Zuma in the UK

By Hamish Stewart and Marco Picardi, africapractice London

The arrival last week of Buckingham Palace’s first candidly polygamist guest under Queen Elizabeth II’s reign has been uncharacteristically subdued. But, whilst the South African premier, Jacob Zuma, will be crossing his fingers for as mellifluous a sojourn as possible, his visit should be seen as an opportunity for Britain to reassert itself as a protagonist in Africa in the face of rapidly growing competition from the BRIC countries.

Britain has much work to do on the continent if it hopes to retain its historical importance in the region and to match the surging investment and growing influence of the BRIC nations. Amongst this grouping, it is China that has made the most waves in its permeation of the continent. Although China is certainly not a new arrival in Africa, trading sums of up to $100 million per annum with some states during the height of the Cold War, recent rapid growth in the volume of economic transactions with Africa has been striking; within ten years of establishing economic and diplomatic ties with South Africa, it is now the rainbow nation’s largest trading partner. In fact, Chinese engagement in continent has seen it claim the title of Africa’s biggest trade partner, a relationship currently worth around $100 billion and growing.

Not to be left out, Russia, India and Brazil have also joined in the post-colonial struggle for new business opportunities on the continent. By mid 2008, Russia had become the second largest foreign investor in Africa. While this situation has changed following the financial crisis, it is a strong indication of what lies ahead. Large, formerly state-owned firms such as Rosneft, Lukoil and Gazprom continue to pursue new opportunities in the oil and gas sectors in diverse countries from Nigeria to Angola.

Along with other emerging economies Russian, and more significantly, Chinese private sector and government investment in the continent is changing the politics of aid and trade in Africa. The British are limited in their capacity to match the munificent repayment terms and low interest rates often afforded in Chinese financing of infrastructure development. Innovative schemes adopted to bolster Sino-African business, such as the creation of special cooperative economic zones, first seen in Zambia in 2007, where Chinese enterprises get tax breaks in exchange for attracting investment into the local economy, present a challenge to Britain’s traditional relationship with the continent. The most recent of these projects, a proposed Suez Economic Zone agreement between the Egyptian government and a Chinese firm from Tianjin, highlights the increasing reach of emerging economies in strategic economic sectors.

Britain must no longer rely so heavily upon historical political ties in seeking to influence the path to development of key countries, but rather must be prepared to engage in constructive long-term investment that will demonstrate commitment to a prosperous future for Africa. In light of Chinese, Russian and more recent Indian trade overtures to African leaders, Britain must be more aware that what she offers is a choice among a growing list of developmental partners in Africa. As domestic economic tides ebb and flow it will be increasingly important for Britain to build constructive economic and political relations with Africa. Here’s hoping Zuma and the Queen will get things started…

Is REDD the new green?

Deforestation contributes an estimated 17% to global greenhouse gas emissions and reduced emissions from deforestation and degradation (REDD) is one of the most effective ways of addressing climate change. Further, avoiding dangerous climate change would be very hard to achieve without addressing deforestation.

Despite its cost-effectiveness, significant funding will be required to address deforestation due to the scale and complexity of the problem. The Union of Concerned Scientist estimates that “for $5 billion a year, REDD can protect nearly 20% of the tropical forests in danger of deforestation, and $20 billion a year can protect about half. With funding approaching $50 billion a year, tropical deforestation could be reduced by two-thirds.” In comparison, the UK’s Eliasch Review estimates between $17-33 billion would be required annually in order to halve emissions from deforestation by 2030.

The outcomes of the climate summit in Copenhagen included a Green Climate Fund over $10 billion annually between 2010-12, only a portion of which will be allocated to REDD activities. While the current funds available are certainly not sufficient or adequate, the promise of increased funding in the future can be used to further evaluate the existing carbon stock in tropical forests, develop demonstration projects and establish the necessary institutional structures.

For Africa, there are immense opportunities to attract climate finance to the Congo Basin Forest which is the world’s second biggest tropical forest after the Amazon. It contains about one quarter of the world’s tropical forest, a wealth of biodiversity with about 10,000 plant species and 70% of Africa’s plant cover. Its vegetation alone contains about 25-30 billion tonnes of carbon – the equivalent of about four years of current global anthropogenic CO2 emissions.

