Posted by Macquarie Asset Management
June 25, 2020
Around the world, cities have long been beacons of opportunity – acting as magnets for people seeking greater access to employment, education, and services. It is no different in Africa, where more than 40,000 people move to urban centres each day in search of prosperity1.
This will only intensify as a massive increase in the region’s population causes the number of people living in its urban centres to double by 20502. With many cities already struggling under the weight of their current populations, this rapid urbanisation will put even greater pressure on the availability of affordable housing.
Kenya is a perfect example of this growing problem, with more than half of its urban population currently living in overcrowded slums3. Today, its capital Nairobi is home to just over five million people4. By 2050, it is expected that this figure will grow to more than 14 million, raising serious concerns around living conditions and access to public services4.
Addressing this challenge is important, with affordable and quality housing essential to sustaining the region’s economic development and stability. But this challenge does not exist in isolation. We must not lose sight of the environmental challenges Africa will also face in the years ahead, drawing on sustainable design principles to tackle both issues head on.
If Africa’s urban centres are not made resilient to the effects of climate change, their vibrancy and promise of opportunity will be at risk.
Buildings and the construction sector represent approximately 36 per cent of global energy use and 39 per cent of greenhouse gas emissions5. Sustainable design aims to minimise this impact by reducing the amount of energy and water used by buildings during both the construction and operation phases.
Most people would understand the impact energy and water efficient fittings and fixtures can have on a building’s environmental footprint. But there are other design considerations that can also enhance a building’s green credentials. For example, windows are the main source of heat loss and gain by a building. If you consider a building’s window to wall ratio early in its design phase, you can significantly reduce its reliance on air conditioning longer term. In the context of rising average temperatures on the African continent, rethinking the design of new buildings in this way could have a real impact both on quality of life and energy consumption.
Sustainable building design can also incorporate technology to increase the control tenants have over their energy use. From smart meters to renewable energy systems like rooftop solar panels, technology can help mitigate the impact our buildings have on climate change.
It is expected that climate change will disproportionately impact countries on the African continent, bringing more unpredictable weather conditions in the years ahead. Faced with the prospect of higher average temperatures as well as more frequent and intense droughts, it is vital that we adapt our societies for this new normal – starting with our buildings and critical infrastructure.
Some modelling suggests that if temperatures rise by 2°C, sub-Saharan Africa could experience a 20 per cent decline in rainfall and an increase in the number of consecutive dry days6. If buildings are designed with these climate scenarios in mind, communities across the region will be better positioned to deal with growing issues like water scarcity. Similarly, buildings that prioritise energy efficiency will take pressure off the electricity grid and reduce overall emissions.
There is a perception that green buildings are more expensive to design and build than conventional buildings. The reality is that, today, intelligent design does not have to cost the earth.
A lot of the green design principles we are talking about do not involve a significant outlay and only require that developers evolve their approach. In that sense, it will be important that the viability of environmentally sustainable building design is demonstrated by the construction industry, with initiatives like EDGE certification already helping to achieve this goal.
Ana Plecas, Vice President, UK Climate Investments
Once these green design principles are embedded in the market, we expect we will see both building standards and the expectations of tenants evolve. We think residential and commercial tenants across Africa, like in the rest of the world, will increasingly want to own, rent and work in buildings that are better for the environment. They should also recognise the benefits these types of buildings can offer in the way of lower operational costs through reduced water and electricity consumption.
Hopefully, we will reach a point where green solutions are considered standard in Africa.
The Kenyan government – like many across Africa – has identified affordable housing as a priority policy area, but we believe private capital will be essential to delivering the considerable step-up in investment required.
The entrance of more institutional developers to the market in recent years has been reassuring, but local developers need equity to obtain construction finance and deliver affordable housing projects at scale. I think the supply and demand imbalance that we are seeing will attract capital to the sector, but effective urban planning and infrastructure investment will be key. The presence of other investors like UK Climate Investments will also play an important role in crowding-in investment – giving private capital the confidence needed to commit to new projects.
In this respect, we expect that both governments and the private sector will need to work together to build adequate green housing to meet the needs of Africa’s growing population.
Managed by Macquarie Infrastructure and Real Assets, UK Climate Investments is a £200 million pilot investment programme mandated to invest in India and sub-Saharan Africa. It targets transformational green energy investments where UK Climate Investments’ capital can mobilise additional private sector capital on a sustainable basis to promote cleaner, greener growth in these developing economies. UK Climate Investments is a joint venture between Macquarie’s Green Investment Group and the UK Government’s Department for Business, Energy and Industrial Strategy. It forms part of the UK aid funded International Climate Finance, which is a UK Government commitment to support emerging markets and developing countries to respond to the challenges and opportunities of climate change.
To find out more about the work of UK Climate Investments, click here.
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