SOUTH Africa’s green economy can stimulate growth, enhance competitiveness and open new markets, locally and globally. Abundant natural resources —predominantly solar and wind, but also the minerals needed for the development of green technologies and biodiversity — and a solid financial sector and innovative industries position the country to play a leading role in a greener world.
Green activities already contribute substantially to the South African economy, such as in the platinum value chain for the manufacturing of catalytic converters, as well as in renewable energy, resource efficiency, recycling, biodiversity conservation and tourism.
Moreover, the growth of a green economy presents an opportunity to create jobs. The government’s industrial policy identifies "green and energy-saving industries" as a priority sector for job creation, and its New Growth Path targets the creation of 300,000 additional direct jobs by 2020 in green economy sectors — including 80,000 in manufacturing — and more than 400,000 by 2030.
A study by the Industrial Development Corporation, the Development Bank of Southern Africa and economic research institute Trade and Industrial Policy Strategies supports the government’s ambitions, estimating the potential in the formal sector of the green economy at roughly 462,000 possible jobs by 2025.
In addition to its contribution to job creation, poverty alleviation, energy security and reduced environmental impacts, the green economy makes economic and financial sense, offering cost savings and higher profitability. According to the United Nations Industrial Development Organisation, energy-efficiency improvements in developing countries display on average a payback period of less than two years and a five-year internal rate of return of more than 40%.
Green practices can also stimulate commercial activity in numerous sectors of the economy. Opportunities in agriculture (organic produce and cotton production, biofuels), mining (platinum, iron ore, copper), manufacturing (energy-efficient and pollution-control equipment and machinery, renewable energy components), electricity generation (renewable energy), construction (green buildings) and services (tourism, recycling, public transportation) are a few examples.
The government has implemented a number of schemes to assist businesses to seize green opportunities in these sectors, although the focus remains on renewable energy and the improvement of resource efficiency, both in terms of energy and water consumption.
Businesses can get support through grants, concessional loans, tax incentives or technical assistance from various government entities, such as the Department of Trade and Industry, the National Cleaner Production Centre of South Africa, Eskom and the Industrial Development Corporation, to implement energy-efficiency improvements. Privately run schemes exist too, such as the National Business Initiative’s programmes.
The government also promotes renewable energy. South Africa is running one of the world’s leading procurement programmes for renewable energy (essentially from wind, solar photovoltaic and concentrated solar power technologies), which has already attracted investments worth R150bn. Companies investing in renewable energy technologies can also benefit from an accelerated depreciation rate for capital equipment and Eskom’s subsidy for solar water heaters.
However, while many companies are already vigorously investing in the green economy, most opportunities remain underexploited or untapped. Both the private and public sectors must be proactive in seizing these opportunities. Notably, the significant shortfall in professional, managerial and technical skills, which can be a bottleneck for the growth of green industries and services in the country, should be the foundation of all green economy policies in South Africa.
Ultimately, successful management of the global green transition will require short-term pragmatism and long-term planning, linking business, the government, labour, nongovernmental organisations and the research community in support of green growth. Only then will South African businesses be able to harness the opportunities created by these new markets and position South Africa as a green frontrunner.
• Montmasson-Clair is assistant programme manager: sustainable growth at Trade and Industry Policy Strategies.