Colin Herron on Investing in Africa’s Water Security

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Colin Herron on Investing in Africa's Water Security | Future Business

No Water, No Life

Herron explains that quite simply, without water there can be no life, no society, no development. “Yet too often managing our water is seen as the responsibility of a single line ministry, and not an all-of-society effort to ensure that water is used efficiently and effectively for all needs, while ensuring that water sources are sustainably preserved for generations to come.

“Water management is chronically underfunded, with countries in 2020 rating their own progress towards sustainable water management funding schemes at 46 per cent, as compared to the target of 100% by 2030, measured through Sustainable Development Goal indicator 6.5.1.

“In Africa, this growing pressure is exacerbated by the existing annual water investment gap, which is estimated between USD 49 and 54 billion, according to data from the African Development Bank. Because of water scarcity, contaminated water, or poor sanitation, Sub-Saharan Africa loses an estimated five per cent of its GDP annually. So the lack of investment negatively affects the economy, further reducing the opportunity to reset the course towards sustainability.”

Herron believes this lack of investment also impacts the most vulnerable, adding to the continent’s economic and political insecurity, and compromising its prosperity. “For example, the African Development Bank estimates that every year 40 billion hours of otherwise productive time is spent just collecting water in Africa.

“Furthermore, the World Health Organization estimates that on average, every dollar invested in water and sanitation returns US$4.3 and an estimated gain of 1.5 per cent of global GDP through reduced health care costs, as well as providing benefits such as reduced pollution, greater workplace productivity, increased school attendance, and greater dignity, privacy, and safety.

“Clearly Africa needs a coordinated and collaborative approach to ensure that developed nations honour their financial commitments and that all investors, including the corporate sector, contribute to meeting the continent’s greatest needs. It is of the utmost importance that water security and climate resilience are a key part of regional and national development plans in Africa.”

Blueprint for Tomorrow

Fortunately, says Herron, there is now a blueprint in place that will help the continent to increase sustainable investments in water.

“In February 2021, the African Union Heads of States adopted the Continental Africa Water Investment Programme (AIP), as part of the second phase of Programme for Infrastructure Development in Africa (PIDA), with a goal to leverage and influence US$30 billion per year in climate resilience SDG 6 water investments annually by 2030, creating at least five million jobs.

“To fulfil this ambition, the AIP will make use of the AIP Water Investment Scorecard, to be launched in 2022, which will rally political leadership and commitment to transform the investment outlook for water and sanitation towards the realisation of SDG 6, by supporting countries to track progress, identify bottlenecks, and take action. The scorecard will enhance mutual accountability for results in the mobilisation of water investments.”

Top Level Engagement

Herron identifies that a need to engage the highest level of leadership in Africa to solve the water crisis resulted in the African Ministers Council on Water (AMCOW), along with UNDP, UNICEF, AUDA-NEPAD, the African Development Bank, Global Center on Adaptation, and the Global Water Partnership (GWP) establishing a partnership to mobilise international commitment for water investments and SDGs in Africa, by convening an International High-Level Panel on Water Investments for Africa.

“This panel will drive global political mobilisation and international engagement to narrow the water investment gap on the continent. The panel will be launched in March at the 9th World Water Forum.

“Based on this tremendous mobilisation of political, technical, and financial resources, public and private investors will now have a clear investment pathway which will increase the efficiency and impact of their investments, while also allowing funding sources to be blended in a way that mutualises risks by increasing multi-sector collaboration, in the spirit of SDG 17, on Partnerships for the Goals.

“With a long-term vision, the AIP is here to stay, further increasing investor confidence. Frameworks like the AIP reduce the transaction costs for investors while providing a scalable approach through which everyone can contribute within the scope of their possibilities.

“Currently many corporate investors are unsure of where to best provide support. The increasing focus on Environment, Social and Governance (ESG) criteria is generating further interest and commitments from investors, but the pathway towards optimal ESG investments can be a minefield.

“If corporate investments are not grounded in the public good as defined through good governance arrangements, there is a risk of maladaptation or even unwitting greenwashing, which is certainly not a good investment for anybody.

“Africa desperately needs investments in its water resources, to boost its drive towards sustainability, reduce health risks, increase climate resilience, create jobs and livelihoods, and to grow its economies.

“To do this, corporates need to sit at the table along with other stakeholders, as one voice among many. When multiple voices are heard, the outcome is more likely to be one in which local customs are respected and solutions are sustainable.”

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