Nature-Based Investing & What It Means For Africa

The realities of the declining biodiversity due to climate change have suddenly become too big to ignore. This was the main agenda of the 2022 United Nations biodiversity conference (Cop15) in Montreal in December. Thousands of delegates gathered, tasked to find ways to counter the alarming decline in global biodiversity. The negotiations ended with an agreement to protect 30% of the Earth’s land and oceans by 2030, along with a string of other resolves to contend with the loss of biodiversity.

The agreement was signed by governments and private sector representatives. Among them were financial institutions that have increasingly committed to protecting and enhancing biodiversity in recent years. They are responsible for the new terminology – Nature Based Investing.


What Does It Mean? 

Nature-based investing” – is where investors provide benefits to nature and ecosystems alongside achieving a financial return.

This new buzz is timely because many economic activities depend on the earth’s biodiversity. In Eastern Africa, for example, tourism is a major revenue earner, and it’s all pegged on flourishing biodiversity. Therefore, anything that threatens biodiversity and ecosystems in Africa and around the world should be addressed with urgency both by investors and governments.


The Real Problem Impending Investments in Biodiversity

Although the 2022 UN Biodiversity Conference made a historic agreement on biodiversity, it failed to address some pertinent issues surrounding investments in bio-diversity.

“We didn’t sign the agreement,” Ève Bazaiba, the DRC’s environment minister, said. “It is not possible for us to implement it. We cannot accept the level of ambition without more finance.”

The issue of financing the ambitious projects proposed at the conference creates a major challenge for developing countries, not just DR Congo, to sufficiently invest in biodiversity. As stated by the UN Environment Programme, only 17% of total investments by the private sector are directed to nature-based solutions. This is barely half the $384B needed yearly to meet the biodiversity goals.


Investment Dilemmas

Digging deeper into the matter, it was discovered that the availability of finances is just one part of the challenge. The other impediment to investment in biodiversity is that investors need help determining what actually to invest in when it comes to nature.

Devang Vussonji, a partner at consulting firm Dalberg, says that the difficulty of measuring and assigning value to different types of biodiversity is a major factor holding back investment in nature-based solutions in Africa.

“There’s a lot the market needs to figure out,” he says. “What do we value and not value ?”

For many investors, the most viable starting point is carbon credit schemes. These are designed to conserve or enhance forests that act as carbon sinks – theoretically enabling companies to offset emissions from other activities.

“There’s now a recognition that if the carbon markets have proven themselves and are beginning to take off, there’s good demand for products as well as a good supply of products, then the same can be replicated for broader nature-based investing as well,” says Devang Vussonji.


The Way Forward for Africa’s Biodiversity…

Considering Africa is the least contributor to emissions globally, nature conservation may not be the only priority for these investments. The need to ensure a sustainable food supply is a worthy rival, considering the human population is set to almost double by 2050.

“You do have that trade-off between protecting virgin nature and cultivating food for a growing population,” Litovsky acknowledges. He adds that developing agricultural techniques that regenerate natural ecosystems will be “really quite fundamental” to Africa’s future.

It’s worth noting that Africa has been more successful than most of the world in preserving its biodiversity up to date. Africa boasts of one-quarter of the Earth’s biodiversity, hosting spectacular natural phenomena like the mighty Congo Rainforest, also known as the “green lungs” of the planet. In this regard, Africa’s investment in nature must be balanced and well-directed. A hierarchy of priorities should be developed, and resources channelled systematically to address each problem with the urgency it demands.

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