"Renewable energy should become a leading sector in the new world’s economy"
By Yariv Cohen, Ignite CEO. Published on The New Times
As the COVID-19 virus continues to spread throughout the world, we realize every day how little we actually know about the virus and its various implications. While the debate on the social, economic and political effects is at its infancy, there is one thing everybody can agree on: the pandemic is expected to drastically change our lives. As always, some will benefit from the situation and gain tremendous opportunities to prosper and thrive. Others will collapse and disappear. While all sectors, and countries are due to change, some are currently facing both great opportunities and great risks at the same time, facing a major turning point that will shape their future for years to come.
Two notable examples are Africa and the field of renewable energy. Both have gone hand in hand for a long time: In recent years, renewable energy has enabled many countries across Africa to bridge the infrastructure gap, providing millions of people with affordable, clean and scalable energy solutions. At the same time, the continent has become a global leader in the renewable energy sector, with countries relying heavily on various renewable solutions, much more than the majority of developed countries. Now, due to the global crisis, both Africa and the renewable energy sector are facing a significant junction; The next few months will determine whether they will benefit from the vast opportunities, or be severely harmed. Either way, the result is expected to directly impact hundreds of millions of people throughout the continent, and to shape lives and economic reality. Africa: Hope to stand out in the new economic reality
Africa has quite a few reasons to fear the consequences of the crisis. After many years of ignorance and neglect by developed countries (at best) or exploitation and occupation (at worst), global investors have finally begun to notice the huge economic potential across the continent. The young demographics, expected increase in population, political stability, buds of economic growth and technology penetration, have all been shining Africa in a new light. The endless demand for basic services (such as energy, water, medical and more) made Africa a notable investment opportunity with tremendous economic potential alongside a wide-scale opportunity for positive impact. Now, COVID-19 is threatening to reset the clock. The global economic crisis is likely to shake the international investment market, and many investors may avoid “risky” investments. If Africa fails to brand itself as a (relatively) safe investment, investors who have only recently discovered the potential may withdraw their money and opt for more solid and secure channels. Donation funds, which are currently budgeting many humanitarian projects, may also be significantly reduced.
On the other hand, as promised, there is an amazing opportunity: it is precisely the severe global economic crisis that can act as a springboard and propel the African economy into a global transport position. This is because today, despite the continued increase in the number of investors, investing in Africa is still considered “alternative”. As the world’s leading stock indices (Wall Street, NASDAQ, European stock exchanges, etc.) have climbed continuously since the 2008 fall, and tech companies have broken valuation records time after time, Africa is still far from being a consensus.
The new economic reality that investors will meet after the crisis will be different. Technology companies that have enjoyed inflated valuations are likely to face losses, and many products and services that provide “nice to have” solutions are likely to suffer severe declines. Against the backdrop of the continuing decline in consumption all over the world, African markets will present a unique opportunity: with the sheer size of the market (which, as mentioned, is expected to continue and grow significantly) and the great need for real, affordable solutions, companies that provide “must-have” products will present tremendous investment options, which will be particularly unique in light of the new economic reality.
Renewable energy sector: Fear of losing momentum
Just like Africa, the field of renewable energy is finally gaining worldwide attention. After years in which the concern over the climate crisis was the sole property of niche scientists and Al Gore, the last few years have brought widespread attention, constantly gaining momentum. The immediate concern is to lose that momentum: humans need a common enemy, even invisible, to unite and act on a large scale. Now, viruses and pandemics might replace climate warming as the “enemy”, and resources and attention will be diverted as well. The lack of public/media attention will also result in a decline in public awareness and action throughout the world. On the other side of the equation lies a great opportunity. The global crisis has created many precedents that may support the effort to stop climate change. For example, the world did the impossible and cut greenhouse gas emissions by a huge percentage. A massive reduction in the number of aircraft, recreational ships, and private vehicles, as well as many factories, has resulted in a tremendous drop in air pollution at the pandemic epicenters, leading to the lowest pollution levels in decades. In addition, extensive international cooperation between research teams has shown that in times of crisis, the world can unite and take steps that not so long ago seemed impossible. If we are able to channel all of these into fighting the climate crisis, the odds of success will be much higher. The renewable energy sector may be one of the major beneficiaries and become a leading sector in the new world’s economy. It is impossible to predict what will happen tomorrow, not to mention the next few months. Yet, it is our responsibility, from private sector managers to governments and officials, to do everything we can to make this crisis an opportunity. The more we invest now, the better our chances are of success. Both Africa and the renewable energy sector are facing a historic turning point: we must do everything we can to navigate in the right direction, and lead hundreds of millions of people to a better future.