Sustainable business a $350bn/y opportunity – study

5th June 2015

By: Kim Cloete

Creamer Media Correspondent

  

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Businesses in Africa have the opportunity to unlock $350-billion a year in value from new opportunities that focus on sustainability, according to a study undertaken by Accenture and the National Business Initiative (NBI).

A report on the study findings advocated a new way of growing businesses towards a more sustainable future for the continent, with a sharp focus on change and innovation.

It outlined that companies could generate new revenue streams by developing new opportunities aimed at what it called the new “floating” class – the 21% of Africa’s population that was on the brink of joining the middle class.

“With many sustainability challenges, enormous transformation is required. There is enormous opportunity, not simply through corporate social responsibility, philanthropy or marginalised within corporate affairs departments, but in strategy, human resources and supply chains,” said Accenture Strategy MD Peter Lacy.

He told a media briefing at the World Economic Forum on Africa that companies were successfully driving positive socioeconomic change. He used the example of SABMiller, which sources key agricultural raw materials such as sorghum from smallholder farmers. SABMiller currently worked with more than 20 000 farmers across Africa.

Further, in Ghana, AngloGold Ashanti operated a closed-loop system to recycle and reuse water, while M-KOPA Solar, a for-profit social enterprise, brought solar power to low-income customers by connecting more than 180 000 homes in Kenya, Tanzania and Uganda. 

The report said three consumer-driven industries – manufacturing, retail and agriculture – had the greatest potential for innovation.

The manufacture of consumer goods, as well as complex manufacturing, currently accounted for only 9% of Africa’s gross domestic product, yet the industry could capture more than $101-billion by targeting the new consumer class and making its core operations more efficient.

In agriculture, which employs over 80% of the population in some countries, Accenture and the NBI saw opportunities for innovations that increased land productivity, as well as future revenue growth.

The retail sector could open the door for the lower-income market. MTN had used informal community networks to distribute airtime cards. It also offered lower denominations when selling airtime, while Safari and Vodafone had launched M-Pesa, a mobile money transfer application that was used by more than 19-million Kenyans in 2014.

Accenture, together with the NBI interviewed over 30 CEOs for their study. While 96% of CEOs believed sustainability would be important to the future success of their business, only 24% felt the global economy was on track to meet the demands of a growing population.

Of the CEOs surveyed, only 42% believed business was making sufficient effort to tackle global sustainability challenges.

“Through focusing on sustainability and the ability of organisations to maintain profitable growth while ensuring a positive social, environmental and economic impact, we believe businesses in Africa can unleash a new wave of economic growth and significantly enhance social development,” the report stated.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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