Climate change is going to have huge consequences all over the world, especially in Africa. Harvests will be affected, threatening agricultural outputs. This could hurt farmers and lead to greater food insecurity.
But there hasn’t been much discussion about what effects climate change will have in other areas – like in the continent’s small and medium business sector. This is a worrying oversight.
Our research, conducted in Zambia and Botswana, revealed that businesses activities faced major disruptions during the 2015/2016 El Niño event. This was a result of drought-related water supply disruption in Botswana’s capital Gaborone, and disruption to hydroelectricity supplies in Zambia’s capital Lusaka.
El Niño is one of the key drivers of variations in global climate conditions between different years. It recurs every two to seven years and it’s typically associated with reduced rainfall and drought conditions in southern Africa.
Reflecting this trend, the 2015/2016 El Niño was one of the strongest on record. It brought widespread drought conditions and heat waves to the region.
By impacting urban water and hydroelectricity supplies, this had major consequences for business activities in Gaborone and Lusaka, as our research shows. These cities’ experiences should serve as a warning for others across the continent, and systems should be put in place to protect particularly small businesses from the worst realities of a changing climate.
In Botswana, as lake levels in the Gaborone Dam dropped to historical lows, businesses in Gaborone experienced decreased water pressure. In some cases businesses were completely cut off from piped water supply.
Lack of water for food preparation, butchery, irrigation, laundry, cleaning and sanitation had dire consequences for businesses such as hotels and guesthouses, restaurants, food businesses and other service industries. Hairdressers and car washing enterprises, for instance, came to a standstill as they struggled to provide services to customers or to maintain hygiene standards.
In Zambia’s capital Lusaka, where hydropower accounts for 94% of the country’s electricity generation capacity, low lake levels in Lake Kariba contributed to unprecedented electricity blackouts, often lasting for eight hours at a time.
In Lusaka, activities reliant on electricity such as manufacturing, processing and communications were interrupted as equipment was immobilised. Assets were lost because they couldn’t be reliably heated or refrigerated. In both cities, supply chains were disrupted.
Towards the end of 2016, as El Niño drew to a close, more than half of the 135 micro, small and medium enterprises we surveyed in Gaborone and Lusaka told us their profits would be lower than previous years. Almost a third believed that their business was at risk of closing down. Business owners said disruptions to water supply and power outages, in Gaborone and Lusaka respectively, were the greatest obstacles to them doing business.
The two cities’ experiences, alongside the widely reported “Day Zero” water situation in Cape Town, South Africa, should sound a warning for businesses elsewhere on the continent. Water shortages in Cape Town began during the El Niño, but extended into 2018 as drought conditions persisted.
Climate change events like droughts are only going to get worse – and urban centres where many small, medium and micro enterprises thrive will be in the eye of the storm. The 2015/2016 El Niño highlighted that even fairly moderate changes in rainfall can have major consequences for businesses in African cities.
More people are moving to cities, setting up businesses and connecting, often for the first time, to water and electricity grids. This increases demand and places pressure on existing water and energy infrastructure.
At the same time, a complex set of factors has limited the development of new infrastructure and the effective management of existing resources. This means cities are struggling to keep up with the increased demand.
These factors, which include under-investment in infrastructure, policy uncertainty, governance challenges and poor municipal service provision, exacerbated the effect of drought in Botswana, Zambia and South Africa.
Preparing for a new reality
So what can be done to address these realities?
First, action is needed across sub-Saharan Africa to increase understanding of the vulnerabilities in existing water, energy and urban infrastructure – alongside the effects of increasing urbanisation and a changing climate.
And, second, small and medium sized businesses, which are key drivers of economic growth across sub-Saharan Africa and provide many people with a livelihood, need more support from governments and policy makers to help them cope with disruption.
This should include better access to information about the timing and severity of anticipated disruption to water and electricity supplies, as well as support to invest in coping strategies such as alternative sources of energy.
- Kate Elizabeth Gannon: Postdoctoral researcher, London School of Economics and Political Science
- Declan Conway: Professorial Research Fellow, London School of Economics and Political Science
- Patrick Curran, a policy analyst at the Grantham Research Institute on Climate Change and the Environment, also contributed to this article.
The Rage And Tears That Tore A Nation
Snapshots of the outrage against foreign nationals and protests against sexual offenders in South Africa in recent weeks, captured by FORBES AFRICA photojournalist Motlabana Monnakgotla.
