Green Economy Journal Issue 49

SPECIAL REPORT
SPECIAL REPORT
Source: UN, Fitch Solutions
DEMAND ACROSS KEY SECTORS
Africa: Urban population, mn (2025). Note: Circled numbers indicate
urban clusters of over 500 000 for countries with two or more clusters.
sanitation, electricity, health and education. Governments that prioritise
cooperation with the private sector through measures such as PPPs will
see the most investment in sustainable electricity generation sources in
their respective markets.
South Africa, Morocco and Egypt boast the most diverse and largest
industrial bases in Africa and face the most significant pressure to move
towards sustainable energy sources for critical value chains. According
to the latest available data from ClimateWatch, South Africa accounts
for around 1.06% of global greenhouse gas emissions, while Nigeria’s
contribution stands at 0.73% and Egypt accounts for around 0.6%.
PRESSURE TO REDUCE EMISSIONS WILL DRIVE GREEN INVESTMENTS
Regional issues about
sustainability will remain mainly
company-driven to support
brand image.
Power. Liberalised power generation markets and vast solar power
potential will make Egypt and Morocco the renewables generation
growth outperformers in Africa over our forecast period to 2030. By
investing heavily in the expansion and improvement of their transmission
and distribution and generation infrastructure, Angola and Zambia will
see the most significant improvements in power grid efficiency over the
decade, reducing losses from the grid and improving the reliability of their
electricity supplies. Kenya and Morocco will be the most conducive power
markets for sustainable investment in 2021, with the most attractive
balance between renewables generation, grid efficiency and share of
renewables in overall generation.
Telecoms, media and technology. The pandemic has enabled new
digital-centric opportunities for growth, mainly driven by increased
restrictions on movements. In key markets, such as Ethiopia, growth will
be driven by new users coming online. In the region’s outperformers, we
have highlighted cloud, streaming and manufacturing as key areas where
Big Tech will lead. The African telecoms market is poised to provide longterm
demand for data centres as it undergoes significant technological
development. Data centre investments will propel demand and broaden
the range of IT solutions available in the market, supported by global
players Microsoft, Huawei and Amazon Web Services investing heavily to
bolster their presence in the region.
On the downside, power supply challenges in key markets will increase
reliance on costly alternative energy solutions, raising operational costs
for investors. In addition, the dearth of adequate, secure IT infrastructure
means that many countries will be increasingly vulnerable to data theft
and growing cybercrimes, necessitating investment in cybersecurity.
Retail. The Covid-19 pandemic resulted in significant disruptions to the
retail sector as consumers ability was limited to movement restrictions and
restrictions on retail store operations. Consumers adapted to eCommerce
as it offers a safe and convenient way to make purchases. We expect
eCommerce to remain a part of SSA consumer’s purchasing patterns over
the coming years. This will be supported by the region’s high mobile internet
penetration rate and increasing investments in eCommerce services by
consumer facing business such Mass Grocery Retailers (MGR) and clothing,
footwear and accessories retailers. Video on-demand services are in the early
stages of development and adoption in the SSA region as it has historically
been dominated by pay-TV services. However, over the coming years, we
expect streaming to make up a larger share of entertainment consumption,
particularly as players in the industry are making efforts to invest in content
that appeals to audiences across the region.
Healthcare. Digital health will strengthen healthcare operations, while
telemedicine will increase health access in rural areas. Growing mobile
phone ownership and internet access will further facilitate growth
in digital health after the pandemic, although challenges remain.
Environmental sustainability in the medical device industry is still a minor
issue considering the health benefits associated with the sector. Complex
supply chains due to an over reliance of imports in SSA contribute
to greenhouse gas emissions, but a complete ban on plastics in the
medical device industry is still very unlikely and sustainable packaging
will continue to become increasingly important. Regional issues about
sustainability will remain mainly company-driven to support brand image.
Autos. Digital logistics start-ups and rising M&A activity will be key in the
development of tech-enabled freight and logistics solutions across SSA.
This will drive growth in new commercial vehicles sales in the region.
Ecommerce proliferation across the region is helping to drive last-mile
delivery solutions and this in turn will boost light commercial vehicles
and motorcycle sales. The growth of ecommerce and e-logistics will drive
sustainable transportation initiatives as firms embrace environmental, social
and corporate governance (ESG) initiatives by renewing Africa’s ageing CV
fleet that is often more polluting and promote electric vehicles (EVs).
Although the sustainability drive in Africa will lag that of the rest of the
world, there are a few pockets of the continent’s automotive industry that
READ REPORT
THOUGHT [ECO]NOMY
greeneconomy/report recycle
AFRICA BEYOND THE PANDEMIC: Tech, Sustainability & Regional Trade
Transformation | Fitch Solutions [September 2021]
The Covid-19 pandemic has catalysed stronger progress towards digitalisation across key
industries targeting Africa’s rapidly urbanising population. Sustainability will be more of a focus
area, though targets will differ by country, and key initiatives will gain traction in varying degrees
across industries, with the consumer and retail, autos and technology sectors best placed to lead.
Heavy industry will also play a key role, as the region’s population is set to benefit from higher
electrification rates and a recovery in domestic and global demand for products as well as stable
and strong long-term trade growth, which will support road and port infrastructure construction.
The report reveals:
• How Covid-19 has accelerated e-Commerce and digital health uptake in SSA
• The outlook for Africa’s data centre market
• The acceleration of sustainability initiatives in SSA’s food and drink industry post-Covid-19
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offer opportunities to improve sustainability. E-logistics firms will be at
the forefront of purchasing EVs as the income gained from transportation
services rendered will be used to cover some of the purchasing costs. We
note that as businesses in Africa increasingly drive towards a higher degree
of sustainability, they will find it easier to source funding for sustainable
projects amid the ESG investing boom.
Logistics and supply chains. Deeper regional trade integration in the years
ahead will allow countries to specialise and exploit economies of scale,
thereby improving productivity and growth. However, pandemic-induced
logistics bottlenecks have thrown global supply chains out of sync since
2020, causing delays at ports, causing container shortages and recordhigh
shipping rates in 2021. On the other hand, economic disruptions due
to the pandemic have accelerated plans to boost economic diversification
and supply chain resilience all around the world, and Africa is no exception.
Increased digitalisation and streamlined customs procedures are key
measures that will strengthen economic growth and deepen regional
integration over the coming decade. Benefits will be concentrated in a
few countries with strong logistics, security stability and those that are
increasing efforts to ease trading across borders through strengthening
hard and soft infrastructure.
Source: Our World in Data, Fitch Solutions
Africa and key markets: CO2 emissions, per capita (1990-2019).
25 55 61 65
Intra-Africa supply
chains: digitalisation
to unlock
opportunities
Sustainability in Africa’s
autos: EVs, natural gas
and ICE vehicles offer
opportunities
The top power
markets for
sustainable power
investment in Africa
Cooperation between public
and private sector key for SSA
power sector development
post-pandemic
This commentary is published by Fitch Solutions Country Risk & Industry Research and is not a comment on Fitch ratings’ credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.
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