Sub-Saharan Africa is a hungry place. In 2016, 224 million people were undernourished in the region. That is 46 million more than went hungry in 2000. Despite progress made in alleviating undernourishment—reducing it from 28,1 percent in 2000 to 20 percent in 2010—the figure has begun to creep up again to 22,7 percent in 2016. At current growth rates, Africa is expected to be able to feed only 13% of its population with its own resources by 2050.
The case for investing in renewables to promote food security
Renewable energy, especially solar power, can make a significant contribution to improving people’s general quality of life; their access to water, technology and information; education; food preparation options; and employment.
Opportunities for investment in these technologies are abundant and promising. Investing in solar power, in particular, could yield dividends in at least four areas that modernise the agricultural sector.
1. Irrigation systems
Only seven percent of African agriculture is under irrigation, with the rest subject to erratic rainfall patterns. Solar-powered irrigation provides a cost-effective, time-saving and environmentally friendly solution with specific advantages, including an increase in crop yields, improved soil moisture conditions and reduced labour. The latter improves the scalability of rural farming as well as the quality of life of women and children, who are usually responsible for fetching and carrying water.
2. Desalination plants
In many water-scarce regions, desalination is one of the solutions available to meet water shortages. However, desalination facilities require significant amounts of electricity to function and in a continuous cycle, water is needed to generate electricity from fossil fuel-based sources.
Renewable energy-based desalination technologies could increasingly come into play to bridge the water gap. Although still expensive, it is a more sustainable solution and contributes to food security, since the agriculture and food supply chain is the largest consumer of water resources, using about 70 percent of all freshwater.
3. Refrigeration capabilities
In rural areas, the handling, storage, transport, sale, and consumption of perishable food commodities often take place entirely outside temperature-controlled environments. As a result, a significant percentage of food produced spoils before it can be consumed or even reach consumers. Post-harvest losses are estimated at 30 percent of global food production, while less than 10 percent of perishable foodstuffs are refrigerated.
4. Environmentally friendly practices to improve food quality
The degradation and destruction of natural ecosystems are major threats to crop diversity and the stability of food systems. Climate change has been identified as a major determinant of damage to or destruction of ecosystems.
Barriers to investing in renewables
While investing in and rolling out renewables is the obvious way forward for both the public and private sectors, it would be foolish to ignore the fact that certain daunting barriers exist. These need to be examined and tested to build robust and high-yielding investment environments.
• Capital requirements and economic barriers
These include high installation, maintenance and repair costs, compared with the relatively low costs of competing, more traditional sources of energy. Mistaken perceptions of costs further muddy the waters, as do uncertainties about funding processes, inadequate government subsidies, and an unwillingness on the part of banks to fund medium- to long-term investments in shrinking economies.
Solar projects will become more economically viable once adoption rates are scaled up, solid public-private partnerships are formed, governments come on board, and clear regulatory frameworks are put in place.
• Political will and regulation
Utilities across the continent have invested heavily in the traditional energy technologies of coal, gas and oil, wielding enormous market power. These present a formidable barrier to renewable energy. Scaling renewable technologies will require clarity of policy, long-term price certainty and regional cooperation.
• Access to finance
The market for renewable energy technologies is relatively new. This can lead to higher volatility and thus greater risk for lenders. Since most renewable technologies are still in their infancy, they entail added risk. The long-term commercial horizons of energy agreements cannot provide underlying history to validate investment and credit decisions.
• Lack of consumer education
A strategic market barrier to solar technology uptake is a lack of clear messaging and limited consumer awareness around the technology. This often generates negative perceptions based on a poor understanding of the costs or how a technology works in practice.
Developing well-placed investment incentives
To roll out renewable technologies at scale in Africa would require the dedicated development of targeted investment incentives. A calculated effort should be made to eliminate subsidies and other forms of support given to fossil fuels, while efforts to support innovative new technologies should be thoroughly strategised and accurately directed.
By aligning a broad investment community and mobilising private finance, renewable electricity infrastructure offers an attractive return profile for long-term investors. Today, an increasing number of institutional investors are recognising the potential for infrastructure investment to deliver inflation-linked, long-term and stable cash flows. In addition, the resultant economic benefit may begin to dwarf the environmental argument, which thus far, has only gained traction in some sectors.