However, the region and its six countries (Cameroon, the Central African Republic, Congo-Brazzaville, DR Congo, Equatorial Guinea and Gabon) face significant challenges in establishing the mechanism to effectively manage any funds based on relatively weak institutions in most countries. While several efforts such as the Congo Forest Basin Partnership and the World Bank’s Forest Carbon Partnership Facility are only two of numerous activities, it will be crucial for the countries in the Basin to develop their own demonstration projects and fund structures that will show effective implementation, adequate monitoring of carbon stocks and flawless financial administration.

In order to increase credibility and African ownership of current and future forest funding, such pilot programs should be a mix of government and market-based approaches for both the funding and the administration of the funds and projects. The Copenhagen Accord already called for a mix public and private sources of funding but it will be important to also develop the right mix of institutions to allow innovative and effective mechanism to address the great challenges and opportunities REDD provides for Africa.

Climate finance after Copenhagen

Calculating the real cost of climate is a highly complex and contentious affair. It is undeniable that we need to fundamentally transform our economies to get on the path of low-carbon growth, especially by reducing energy consumption and reliance on fossil fuel and halt deforestation as one of the biggest single contributors to climate change. We also need to adapt our way of life to the unavoidable effects of climate change such as changing rainfall patterns, extreme weather events and rising sea levels. While it remains difficult to calculate the costs of the required action on such a massive scale, there is a clear urgency to make substantial funds available as soon as possible.

A variety of climate funds have already been established, most of which have a very specific purpose and relatively limited funding from donor countries. A proposal for a new approach in raising up to $100 billion a year for “Green Fund” for the transition to a low-carbon economy by the World Future Council has been taken up by the IMF. The principal idea is to raise finance through the issuance of additional Special Drawing Rights (SDRs), a reserve asset created by the IMF. The creation of “new money” by issuing new SDRs should not cause inflation if the funds are productively invested into renewable energy.

Africa has long been demanding significantly increased climate funding as the continent most affected by and least responsible for climate change. The official Proposal by the African Group in Copenhagen demanded the establishment of a new adaptation fund to finance the full costs of adaptation activities and the related transfer of technology sharing and capacity building in developing countries, with sources of funding be new, substantial and sustained public funding from developed countries, with an annual scale not less than 2.5 % of the GNP of developed countries. The hopes for such significant funding were shattered together with many other aspirations for the Copenhagen conference but at least some commitment was made in the Copenhagen Accord with regard to climate finance:

“Scaled up, new and additional, predictable and adequate funding as well as improved access shall be provided to developing countries, in accordance with the relevant provisions of the Convention, to enable and support enhanced action on mitigation, including substantial finance to reduce emissions from deforestation and forest degradation (REDD-plus), adaptation, technology development and transfer and capacity-building, for enhanced implementation of the Convention. The collective commitment by developed countries is to provide new and additional resources, including forestry and investments through international institutions, approaching USD 30 billion for the period 2010-2012 with balanced allocation between adaptation and mitigation. Funding for adaptation will be prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States and Africa. In the context of meaningful mitigation actions and transparency on implementation, developed countries commit to a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries. This funding will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance. New multilateral funding for adaptation will be delivered through effective and efficient fund arrangements, with a governance structure providing for equal representation of developed and developing countries. A significant portion of such funding should flow through the Copenhagen Green Climate Fund.

To this end, a High Level Panel will be established under the guidance of and accountable to the Conference of the Parties to study the contribution of the potential sources of revenue, including alternative sources of finance, towards meeting this goal.”

While the Ethiopian Prime Minister Meles Zenawi was criticised by many for his willingness to compromise and settle for less adaptation funding than requested, the fact that there now is such as fund can partly be attributed the to Joint appeal of France and Ethiopia from 15 December. Meles is now a member of the high-level panel for the Green Climate Fund which has a formidable task ahead in addressing the following key issues:

1. Out of the USD 10 billion committed, how much is new and additional money, i.e., not a diversion of Official Development Assistance (ODA) or previously committed funding to deforestation by countries such as Norway or low-carbon growth by countries such as the UK? And if it is not “new money”, how should additional commitments be measure without penalising countries for their commitments earlier on?

2. What will be the mix of public and private, bilateral and multilateral, including alternative sources of finance for the fund and will the funds be dispersed as grants or loans?

3. Which financial institution will allow fulfilling the long-standing demand by developing countries to have balanced representation in the administration of the fund in addition to figures such as Meles already taking prominent positions?

