African Green Technology Market Development

One of the industries with the fastest growth rates in the world is green technology, which integrates environmental science with innovation to address the climate issue and lessen the adverse effects of technology on the environment. Overconsumption of energy from non-renewable sources worsens environmental degradation, climate change, greenhouse gas emissions, and energy scarcity, all of which pose risks to humankind.

Innovative strategies are being developed by businesses all around the world to protect the Earth’s life support systems from permanent damage. The greatest method to lessen the effects of the climate issue is to switch to clean, green, and renewable energy as the primary energy source. By utilizing renewable energy sources including the sun, wind, moving water, organic plant matter, and the earth’s heat, cleantech technologies seek to solve the issue.

Africa will likely experience some of the harshest effects of climate change despite producing only 4% of the world’s greenhouse gas emissions. According to the most recent “Tracking SDG7: The Energy Progress Report,” 773 million people worldwide lack access to electricity and renewable energy sources, with the bulk of them living in Sub-Saharan Africa. Nigeria (92 million), the Democratic Republic of the Congo (72 million), and Ethiopia have the biggest unmet needs populations (56 million).

Green technology offers many African nations the chance to skip traditional fuels and infrastructure altogether and get right to developing sustainable energy systems. Africa is the world’s poorest continent. As the world’s energy systems move toward a net zero future, the continent has the potential to play a significant role. Due to its varied topography, the continent has enormous potential for solar and wind energy, and many of the minerals and rare heaps of earth required for clean energy technology may be found in its soils.

According to a recent report by the International Energy Agency, clean energy will represent $1.4 trillion of all global energy investments this year (IEA) Africa will be able to close this gap with the support of increased investment in clean energy. Fintech still commands the majority of the attention of investors, despite the huge role that Green-tech businesses could play. Compared to $2.4 billion for fintech, African entrepreneurs in the field of climate technology only raised $440 million in declared funding in 2021.

The ICT ecosystem in Africa has expanded significantly over the past few years, but it still trails far behind the rest of the world. This development will need to invest in more energy resources if it wants to keep expanding. Pollution reduction, the provision of clean water, the resilience of the energy system, and agricultural technology are the current major sectors in clean technology.

African firms significantly lagged behind in 2020, depositing only 0.2% of the investment inflow, compared to over 93 percent in the US, Canada, Europe, and China, despite increased investment and capital flow in climate tech. Only four nations in Africa receive the great majority of venture capital: Nigeria, Egypt, South Africa, and Kenya. Getting money outside of the “Big Four” is significantly more difficult. Because of their sizable populations and robust economies, Africa’s “big four” nations consistently outperform the rest of the continent when it comes to startup funding.

Despite having a population of 120 million, nations like Ethiopia remain lagging behind in attracting venture capital investments. Regrettably, high startup funding and investments are less likely to be attracted to African nations with weak fintech performance. Numerous African nations’ weak banking systems, unstable governments, and poor economic conditions all reduce their desirability as investment destinations.

In total, startups in Africa raised about US$3.5 billion in venture capital in the first six months of 2022; by the end of 2022, it is anticipated that this amount will reach $7 billion. Countries like Ethiopia should start offering fiscal and non-fiscal incentives for venture capitalists and business angels to participate in the banking and tech sectors in order to encourage venture investment to the continent. By enhancing their legislative structure, they can encourage the development of a welcoming investment ecosystem. As a result, it would become the continent’s top location for venture capital investment.