The Sustainable Markets Initiative (SMI) Africa Council has unveiled a new initiative aimed at making natural assets a core component of national balance sheets.
The Natural Capital on African Governments’ Balance Sheets initiative is an institutional investor-public partnership led by the SMI Africa Council, which brings together institutional, technology and legal partners such as the African Union Commission, Africa Investor Group, the Great Green Wall of Africa Foundation, AUDA-NEPAD, the Landbanking Group and Mishcon de Reya.
The Natural Capital on African Governments’ Balance Sheets initiative was announced at COP16, currently taking place from Oct. 21 to Nov. 1 in Cali, Colombia.
This initiative will embed nature as an investable asset class within national economic frameworks and investment portfolios to unlock real investments at scale.
Globally, there is a potential $800 billion annual investment opportunity in nature-based solutions, as Africa’s forests, wetlands and biodiversity play a vital role in global decarbonization. Yet, they remain undervalued in traditional economic models, and businesses and investors lack the means to invest with scale into the ecosystems they depend on.
Some of the major barriers include the lack of standardized methodologies for valuing natural capital and the absence of market mechanisms that align business and investor incentives with natural capital preservation and regeneration. It is believed unlocking their value will provide new sources of wealth for Africa by integrating natural resource accounting and developing national standards.
The SMI initiative seeks to accelerate the implementation of the African Union’s Nairobi Declaration (Africa’s Green Investment Deal) launched by African heads of state at the inaugural Africa Climate Summit in Nairobi in September 2023.
“Africa’s natural capital forms the backbone not only of our economies but also of global business models and societies.To protect and expand this value, we must invest at scale in our ecosystems. Through mandate-aligned institutional investor-public partnerships with governments, we can unlock risk- and nature-adjusted returns that drive benefits for people, planet and nature — demonstrating that what’s good for Africa and the world can also create sustainable value for investors.” said Dr. Hubert Danso, co-chair of the SMI Africa Council.