4. What will the money be spent on? Just deforestation and forest degradation, adaptation, technology development and transfer and capacity-building as outlined in the accord or other measures such as finalizing national low-carbon growth and adaptation plans, improving in-country capacity to design and implementing national climate change actions as proposed by the UK, Mexico, Norway and Australia?

5. And last but not least, how will Africa build its capacity to be able to absorb and us additional climate funding after 2012, especially if it comes anywhere near the USD 67 billion for adaptation and USD 200 billion for mitigation as requested in the run-up to Copenhagen?

Despite all the shortcomings of Copenhagen, the rather timid initial financial commitments together with the prospect of something more substantial might provide a good opportunity to address these questions and make climate finance work for Africa

South Africa sports - a brand in itself

I must be one of the last people in South Africa to see ‘Invictus’, Clint Eastwood’s film of the 1995 Rugby World Cup in recently post-Apartheid South Africa. As well as an incredible story, in which the Springboks came from underdogs to win in the final against the mighty All Blacks, it could also be seen as an observation on the power of PR.

Mandela had a deep, natural understanding of his audience, his ‘family’ as he puts it, and understood the power of sport to influence and unite a nation. Moreover, the incorporation of the Rugby World Cup into his drive for reconciliation would also deliver an intuitive and subtle fulfilment of the requirement to clearly brand this new nation on the international stage. Tourism, foreign investment, people and culture & heritage, are all core elements of a nation branding strategy and the Rugby World Cup, given its international prominence at a time when South Africa was looking for FDI, was a perfect vehicle.

Mandela ‘s belief in keeping the Springbok name and colours, something most associated with Apartheid, was brave and brilliant. Sending his ‘rugby troops’ into the townships to run rugby camps for kids who had never before touched a rugby ball, was what would now be called good CSR strategy, while inviting the press along, a PR coup. As Morgan Freeman, playing Mandela, states when footage of the team with the children appears on TV, those few seconds are worth a hundred speeches. A picture says a thousand words, and sport is emotive – with or without the Hollywood soundtrack.

Every business and organisation is trying to find the ultimate channel for its story, to change minds, gain followers, or to sell something. It’s no wonder so many big corporations choose sports sponsorship as a way to reach the masses. This year’s FIFA World Cup™ in South Africa has seen billions of dollars of sponsorship deals and advertising spend as companies try to make the most of the opportunity at home and abroad. One of the most interesting things about the 1995 Rugby World Cup as it plays out in Invictus is the absolute lack of money or large-scale expenditure – pure PR and branding through and through.

First East African CSR Awards to be held during World Economic Forum Africa

In one month, the first East African CSR Awards, in partnership with the East African Business Council (EABC), will be launched and open for entries on 15 February 2010. The awards will take place on the evening of 5^th May 2010 during the World Economic Forum Africa in Dar es Salaam, Tanzania.

For the first time, East African companies will be honoured for their corporate social responsibility (CSR) activities and awarded for outstanding, innovative and high-class initiatives and programmes that create a high social and environmental benefit for the community and the business.

Entries will be accepted from any East African (Burundi, Kenya, Tanzania, Rwanda, Uganda) registered company, or from external individuals who are recommending a CSR initiative of any East African registered company.

East African businesses are encouraged to enter into the following categories:

(i) Best workplace practice;

(ii) Environmental excellence;

(iii) Most ethical & responsible business practice for supply chains; and

(iv) Most sustainable & scalable community investment.

As a preliminary entry criteria, the company must be able to demonstrate to high levels of corporate governance in their business operations and board decisions.

Entries will be judged by an independent panel of international and regional CSR, corporate governance and ethical business experts, and chaired by Elvis Musiba, former President, Tanzania Chamber of Commerce, Industry and Agriculture. The panel includes:

· Dr William Kalema (Managing Director DCDM Uganda and former Uganda Manufacturers Association)

· Ms Jane Nelson (Director of CSR Initiatives, Harvard Business School)

· Dr Judy Muthuri (CSR Lecturer, Nottingham University)

· Mr Steve Kenzie (Programme Manager for Responsible Business, International Business Leaders Forum and UK Focal Point for UN Global Compact)

‘These Awards mark a positive and promising trend in East Africa’s private sector toward a more responsible and ethical business pathway, leading the region’s sustainable economic growth’, Alhaji Bamanga Tukur, Chairman of africapractice (East African CSR Awards secretariat).

africapractice comments on CDM in Copenhagen on Point Carbon

Africa needs further CDM reform: analysts
UN guidance to reforming the CDM may boost development in Africa, but more is needed.

