McKinsey identifies 24 green manufacturing business opportunities in Africa

Kenyan company ASOBO has introduced electric fishing boat engines on Lake Victoria. According to McKinsey, the assembly of electric fishing boats is a green business opportunity in Africa.

McKinsey & Company highlights new business opportunities across several sectors including agriculture, biofuels, basic materials, energy, packaging and plastics, transportation, and textiles and apparel – each having substantial potential for green growth.

If Africa’s manufacturing sector follows the growth trajectory of developed markets over the past decades, it will likely double in size, and without any decarbonisation efforts its emissions could nearly double as well by 2050. This would not only set the world back on its overall emissions reduction targets but could put the continent at an economic disadvantage.

As the rest of the world seeks to pull ahead in the race to net zero, Africa’s manufacturing sector could become uncompetitive and find itself unable to export globally. Many countries outside Africa have committed to ambitious abatement goals and are starting to pass laws and implement taxes on greenhouse gas emissions of imported goods. This could leave the continent even more dependent on international development support.

Globally, manufacturing and the power it consumes is the single largest contributor to greenhouse gas emissions. And while Africa’s contribution to these emissions is currently small, this will inevitably rise as the continent industrialises and if no steps are taken to mitigate the effects.

In a recent report, consultancy firm McKinsey & Company identified the following 24 green manufacturing business opportunities in Africa to produce new products that are less carbon-intensive and/or that embrace new low-emitting production processes.

Agro-processing
1. Convert waste into black soldier-fly animal feed (or other insect protein)
2. Manufacture biological crop protectors such as bioherbicides, biofungicides, and bioinsecticides
3. Manufacture plant-based protein
4. Manufacture cultured meat
5. Produce bioethanol as a low-carbon fuel alternative for transportation and cooking (replacing firewood and charcoal)
6. Produce bioplastic using agricultural products

Power
7. Manufacture parts for wind turbines (primarily turbine towers)
8. Manufacture solar panels
9. Assemble off-grid solar systems (eg, solar home systems, water pumps) for local markets
10. Assemble microgrids for local markets

Forestry products manufacturing
11. Manufacture high-end cosmetic creams using forest-friendly natural products
12. Manufacture cross-laminated timber (or other alternatives to cement)

Transportation
13. Assemble (with future potential to manufacture) electric vehicles for personal or commercial uses
14. Assemble (with future potential to manufacture) electric motorbikes and other two/three-wheelers
15. Assemble (with future potential to manufacture) electric fishing boats
16. Manufacture storage inputs (batteries and fuel cells) for electric vehicles and boats
17. Manufacture charging facilities (and local infrastructure) for electric vehicles

Basic materials
18. Manufacture direct reduced iron using hydrogen or biomass fuel for export markets
19. Manufacture insulated glass using hydrogen fuel furnaces
20. Manufacture electrolyser for green hydrogen production
21. Production of green hydrogen for local (substitute fossil fuel for transportation) and export (ammonia) markets

Textiles
22. Set up mechanical recycling plant to recycle PET flakes into polyester fabric
23. Set up an “early mover” hydrothermal plant to recycle polycotton into polyester and cellulose powder
24. Manufacture textiles from alternative fibres (e.g., fruit, hemp, vegetable)

These new businesses could embrace opportunities in two main areas: new products that displace existing carbon-intensive products, for example, the production of plant-based proteins, which are fast gaining market share across the world; and the development of new industries and new processes that support green transportation or enable the energy transition. Two examples here include the manufacturing of wind turbine components to supply the fast-growing wind sector on the continent and the manufacturing of electric two-wheelers.

According to McKinsey, these opportunities offer African entrepreneurs and financiers exciting prospects. Those who act fast to take advantage of them could benefit from Africa’s unique resource advantage, including its range of natural resources, solid renewable energy capabilities, and significant areas of uncultivated or under-cultivated land.

Maria Flores

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