As the continent’s second-biggest economy, South Africa attracts migrants from the rest of Africa. But mired in its own problems of unemployment and political instability, September saw a serious outbreak of attacks by South Africans on foreign nationals and foreign-owned businesses. And they have been ugly.
The spark that fueled the raging fire was in Pretoria, the country’s capital, when a taxi driver was shot dead by a foreign national who was selling drugs to a youngster in the central business district (CBD).
The altercation caused a riot and the taxi industry brought the CBD to a standstill, blocking intersections. It did not stop there; a week later, about 60 kilometers from the capital in Malvern, a suburb east of the Johannesburg CBD, a hijacked building caught fire, leaving three dead. As emergency services were putting out the fire, the residents took advantage and looted foreign-owned shops and burned car dealerships overnight on Jules Street.
The lootings extended to the CBD and other parts of Johannesburg.
To capture this embarrassing moment in South African history, I visited Katlehong, a township 35 kilometers east of Johannesburg, where the residents blocked roads leading to Sontonga Mall on a mission to loot the mall and the foreign-owned shops therein overnight.
Shop-owners and workers were shocked to wake up to no business.
Mfundo Maljingolo, a worker at Fish And Chips, was among the distressed.
“This thing started last night, people started looting and broke into the mall and did what they wanted to do. I couldn’t go to work today because there’s nothing to do; now, we are not going to get paid. The shop will be losing close to R10,000 ($677) today. It’s messed up,” said Maljingolo.
But South African businesses were affected too.
Among the shops at the mall is Webbers, a clothing and footwear store. Looters could not enter the shop and it was one of the few that escaped the vandalism.
Dineo Nyembe, the store’s manager, said she was in disbelief when she saw people could not enter the mall.
“We got here this morning and the ceiling was wrecked but there was no sign that the shop was entered, everything was just as we left it. Now, we are packing stock back to the warehouse, because we don’t know if they are coming back tonight,” lamented Nyembe, unsure if they would make their daily target or if they would be trading again.
Across the now-wrecked mall are small businesses that were not as fortunate as Webbers, and it was not only the shop-owners that were affected.
Emmanuel Nhlane’s home was robbed even as attackers were looting the shop outside.
“They broke into my house, I was threatened with a petrol bomb and I had to stand outside to give them a chance; they took my fridge, bed, cash and my VHS,” said Nhlane.
Nhlane had rented out his yard to foreign nationals to operate a shop. He does not comprehend why his belongings were taken because he doesn’t own a shop. Now, it means that the unemployed Nhlane will not be getting his monthly rental fee of R3,700 ($250).
Far away, the coastal KwaZulu-Natal province of South Africa, was also affected as trucks burned and a driver was killed because of his nationality. This was part of a logistics and transport industry national strike.
Back in Johannesburg, I visited the car dealerships that were a part of the burning spree on Jules Street.
The streets were still ashy and the air still smoky, two days after the unfortunate turn of events.
Muhamed Haffejee, one of the distraught businessmen there, said: “Currently, we are still not trading.”
Cape Town, in the Western Cape province of South Africa, which hosted the World Economic Forum (WEF) on Africa from September 4 to 6, was also witness to protests by women and girls from all walks of life outside the Cape Town International Convention Centre, demanding that the leadership take action to end the spate of gender-based violence (GBV) in the country.
There were protests also outside Parliament. What set off the nationwide outcry was the shocking rape and murder of Uyinene Mrwetyana, a 19-year-old film and media student at the University of Cape Town, inside a post office by a 42-year-old employee at the post office.
There was anger against the ghastly crimes and wave of GBV in the country that continues unabated. According to Stats SA, there has been a drastic increase of women-based violence in South Africa; sexual offences are up by 4.6%, from 50,108 in 2018 to 52,420 in 2019.
A week later, on a Friday, Sandton, Africa’s richest square mile and one of the biggest economic hubs, was shut down by hundreds of angry women and members of advocacy groups from across Johannesburg. They congregated by the Johannesburg Stock Exchange (JSE), the cynosure of business, singing and chanting, to demand “a 2% levy on profits of all listed entities to help fund the fight against GBV and femicide”.
Among the protesters was Cebi Ngqinanbi, holding a placard that read: “I’m not your punching bag.”
