The East Africa Insurance Sector: driving momentum to ensure climate change mitigation? 

By Sarah Caddy 

Extreme weather events are on the rise due to climate change, placing East Africa increasingly at risk. The recent torrential rain raising Lake Tanganyika to dangerous water levels is just one example, with experts citing climate change and deforestation in the Burundi highlands as causes for topsoil erosion around the lakes. Droughts, tropical cyclones and even plagues of locusts have all been experienced recently. Each threaten the health and livelihoods of households and economies. 

In response, there’s growing impetus to promote sustainability in the run up to the global climate event COP26, to be held in the UK in November. As experts in estimating risk and with significant investment capable of steering meaningful change, the insurance industry is well placed to advise and make a difference.   

To this end, the Nairobi Declaration on Sustainable Insurance was launched by the UN Environment Programme’s Principles for Sustainable Insurance Initiative (PSI) on 22 April 2021. Founding signatories including the Association of Kenyan Insurers (AKI), ICEA Lion Group, Egypt’s Regional Center for Sustainable Finance (RCSF), FSD Africa, and PTA Reinsurance all pledged to strengthen the African insurance industry’s contribution to achieving the UN Sustainable Development Goals (SDGs). These include ensuring a sustainable recovery from the Covid-19 pandemic. 

Four months on, with global climate disasters continuing to make news headlines, we look at the efforts being made by the African insurance industry to achieve the goals outlined by the Nairobi Declaration.  

As the only African member of the 22 global insurers and reinsurers who collaborated over 2020 as part of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) insurer pilot group, ICEA Lion Group is vocal about its pioneering role. Writing about its work on the group, it describes the analytical tools the firm is developing to improve climate risk disclosures in line with the recommendations of the TCFD, using the latest climate science. With mounting global pressure on accountability and evidence-based net zero target achievement claims, we predict an increase in African insurance firms communicating their use of tools aligned to the TCFD recommendations, and their role in mitigating against climate change. 

Meanwhile, FSD Africa refers to the obligations for the insurance industry to act on climate change. Writing in their July 2021 blog, risk managers Kelvin Massingham and Zillah Maliah outline the extent of the sustainable development crisis that we currently face, and the essential role that the insurance industry must play in facilitating the flow of capital to climate mitigation investments.  Their call to action to their industry peers is to act now: with only 3 percent of global climate finance allocated to sub Saharan Africa, and a low percentage of African weather-related losses currently being insured, East Africa is poorly equipped to meet the cost of increasing climate disasters. Delay from the insurance industry could prove to be catastrophic. 

While home to 15 percent of the world’s population, Africa is responsible for only 4 percent of global carbon emissions. And yet, Africa’s citizens are already among those suffering most from the effects of climate change – not only from extreme climate events, but also from decreasing agricultural yields and increasing disease transmission, as outlined in this article by the UNFCCCDespite the unfairness of this situation, there is hope. Rama Yade, Director of the Atlantic Council’s Africa Centerdescribes the potential offered by the African continent to reverse climate change. She writes convincingly of the renewable energy opportunity, but also of the “massive investment” required to achieve full capacity – fifty billion dollars per year by 2050, according to the United Nations 

The onus is on African insurance industry leaders to leverage their collective might towards a sustainable future. The appetite for working collaboratively towards a common goal that benefits society as well as business is evident in the work of the Nairobi Declaration. By effectively communicating their individual efforts, those insurance firms that are pioneering in this regard can not only be seen as industry leaders but may also nurture best industry practice for all. 

 

Understanding the full value of rural electrification in sub-Saharan Africa

By Ryan Witton 

According to the International Energy Agency’s 2019 Africa Energy Outlook, some 600 million people in sub-Saharan Africa do not have access to electricity (that’s 75% of the global total), and around 900 million lack access to clean cooking. Despite this, the population without electricity access is in fact falling thanks mostly to the speedy energy transitions of a small number of leading countries, particularly Kenya, Senegal, Rwanda, Ghana and Ethiopia. Electrification in these countries has been implemented through grid connections and a rapid rise in off-grid systems such as the solutions provided by Bboxx 

At the turn of the century, Africa’s installed renewable energy capacity was around 22 gigawatts (GW) – a sharp contrast to the 189GW capacity in Europe the same year (a continent with 85 million fewer people). In the two decades since, Africa’s installed generation has more than doubled to over 53GW and is continuing with strong momentum. Just take a look at recent officially launched projects like Kipeto‘s 100MW wind farm in Kenya or AMEA Power’s 50MW solar PV power plant in Togo. 

We all know that access to electricity brings a host of economic and social benefits to high-growth nations, but the full worth of providing these clean sources of energy in rural communities across sub-Saharan Africa has yet to be realised. While the physical health challenges of traditional fuels for generators and cooking is widely examined, the strain on mental health is granted much less consideration.  

