Climate change and East Africa’s Economic progress

It is a misconception in many African countries that climate change is a ‘first world problem. While Africa has contributed little to global warming, Africa economies and environmental ecosystems is nevertheless disproportionality vulnerable to its impact. The continent risks economic regression, which could undo all the progress that the continent has made over the past decade. This is especially true in the realm of regional integration within the East African Community. The truth is the region is unprepared for intensified weather conditions and as a result, poses a real risk to future investment opportunities.

Regional Integration is Inevitable but so is Climate Change

The future is bright when it comes to East Africa’s economic trajectory. In September 2011, the African Development Bank (AfDB) produced an interesting report that looked at Africa in 2060. The report, “Africa in 50 Years Time: Towards Inclusive Growth,” shared some interesting and at times optimistic insights about the future of East Africa. There is the promising; the report believes that Africa’s dependence on advanced country markets will lessen dramatically and by 2060 aid will have decreased in importance as a driver of Africa’s development. There is the exciting; of all the regions the report expects East Africa to have the highest real GDP growth rate between 2020 and 2060, surpassing Southern Africa. East Africa’s share of the continent’s total GDP is projected to expand from 11% (of $1.71 trillion) in 2010 to a very significant 39% (of between $12.2 and $15.7 trillion) in 2060. There is also an expectation that per capita GDP will increase from the current $657 to a low of $6,000 and a high of $7,000 in the next 50 years. East Africans are expected to enjoy these benefits longer as their life expectancy will also increase.

All of these statistics bode very well for the regional integration project. Trade, specifically intra-regional trade will inherently increase as the people of East Africa live longer and get richer. A vibrant and expanded middle class will increase over the next 20-30 years, demonstrated by the expectation that Africa’s middle class will expand from the current 355 million (34% of the population) to 1.1 billion (42%) by 2060. There is a lot to be optimistic about as Mckinsey’s Rise of the African Consumer report indicated: “Africans are exceptionally optimistic about their economic future with 84% (of those surveyed) saying they will be better off in two years.”

All of these signals point to prime conditions for the regional integration project of the East African Community (EAC). The region has now surpassed a tipping point where the EAC can no longer be dismantled. For the first time, and unlike the first EAC project, the costs of breaking up the EAC would be equally felt amongst the five partner states. No country can say, with absolute confidence, they will be better off without the EAC project. The regional economic integration process is inevitable, despite skepticism about the wisdom of the monetary union and political federation. The trouble is that climate change, also something that is inevitable and for all intents and purposes already present in our daily lives, is accelerating and can undermine the social and economic integration of the EAC. Climate change is also something many policymakers in the world are skeptical about.

The regional integration process is inevitable and can benefit the people of East Africa, but simultaneously climate change and global warming is inevitable and can completely derail all the gains and momentum that has been made over the past decade. How prepared are policymakers and businessmen in dealing with the consequences of climate change? How aware are they of the costs of ignoring global warming?

When The Unexpected Becomes Expected

On April 11, 2012 the city of Dar es Salaam in Tanzania received its first tsunami warning after an 8.6 magnitude earthquake occurred near Indonesia’s Sumatra Island. The warning set the city off into a state of panic as people rushed to their homes from work. If there was ever a wakeup call demonstrating how utterly unprepared the largest coastal city in East Africa and economic hub of Tanzania was, it was on full display on the evening of April 11. Traffic jams, although not uncommon in the city, created a tight gridlock with a number of cars lined up on Salender Bridge (the main bridge that connects the city center to the peninsula and suburbs). With the advent of social media and the Internet, rumors and misinformation spread throughout the city with people not aware of what was happening.

The scare, no tsunami hit Dar es Salaam or Mombasa in Kenya, demonstrated two very important things 1) how unprepared East African governments are for unexpected but probable events like an earthquake or tsunami and 2) how unready the city is in mass evacuation strategies. Both factors do not spell well for the future when unexpected and unlikely events like tsunamis and earthquakes become commonplace due to drastic changes in weather conditions.