“We came here to disrupt Sandton as the heart of Johannesburg’s economic hub. We want to make everyone aware that women and children are being killed every day in South Africa and they [Sandton] continue with business as usual, sitting in their offices with air-conditioners and the stock exchange whilst people on the ground making them rich are dying. That is why we are here, to speak to those that have economic power,” said Ngqinanbi.
She added that if women can be given economic power, they will be able to fend for themselves and won’t fall prey to abusive men, since most women stay in abusive relationships because men are more financially stable.
Amid the chanting and singing of struggle songs, Nobuhle Ajiti addressed the crowd and shared her own haunting experience as a migrant in South Africa and survivor of GBV. She spoke in isiZulu, a South African language.
“I survived a gang rape; I was thrown out of a moving car and stabbed several times. I survived it, but am I going to survive xenophobia that is looming around in South Africa? Will I able to share my xenophobia story like I can share my GBV story?” questioned Ajiti.
She said as migrants, they did not wake up in the morning and decide to come to South Africa, but because of the hardships faced in their home countries, they were forced to come to what they perceived as the city of opportunities. And as a foreign national, she had to deal with both xenophobia and GBV.
“We experience institutionalized xenophobia in hospitals; we are forced to pay huge amounts for consultation. I am raped and I need medical attention and I am told I need to pay R5,000 ($250).
“As a mere migrant, where am I going to get R5,000? I get abused at home and the police officer would ask me where I’m from because of my accent, I sound Zimbabwean. What does my nationality have to do with my husband beating me at home or with the man that just raped me?” she asked.
Addressing the resolute women outside was the JSE CEO Nicky Newton-King who received the memorandum demanding business take their plight seriously, from a civil society group representing over 70 civil society organizations and individuals.
The list of demands include that at all JSE-listed companies contribute to a fund to resource the National Strategy Plan on GBV and femicide, to be launched in November; transport for employees who work night shifts or work after hours; establish workplace mechanisms to provide support to GBV survivors as part of employee wellness, and prevention programs that help make workplaces safe spaces for all women.
Newton-King assured the protestors she would address their demands in seven days. But a lot can happen in seven days. Will there be more crimes in the meantime? How many more will be raped and killed in South Africa by then?
Roadmap For African Startups
Francois Bonnici, Head of the Schwab Foundation for Social Entrepreneurship, explains how African impact entrepreneurs will continue to rise.
Does impact investment favor expats over African entrepreneurs? If so, how can it be fixed?
There is a growing recognition all over the world that investment is not a fully objective process, and is biased by the homogeneity of investors, networks and distant locations.
A Village Capital Report cited that 90% of investment in digital financial services and financial inclusion in East Africa in 2015-2016 went to a small group of expatriate-founded businesses, with 80% of disclosed funds emanating from foreign investors.
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In a similar trend recognized in the US over the last decade, reports that only 3% of startup capital went to minority and women entrepreneurs has triggered the rise of new funds focused on gender and minority-lensed investing.
There has been an explosion of African startups all over the continent, and investors are missing out by looking for the same business models that work in Silicon Valley being run by people who can speak and act like them.
In South Africa, empowerment funds and alternative debt fund structures are dedicated to investing in African businesses, but local capital in other African countries may not also be labelled or considered impact investing, but they do still invest in job creation and provision of vital services.
There is still, however, a several billion-dollar financing gap of risk capital in particular, which local capital needs to play a significant part in filling. And of course, African impact entrepreneurs will continue to rise and engage investors convincingly of the growing and unique opportunities on the continent.
What are the most exciting areas for impact investing and social entrepreneurship today?
After several decades of emergence, the most exciting areas are the explosion of new products, vehicles and structures along with the mainstreaming of impact investment into traditional entities like banks, asset managers and pension funds who are using the impact lens and, more importantly, starting to measure the impact.
At the same time, we’re seeing an emergence of partnership models, policies and an ecosystem of support for the work of social entrepreneurs, who’ve been operating with insufficient capital and blockages in regulation for decades.
The 2019 OECD report on Social Impact Investment mapped the presence of 590 social impact investment policies in 45 countries over the last decade, but also raises the concern of the risk of ‘impact washing’ without clear definitions, data and impact measurement practices.
In Africa, we are also seeing National Advisory Boards for Impact Investing emerge in South Africa and social economy policies white papers being developed; all good news for social entrepreneurs.
