM
Tags:
Climate change
Standard Bank
ESG
COP26
Sponsored Content
ESG investing

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