Let us look at the case of Teresia Olotai, a Maasai mother of six and senior ‘Mama’ of Lobulu, a tiny rural enclosure (or “boma”) in Tanzania. Like the other women in Lobulu, life without electricity for Teresia was challenging. In the darkest hours of the night, she risked falling on stones or unwittingly stepping on venomous snakes. She has had to deliver babies in the dark, and when her children woke at night, she fed and changed them by touch. Candles and kerosene lamps posed a potential fire hazard in her wooden hut. This was until Teresia and her boma became part of a USAID Power Africa Project to install rural solar micro-grids. 

For rural communities in sub-Saharan Africa, the introduction of access to clean electricity has undoubtedly led to positive impacts in physical wellbeing. Electrified health centres are able to offer extended service hours, laboratory testing and vaccine refrigeration. In the home, there is less illness from indoor smoke inhalation and fewer burns from traditional cookstoves. The physical strain attached to carrying heavy loads of wood or kerosene, along with a danger of physical assault during collection (especially for young girls) is also diminished. Increased access to health and hygiene information via TV, radio, and the internet can be greatly beneficial. But let us also consider the psychological traumas arising from these same situations. 

The concept of wellbeing runs far deeper than what can be ostensibly observed at a purely physical level. Studies in renewable energy interventions, predominantly solar and hydro pico-, micro-, and mini-grids, have revealed positive mental impacts for rural people that emanate from a lower perceived risk of injury or illness. Examples of these risk reductions are increased security inside and outside the home from thieves or wild animals with improved lighting, or a lower chance of illness, injury and property damage from burning kerosene indoors.    

Women have reported better sleep at night knowing that they had safe lighting for emergency situations, especially involving their children. Connectivity through improved access to mobile phones is a huge boon to mental health, and communities are able to celebrate their new-found ability to stay connected to loved ones, friends, and family when they are able to charge phones at home, rather than walk and bus to town and pay a vendor.  

Lighting facilitates communal and family gatherings, extended study hours and has been revealed to reduce the risk of domestic violence because households are generally happier with increased light. Regions where public services have been improved and street lighting has been provided offer the greatest community wellbeing benefits, with increased safety outdoors and more opportunities for communal gatherings and entertainment after hours. And of course all of this has an impact on economic growth. 

The worry or stress felt from the risk of injury, sickness, or lack of sleep can in many ways be more ubiquitous than the physical harm itself. It is therefore crucial that these implicit, as-yet-unquantifiable impacts to mental wellbeing be given just as much focus as physical impacts when planning renewable energy projects and micro-grids in rural sub-Saharan communities. 

Concern Universal on how to make phone calls using a mud oven

CONCERN UNIVERSAL ON HOW TO MAKE PHONE CALLS USING A MUD OVEN

Narda Shirley

 

I often find myself banging on to clients about the virtues of bite-sized video as a story telling medium. But I was reminded again of its power when I watched a video about a Concern Universal project called ‘how to charge your phone with a mud oven’. At just 1 minute and 30 seconds long, with only captions to explain what’s going on, the film has had over 20 million views and inspired 62,000 comments.

The ‘Flower Pot stove’ is bucket-sized and made of mud. It is made locally to a tested template, and runs on just a few sticks of wood, roughly a third less than a fire would use. It also produces much less harmful smoke which is an important innovation as the simple act of cooking kills 4.3 million people each year.

Approximately 2.5 billion people living in the developing world burn biomass as a primary energy source; this number is expected to grow to 5 billion by 2050.

Thanks to the clever little thermo electric generator that attaches to the stove, and produces electricity from its heat, people living in rural locations without access to the grid, can generate enough power to charge a phone or power a torch. Mobile phones, now very cheap, can help relieve poverty in so many ways. Remote farmers can get better access to fair market pricing and selling time for people to make phone calls can be a means of generating additional income in a community. Torches mean children can study after dark making more of education opportunities.

Concern Universal, (CU) the charity behind the initiative has a sweet spot for innovation where it improves the lives of women in particular. Its resourceful new Global Head of Communications & External Affairs, John O’Brien has masterminded an event on Tuesday 22 March at the fashion and design emporium, Clerkenwell London. The event, called ‘fashionUP’ will raise awareness and money for the work of the charity which has been going for 40 years and whose work extends beyond Africa into Latin America and Asia.

I’m shamelessly shaking down my friends (and theirs) to stump up the donation price to come along to ensure that Concern Universal gets a great turnout and raises the money it needs to continue with its work. While we are chomping on canapes, downing a few drinks, and taking in the stylish surroundings of the Clerkenwell emporium, it’s affecting to think that all over the undeveloped world, rural families are watching the last glimmers from their cooking fires go out, sinking them into complete darkness. Well done CU for shedding some light on all the issues and with such a clever solution. See you on the 22 March! And check out that film here.

Photo credit: Toby Richards

Running the Numbers: Chinese Social Media and Dangote Industries

 

Tom Griffiths

Last week, we at Gong were treated to a lunchtime talk by Jonathan Smith of Hot Pot Digital. Jonathan runs a bespoke service, representing a number of the UK’s brands on Chinese social media sites like Sina’s Weibo (China’s Twitter-equivalent in both micro-blog format and number of users). His talk raised a question in my mind: what share of voice does African business news have on Chinese social media channels, as compared with Twitter?