What role does technology play in enabling impact investing and social entrepreneurship?
The role of technologies from the mobile phone to cloud services, blockchain, and artificial intelligence is vast in their application to enhancing social impact, improving the efficiency, transparency and trust as we leapfrog old infrastructures and create digital systems that people in underserved communities can now access and control.
From Sproxil (addressing pirated medicines and goods), to Zipline (drones delivering life-saving donor blood to remote areas of Rwanda) to Silulo Ulutho Technologies (digitally empowering women and youth), exciting new ways of addressing inclusion, education and health are possible, and applications are being used in many other areas such as land rights, financial literacy etc.
While we have seen a great mobile penetration, much of Africa still suffers from high data costs, and insufficient investment in education and capacity to lead in areas of the fourth industrial revolution, with the risk that these technologies could negatively impact communities and further drive inequality.
Businesses At The Heart Of A Greener Future
With every day that passes by it becomes more apparent that the Earth is deteriorating and time is running out to save it. Scientists have estimated that we have less than a decade to save the planet before it is irreversibly damaged, mainly due to climate change.
Businesses claim the largest percentage of global emissions (at approximately 70% since 1988, according to The Guardian) which is an alarming statistic, especially in a time when the planet’s well-being is being compromised.
Many large business corporations are hastily coming on board with operating sustainably by transforming their practices and placing business ethics at the forefront of their priorities.
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Last week, a round table discussion was held at the Fairlawns Boutique Hotel, Sandton hosted by Environmental Resources Management (ERM) – the world’s largest sustainability consulting firm. Their aim was to discuss how imperative it is for African businesses to get on board with sustainability.
“We have been talking about how to be sustainable for a long time but now it is time for us to do sustainability,” says Thapelo Letete, Technical Director of ERM.
An engaging and thought-provoking panel discussion ensued with representatives from ERM and mining companies, Anglo American and Gold Fields. They emphasized the importance of sustainability being recognized by investors, especially in mining and oil companies that rely solely on Earth’s natural resources.
Civil society has a colossal role to play in ensuring the sustainability of businesses. Due to the law of supply and demand in production, consumers are being urged to be mindful of their buying habits and to make sustainable decisions. These are as simple as minimizing the utilization of plastic straws by replacing them with metal or paper straws and reusable shopping bags and by recycling selected items.
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“Research suggests that socially and environmentally responsible practices have the potential to garner more positive consumer perceptions of (businesses), as well as increases in profitability,” according to an entry in Sage Journals published in May.
The advancement of science, artificial intelligence and the rapid growth of the technological industry make it an undeniable fact that the Fourth Industrial Revolution is underway. Many businesses across the globe seem to be well prepared for this change. However, businesses in Africa seem to be vulnerable.
“It is difficult to say that all businesses in Africa are prepared for it. It is not a country specific thing but it does vary across corporations. There will be businesses that are well prepared and businesses that are not so well prepared,” says Keryn James, CEO of ERM.
A large part of sustainability also relies on empowerment and equality. Sub-Saharan Africa has the highest number of female-owned businesses who contribute a large amount of money towards their respective countries’ GDPs. However, most of these businesses struggle with the issue of scaling.
“Women sometimes underestimate their ability and they don’t necessarily have the confidence that they should have about the value that their businesses present. Women often take less risks than men,” says James.
“The issue of scaling is one that we see globally. One of the issues are access to funding to support in the investment and growth of their businesses.”
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Going forward, the availability of mentorship programmes and skills development opportunities for women, especially black women in business should be encouraged.
According to a study done by the UN Women’s organization, an average of 3 out of 7 women score higher in performance when they are placed in senior managerial positions. Additionally, if more women work, the more countries can exponentially maximise their economic growth.
Women will be empowered when given the correct skills and opportunities to be able to run their own businesses independently which would ultimately lead to the scaling of female-owned businesses in Africa and sustainable development.
The Nedbank Capital Sustainable Business Awards aim to recognize the efforts of businesses that operate sustainably and to encourage other corporations who intend to adopt more sustainable strategies into their practices. Initiatives such as these prove that business value also depends on how sustainable they are.
It is clear that the prioritization of sustainability and accountability in businesses is the only way forward in the midst of this global crisis. With a combination of will and the rigorous work that African businesses have put into sustainability initiatives and strategies, it is easier to be optimistic about our planet’s wellbeing.
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