Scaling investment for Africa’s sustainable blue economy

Despite carrying 80% of the world’s trade, absorbing 30% of carbon-dioxide emissions, and providing food security for almost three billion people, the global blue economy (oceans and waterways) is suffering from acute underinvestment, and nowhere more so than in Africa. In the face of heightened economic volatility and tightening financial constraints, the transition to a more sustainable blue economy represents a major, largely underappreciated opportunity for the continent.

This is not just some abstract idea. Given investors’ appetite for sustainable, scalable returns, the opportunity is hiding in plain sight, and governments are waking up to it. Spanning more than 30,000 kilometers (18,640 miles) of coastline, Africa’s blue economy does $300 billion worth of business each year, and it is uniquely positioned to benefit from the broader shift to more sustainable models. The African Union projects that the blue economy will increase to $405 billion in 2030, and to as much as $576 billion by 2063. As these sectors expand, employment levels could increase from 49 million jobs in 2019 to 78 million by 2063.

Highlighting the sectors with the most potential helps to put these numbers into context. Consider food, where the development of sustainable aquaculture and fishing practices could help meet the growing demand for protein in Africa and beyond. Our calculations suggest that sustainable aquaculture-based fish production could grow eightfold in Africa, reaching approximately 19 million metric tons per year by 2050.

The energy sector is similarly promising. According to research from the World Bank, South Africa could reach 900 gigawatts of offshore wind capacity, and it is not unique. All told, offshore wind alone could boost Africa’s electricity generation 45-fold.

The sustainable blue economy also has an important role to play in climate adaptation. With sea levels around much of Africa’s coastline rising faster than the global level average, marine restoration and conservation can build natural resilience while also delivering benefits to food systems, biodiversity, and other sectors such as tourism.

But to make the blue economy truly sustainable, Africa and the Middle East will need approximately $70 billion in annual investment from now to 2030. To reach that target, governments should leverage innovative financial mechanisms to bring more capital into the blue economy and advance sustainable, scalable projects. Fortunately, demand for such solutions is growing, and over 80% of African countries have already embedded the blue economy into their national development plans or climate strategies.

Decision-makers across many markets are beginning to treat the ocean as a strategic asset that needs to be protected and sustainably managed. But while solutions like blue debt instruments hold much potential, many issuers have yet to capitalize on the opportunity presented by the sustainable debt market. Greater use of blue bonds, sustainability-linked loans, and social bonds could channel capital where it is needed most.

Similarly, debt conversions for nature – increasingly explored as “debt-for-sustainability swaps,” whereby financing or debt relief is explicitly earmarked for sustainable projects – represent attractive options for sovereign issuers, depending on their financial characteristics. Such transactions can reduce debt-service payments and free up capital to support a country’s sustainability goals.

For example, last year, Standard Chartered (where I am Chief Sustainability Officer) partnered with the Government of The Bahamas, The Nature Conservancy, and the Inter-American Development Bank (IDB) to launch an innovative debt conversion for nature and climate. The project is expected to generate $124 million for marine conservation, demonstrating that this asset class is developing quickly – and with significant potential for scaling.

Moreover, efforts to develop sustainable blue economy strategies and practices are increasingly supported by regulatory reforms, marine spatial planning programs, and regional cooperation models like the International Union for Conservation of Nature’s Great Blue Wall Initiative. These are laying the foundation for a wave of investible projects supported by real assets, local ownership, and measurable returns.

The momentum will keep building this year. In June, the Blue Economy and Finance Forum and the UN Ocean Conference offer opportunities to bring bankable projects to global investors and accelerate the African sustainable blue economy’s growth. The risks – ranging from regulatory bottlenecks to insufficient capacity to develop projects – are manageable with the right partnerships.

Making Africa’s blue economy sustainable is no longer an untested idea. Our own latest research, Harnessing Africa’s Blue Economy, shows this is a growing investible market – one that banks, asset managers, and governments cannot afford to ignore.

This commentary is part of The Ocean Imperative debate, brought to you in part by The Ocean Risk and Resilience Action Alliance and AXA.

This article is also published on Project Syndicate. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.