The coast of East Africa is no stranger to the effects of earthquakes and tsunamis. After the 2004 earthquake and tsunami that hit Southeast Asia, the ripple effects were felt throughout the region. While it was hard to imagine that the coastlines of Somalia, Kenya and Tanzania could be affected by a seaquake whose epicenter was thousands of miles away, an estimated 80 people died when the ripples of the tsunami wave reached Somalia, Kenya and Tanzania. From a purely economic perspective, the costs of rebuilding from a tsunami especially in a major city that is by and large below sea level can reach up to billions, both in direct and indirect costs. The coastlines of both Kenya and Tanzania are very lucrative especially in the context of tourism. For instance in 2011, Kenya earned an estimated 99 billion Kenyan Shillings (Ksh) (est. $1billion) in tourism earnings. Tourism and agricultural industries are two sectors that are vulnerable to climate change and extreme weather conditions. With extreme drought and unpredictable weather patterns, tourist attractions like the Maasai Mara and Serengeti may not have as many animals in the future, decreasing interest from international tourists and denting the tourism revenues and contribution to the GDP of the two countries. The same can be said with rising sea levels and its impact on coastline attractions like Mombasa and island attractions like Zanzibar.

The coastlines of Kenya and Tanzania also host the two major and most important ports of East Africa. The ports of Dar es Salaam and Mombasa are considered the lifelines of central Africa.

Tsunami and earthquake warnings alone can shutdown ports, spelling an economic crisis for landlocked countries like Rwanda, Uganda and Burundi among others. According to the Kenyan Ports Authority (KPA) the Port of Mombasa handled 5 million tonnes of transit traffic in 2011 and Uganda accounted for the majority of this at 80% and the Democratic Republic of Congo was the second highest transit market. A closure of Mombasa due to tsunami warnings or violence and instability for that matter, would prove catastrophic for the economies of the landlocked countries of the EAC. One should remember that the port also handles aid cargo each year, as Kenya is the major hub for international relief and aid agencies. According to KPA, Mombasa handles between 350,000-700,000 tonnes of aid cargo each year. An estimated 3 million people depend on food transported via Mombasa port. The irony is that those who are in need of food and aid are in their current situations obviously due to political and security reasons but also to famine and extreme weather conditions.

There is an understanding amongst East African policymakers and businessmen that the countries in the EAC cannot transform if they do not have agriculture at the center of their development strategies. They will also not be able to match the growing demand for jobs. However, the trouble is that these countries can no longer have agriculture at the center of their development and poverty reduction strategies due to the increasing changes in the weather. According to a United Nations Environment Programme (UNEP) report that analyses the economic costs of climate change adaptation in Africa, “conservative estimates are that African economies could be facing loses of at least $10-20 billion annually with other sectors, namely agriculture, being more affected than others. As the former United Nations Secretary-General, Kofi Anan aptly put it ““Without action at the global level to address climate change, we will see farmers across Africa and in many other parts of the world, including in America-forced to leave their land. The result will be mass migration, growing food shortages, loss of social cohesion and even political instability.”

The Challenges of A Negative Argument

It is obvious that both private sector leaders and policymakers need to have long-term strategic planning in dealing with climate change and its impact. The hardest argument to make, especially in the context of Africa, is to say: “it could get worse if we don’t…” Explaining to both East African constituents and leaders that things could get worse when the effects of climate change are not necessarily clear is a hard one to make. Even if we look at the United States and the presidential elections in 2012 we see a similar case. It was quite difficult for President Barack Obama to tell the American electorate that because of his actions, he prevented an economic depression. “It could have been a lot worse.” Such an argument is hard to make, you cannot sell something that is in the negative.

The argument environmentalists in Africa are making now is “it could be worse if we don’t…” something incredibly difficult to make when the realities of climate change are not felt every day. It will be especially hard to make when, as seen in an April issue of The Economist “climate change may be happening more slowly than scientists thought.” The last thing Africa and the world needs is breathing space and an excuse to defer dealing with climate change to the next generation, especially due to the uncertainty that surrounds it. As The Economist warns, this is not the time to become complacent, the risks of severe warming are still very real, though not 4°C we could still see an increase of 3°C. The AfDB also expects temperatures to rise by 3.6°C in the Sahara region and an average of 3.2°C in East Africa. It is hard to fathom these statistics in everyday life and in business and investment terms. Do investors in East Africa and businessmen think about these risks in the long-term? Do they know that global disaster costs today are more than three times what they were in the 1980s? As mentioned earlier, climate change, global warming and its real social and economic consequences have to be taken into account and be immersed in the political discourse of the region. The same can be said in the business world.