China-Africa trade receives a lot of attention, both positive and negative, in English and French social media. Simply search for the words “China” and “Nigeria” on Twitter and receive a stream of news, statistics and viewpoints. This is of little surprise given China’s perceived importance in many of Africa’s economies. I was interested if a similar ‘conversation’ exists on Weibo.

The story I decided to test my hypothesis on was this week’s news that Dangote Industries, a Nigerian Conglomerate, intends to invest US$9billion in building the country’s biggest oil refinery along with petrochemical and fertiliser plants. Dangote Industries’ founder, Aliko Dangote, announced that his company will be putting up US$3 billion and seeking US$6 billion in loan capital.

My admittedly less than rigorous method of investigation was to compare mentions of “Dangote” on Twitter with mentions of “Dān gē tè (丹格特)” on Weibo over the 5th of September. Before going into the findings I would like to note that I recognise Twitter is widely used in Nigeria when compared with Weibo. I have looked at geo-tagged tweets from users outside of Nigeria to try to negate this bias however I realise any findings were always going to be heavily weighted towards Twitter.

The results: Weibo had only two posts that mentioned the story. Both simply stated the facts without commentary and provided a link to a longer write up. Both posts were made by petroleum industry trade publication’s Twitter accounts. Twitter, on the other hand, held a huge number of tweets on the news. Many of these came from Nigeria, however there were also many hundreds from Kenya, the US, Britain and Indonesia. Most tweets simply restated the facts, however a number commented on the potential job creation of the new factories.

The results were striking, even with the obvious bias in the experiment: 2 Weibo posts compared with thousands of tweets. It seems that the new Nigerian refinery just wasn’t a talking point on Weibo, despite the resource trade between China and Africa being so well publicised. However, as many African countries’ economies rise, will we see an increase in discussions on African business on Weibo?

It would be interesting to repeat the test on a piece of news that directly involves both China and an African country: an experiment for a later day.

 

Homestrings wins at Africa Diaspora Awards 2013

 

Sarah Caddy

Pride of heritage was the flavour of the evening at the Africa Diaspora awards, held in London’s West End on 2 May 2013.

The continent had much to celebrate, with awards presented to the brightest and best from the worlds of Business, Academia, Entrepreneurship, Media and Community. Her Excellency Ms Thandi Modise, Premier of North – West Province, Republic of South Africa, set the tone for the evening with a moving speech on the role played by the African Diaspora in securing the continent’s successful future. “The spirit of internationalism has sustained humanity” she proclaimed, vocally grateful for the benefits that a global perspective can have not only for the individual Diasporans, but also for the separate countries within the continent. Her vision was for a continent that works with its neighbours and international allegiances to build an ever more promising future.

A prime example of her vision in practice is Eric Vincent Guichard, who secured the Entrepreneur of the Year award for his online initiative, Homestrings – an investment platform that facilitates Diaspora investments into their own communities.  It was an award we thoroughly toasted, as well deserved of our client!

 

President Mahama’s message at The Times CEO Summit Africa was very clear: Invest in people and infrastructure

 

Isabelle Alenus-Crosby

Africa’s future as the world’s economic engine rests on investing in its one billion people, President Mahama of Ghana said in a speech at The Times CEO Summit Africa today. “Investments should focus on people, providing them with jobs”.

Mr Mahama delivered his keynote address at the third CEO Summit Africa, which is held every year in London. The two-day summit which was held on April 29th and 30th this year, brought together Chief Executives of Africa’s biggest businesses with International Investors. The President’s address also focussed on Ghana’s readiness for business and the opportunities available for partnership with its private sector to expand the infrastructure base of the country.

Most of the continent is going through an unprecedented period of stability whilst an economic revolution is sweeping across it. With more investors coming in every day, Mr Mahama shouldn’t worry. Africa’s equity markets are hot and a virtuous cycle has already emerged. And the good news doesn’t end there. The Economist reported at the start of 2013 that a rapid increase across the full investment spectrum is expected within the next couple of years. People across Africa therefore have good reason to be optimistic. According to the IMF, 84% believe that they’ll be better off in two years.

Another possibility, of course, is that they’ll be much better off.

African GDP – growing faster than previously thought?

 

Isabelle Alenus-Crosby

There have been various reports in the news lately that the impressive GDP statistics posted by countries across Africa may actually be underestimations, and that the continent’s outlook could be even better than previously thought.

GDP growth is correlated to a variety of data, and if this data is sparse (which is still very much the case across Africa), whole swathes of economic activity can be overlooked. Simply put, growth is measured by comparing current data to the base year. But without sufficient data, many “new” sectors, such as mobile telephony, have nothing to be compared to. And these new sectors have been growing quickly and steadily across the entire continent for almost a decade.

Until 2010, Ghana was using a 1993 base year. When it was finally revised by the statistical office, GDP estimates rose by over 60 %, translating to approximately 13bn USD of economic activity. Nigeria’s base year is still set at 1990. An upward revision is therefore imminent and likely to be even more impressive than Ghana’s. In fact, economists are predicting that the GDP for the whole of sub-Saharan Africa will rise by at least 15 % in the next couple of years! Where’s the champagne?