Strategic approaches can guide sustainable growth

Efforts to diversify the economies of East Africa are likely to generate an environmental cost, such as deforestation. Image credit: Boudewijn-Huysmans from Unsplash

Strategic approaches can guide sustainable growth

The second in a two-part series, this article considers ways that East African countries can strategically plan to avoid potential environmental and social harm as their economies diversify and industrialise.

By Darryll Kilian, partner and principal ESG consultant, SRK Consulting and Wouter Jordaan, partner and principal ESG scientist, SRK Consulting

It is a hard reality that efforts to diversify the economies of East Africa are likely to also generate an environmental cost, along with negative social impacts. However, this outcome can be mitigated if burgeoning secondary sectors are held to strict sustainability standards. The key will be using the appropriate tools to chart and enforce such a direction.

There are already various challenges facing environmental sustainability in these countries, including issues of land degradation, deforestation, slash-and-burn practices, water pollution and air quality deterioration. These environmental pressures will only increase as this already fast-growing region becomes the focus of more foreign direct investment. It will be essential to build capacity and infrastructure to mitigate and manage development-induced environmental and social impacts.

It will be necessary to strengthen waste management infrastructure and capacity as economies diversify. Image credit: Antoine Giret from Unsplash

In 2019, East Africa’s FDI inflow increased from USD5,7-billion to USD11,5-billion in just one year. This effective doubling of FDI was due mainly to China, whose investment in the region accounted for almost 60% of its FDI inflow – directed at the technology, manufacturing, and services sectors.

Significantly, there are world-renowned national parks which indicate an encouraging potential to apply the kind of regulatory frameworks necessary to preserve the environment.

Laws that require environmental impact assessments (EIAs) are in place in East African countries, requiring developers to comply before permits are released.

Challenges arise when investing in infrastructure such as powerlines and dams which straddle international boundaries and different regulators are involved in authorising projects. A strategic focus and alignment may be more prudent in these instances.

Strategic approach important for a sustainable future

International and regional banks – both commercial and developmental – are well represented in the region, on the strength of its myriad industrial, infrastructural, and agricultural opportunities. These institutions also have their own sustainability requirements, generally setting the bar high for responsible project design and implementation.

What will be important for a sustainable economic future, however, is for a strategic approach to be adopted – both by governments and project developers. A valuable tool in this approach is the strategic environmental assessment (SEA) that looks beyond the project context – and which can reduce risk and costs by guiding policy level decisions regarding development alternatives at an early stage.

It is the timing and scope of the SEA that differentiates it from the project-specific EIAs. While still not widely employed in Africa, SEAs have been popular tools in many parts of the world. An SEA is a systematic decision support process that aims to ensure that environmental – and possibly other sustainability aspects – are considered effectively in policy, plan and programme making.  These insights can be used to guide programme or project planning. By detecting conflict with other prospective land uses and development options, the project proponents – and regulators, for that matter – would be able to take appropriate steps to avoid unnecessary expenditure and unacceptable consequences.

It is worth remembering that the environmental and social impact of large projects is a two-way street. Not only must the project planners consider a project’s impact on its environment – they must also factor in the risk the environment poses to the viability and sustainability of the project itself.

This is important because projects are more likely to be stalled or halted by environmental and social risks acting on them, rather than the project-induced direct and indirect impacts; the latter can be mitigated by appropriate alternatives and proactively management.

As a valuable contribution to the planning process, an SEA could be considered as an early-warning tool for identifying risks and managing impacts. It draws attention – at the policy development or planning phase – to aspects of the policy or plan which could undermine sustainability in fundamental ways.

By allowing space for alternatives as well as complementary infrastructure to be considered, the SEA would require that the ‘downstream’ environmental and social impacts are considered proactively. This would help chart a way forward to the most sustainable outcome, by avoiding negative effects on livelihoods and strengthening infrastructure to mitigate risks such as water and waste pollution.

By highlighting potentially fatal threats or weaknesses, the SEA is of course very important to investors and to stakeholders like governments and regulators. If a project needed a specific type of waste disposal, for instance, an SEA may identify the lack of such facilities in the required proximity. This would give the client an opportunity to consider other options, such as waste minimisation technologies or waste recovery.

There is also much to be gained from a regional approach to sustainable development – not just in terms of economic integration but in environmental priorities. In the same way that East African countries are collaborating to facilitate cross-border trade or develop regional infrastructure, so environmental assessments too can be done on a regional basis. This makes sense especially for those infrastructural projects with regional significance, like rail lines, road networks and even ports.

These efforts may also assist in encouraging the alignment of regulatory environmental requirements between countries in the region. In our experience, non-alignment in this respect can severely hamper the progress of important regional infrastructural projects. In the Southern African Development Community (SADC), for instance, the upgrading of transmission interconnector infrastructure by the Southern African Power Pool met significant hurdles when trying to negotiate the environmental regulations of different countries.

On behalf of the World Bank, SRK Consulting was able to assist by developing an Environmental and Social Management Framework – to assist the passage of priority power projects towards bankability stage.

It is clear that East Africa is well-positioned for continued economic growth. The challenge is to ensure that such growth is inclusive and diversified, leveraging the region’s many natural resources to develop secondary and tertiary sectors. Equally, this deeper-rooted economic progress must be accompanied by environmental sustainability – so that gains made for the livelihood of this generation are not made at the expense of the next.

 

SRK Consulting was able to assist the passage of priority power projects towards bankability stage. Image credit: Unsplash

Read the first article in the two-part series of how  East African countries can strategically plan to avoid potential environmental and social harm as their economies diversify and industrialise.

Raising the quality of East Africa’s economic growth

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