Published: 06 Jan 2010 16:17 CET
(c) Point Carbon, http://www.pointcarbon.com/news/1.1364360 (subscription only)

At last month’s UN-led climate summit in Copenhagen, countries agreed to further guidance to the clean development mechanism (CDM), including measures to increase investment in countries that currently host fewer than 10 schemes.

While the CDM has raised billions of dollars for carbon-cutting projects in developing countries, 68 per cent of projects is dominated by China, India and Brazil.

To help foster development in poorer countries most vulnerable to climate change, the guidance suggests to defer payments and to provide loans to support in countries that lack projects.

“It certainly won’t hurt but it won’t turn things around overnight,” said Miles Austin with Ecosecurities, a developer of projects aimed at cutting greenhouse gas emissions.

“More reforms will be needed,” Austin said, pointing out that CDM development in Africa still suffers from a lack of demand for projects and a shortage of specialists, such as project auditors and consultants.

For instance, the CDM executive board could help improve demand by standardising a tool to calculate the emission factors for African electricity systems, he said.

The African continent accounts for less than 2 per cent of all registered CDM projects, with the bulk of the projects located in South Africa.

Eligibility criteria

Gregor Pfeifer, senior consultant at Africapractice, said that many African countries could benefit from the measures, particularly since they get around the more difficult criteria of regarding the general development status of host countries.

“While Africa is the continent with the highest number of least developed countries, the definition based on the number of registered projects (less than 10) includes countries such as Ghana and Nigeria, which are not LDCs,” he said.

Another measure calls for the CDM executive board to develop top-down methodologies for countries that lack investment, while requiring more transparency from auditors or so-called designated operational entities (DOEs).

The top-down development of methodologies should benefit the African continent given the relatively high costs and risks in developing a CDM methodology, according to Pfeifer.

However, it remains to be seen how suitable the methodologies will actually be for CDM developers in Africa.

Meanwhile, the requirement of reporting the amount of work done by DOEs may not be enough to remove the bottleneck in Africa, Pfeifer said, noting that some calls for the promotion of African auditors appears to have been excluded from the measures.

He welcomed the move for loans to cover the costs of the development of project design documents, validation and the first verification of projects which only need to be repaid starting from the first issuance of carbon credits.

“(But) if there was a genuine interest in promoting CDM in Africa in particular, grants and not only loans should also be provided,” he added.

By Jeff Coelho – jc@pointcarbon.com, London

Outcomes from Copenhagen - No legally binding deal but a Copenhagen Accord of vague commitments

Climate change talks at Copenhagen ended last Friday, 18 December, without a legally binding protocol.

An agreement was brokered by the US and China, backing scientists' call to limit global warming to within 2 degrees centigrade against pre-industrial levels. But it contains no improved targets on greenhouse gas emissions from rich nations, does not commit anyone to a legally binding cuts and is not endorsed by the United Nations which needs a consensus from all countries to be enforced.

While it was endorsed by other big players such as the European Union, India and South Africa, the so-called Copenhagen Accord was rejected by smaller UN members such as Sudan, which during the conference acted as the chair of the G77 group of developing nations.

As part of the accord, rich nations agreed to quantify the amount of aid they were willing to give to poor nations to help them reduce their emissions and cope with the consequences of climate change.

Immediate, 'fast-start' aid was quantified at $30 billion over the next three years, with the EU and Japan pledging around $11 billion each, and the US offering $3.6 billion. Rich nations also set themselves the goal of 'mobilizing $100 billion a year by 2020 to address the needs of developing nations'.

One of the most controversial issues standing in the way of a legally binding deal between the US and China - which together account for about 40 percent of global emissions - hinged on the question of how much right third countries should have to inspect each other's greenhouse-gas emission claims.

While Obama had called for 'transparency' in the way emission targets should be monitored and reported, China strongly opposed any international exercise that would infringe on its national sovereignty.

The full significance of the deal will not be known until well into next year. Countries are supposed to fill in details of planned cuts in greenhouse gas emissions, left blank in the accord, by the end of next month. The UN is to follow with more talks towards a legally binding global treaty.