Leadership: The X-Factor

When the late Prime Minister of Ethiopia, Mr. Meles Zenawi, passed away a significant amount of the obituaries written on him focused on how he was the regional anchor to security and stability in the Horn of Africa. Although Mr. Zenawi was a key architect of regional security in East Africa and keeping Somali extremists at bay, he was also viewed as a champion for addressing climate change and environmental issues facing Africa. This should not come as a surprise considering Ethiopia, more than any country in the world, has seen the devastation of what a severe drought can bring to a population, especially if the government and is unprepared. Extreme weather such as a drought can reverse any poverty reduction and development strategies. As a result, Mr. Zenawi worked diligently to make sure his country and the region understood the challenges of global warming.

The United Nations Environment Programme (UNEP) said as much in a tribute claiming Mr. Zenawi was “a great advocate for Africa’s strong position on climate change” and went on saying he was “an environment champion who believed that Africa needed to embrace Green Economy as the central pathway to sustainable development.” Of course, it is hard to say with certainty that the drought in Ethiopia was caused by climate change, but it is clear, going forward that the intensity and frequency of droughts will increase as a result of global warming. As an Oxfam brief in September 2012 stated, “Climate change is making extreme weather-like droughts, floods and heat waves more likely.” Mr. Zenawi and Ethiopia’s position as a regional security anchor was replaced, to a certain extent by Kenya’s bold incursion into Somalia. What about his presence as a climate change champion? Who will replace him and pick up the mantle?

How we handle the future and the uncertainty that surrounds it will be up the people of East Africa and the leadership prioritizes climate change and its direct and indirect consequences. The leadership cadre of East Africa will have to think beyond each election cycle and think 20-30 years ahead. We may have bold visions and projects that will make us middle income countries by 2040 or so, but these changes could be easily reversed by the impending challenges presented by extreme weather conditions and unplanned disasters.

In September 2012, Mo Ibrahim, the Sudanese born billionaire and philanthropist and founder of the Mo Ibrahim Foundation, Index and Prize told the Wall Street Journal that “Africa doesn’t need help, doesn’t need aid. It’s a very rich continent. There is no justification for us to be poor.” The heart of the problem is governance, “without good governance, there’s no way forward.” Mr. Ibrahim is referring to what can be called the X-Factor in the future of East Africa in how it deals with the changing political, social, economic and environmental future. It is also what can embolden or undermine the regional integration process. If the region’s leaders do not take the environment seriously and the consequences of extreme weather conditions, we will be caught flatfooted when disaster hits compromising our human and economic security destabilizing the entire EAC project. As Rob Bailey, author of a Chatham House Report called “Managing Famine Risk” indicated “Governments in at-risk countries may attach low priority to the needs of the poor or marginal communities when deciding how to allocate public funds or whether to respond to early warnings.”

We can either sit back and enjoy and take comfort in the high, positive economic growth rates, the increased foreign direct investments, expanding intra-regional and global trade, and the rising global profile of the region. However, we should do so knowing full well that the economic gains and progress made over the past ten years can be easily reversed if we ignore certainties like climate change and global warming. If Africa truly wants to transform and realize the visions it has forest for itself, it must start planning ahead, preparing for the unexpected and building a society and economy that will be resilient in 50 years and not just for tomorrow.

We simply cannot afford to take these things for granted. Perhaps Nassim Taleb, the author of Antifragile: Things That Gain From Disorder should have the last word in this when he discusses risk management and preparing for the unknown:
“People in risk management only consider things that have hurt them in the past (given their focus on evidence), not realizing that, in the past, before these events took place, these occurrences that hurt them severely were completely without precedent, escaping standards.”

Ahmed Salim is a Programme Manager with the Society for International Development and co-author of The State of East Africa 2012: Deepening Integration, Intensifying Challenges.

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