How Emerging Technology Can Boost Africa’s Green Industrial Future

African governments need to create new ways to fund climate-friendly green projects. Donor-funded initiatives have driven progress toward financing Africa’s green growth, but more investment is required. Cross-border data hubs and AI simulators that use big data and the Internet of Things (IoT) can help Africa achieve low-carbon green industrialization, leveraging the continent’s abundant renewable resources and young workforce.

One obstacle to green growth is the lack of reliable data for investors to finance African innovations. Investors need various data, such as trade, climate, and economic indicators, to evaluate the feasibility and profitability of green projects. But African governments often fail to provide updated and accurate data, which raises the risks and costs of credit. As a result, the private sector faces higher interest rates and lower access to the green bond market. Emerging technologies can help establish trustworthy and transparent data hubs in Africa that enable financiers to assess the opportunities and returns of green industrialization.

Emerging Technologies

The green growth transition and emerging digital technologies can work together as a powerful force for Africa’s economic transformation. By leveraging data, African governments can help inform new green financing frameworks that reduce risk perceptions and costs. Combining IoT, blockchain, and artificial intelligence, a multi-pronged approach can help build scalable and interoperable green data hubs based on common standards for sustainable industrial policy, project modeling, and simulation.

• The Internet of Things. IoT provides a means for the green data economy, allowing smart technology devices to collect and transfer real-time data. With a growing internet penetration of about 60 percent, more people in Africa are connected than ever before. Every person is potentially a data provider, offering data on mobility, consumer behavior, browsing history, social media posts, etc. Additionally, sensor, drone, and satellite technologies can collect demographic, climate, agricultural, and transportation data to support green growth financing strategies. Data hubs leveraging IoT can help break data silos, with data collected across agencies, the public and private sectors, and countries and regions. Of course, African governments must have strong data protection and privacy policies to ensure that such data is only used ethically.

• Web3 (blockchain). As more structured and newly created data is collected, the integrity of this data is critical to building investor trust. Blockchain technology provides a decentralized but scalable framework for data gathering and storage. If correctly leveraged,  this provides a secure data foundation that incentivizes end-user monitoring and reporting of data. As green data grows, leveraging blockchain eliminates potential challenges with siloed big data warehouses at the country or sectoral levels.
• Artificial intelligence. Data is only useful when processed into information for decision-making. AI can synthesize data into meaningful information for smart, green project financing decisions. AI is revolutionizing governments’ capacity to gather, complete, and interpret large, complex, and disparate datasets, making it possible to enhance data-driven decision-making for green growth financing. AI can be used in green project modeling, forecasting, and simulations. In the future, African governments will have the tools to simulate green project options and outcomes for better project design, but they need to plan for this now by building expertise, improving data, and ensuring credible AI regulations.

A Vision for Green Industry AI Simulators

Africa’s climate-positive industrial transformation can benefit greatly from “green industry AI simulators” that use IoT, blockchain and AI tools. IoT can capture data, blockchain can safely store it, and AI can interpret the information into forecasts and simulations. This can help governments and the private sector to evaluate and prioritize green projects with more confidence, reduce information gaps, and access project financing.

ACET, in collaboration with African and global partners, aims to develop a prototype AI green industry simulator based on regional and global data frameworks. The simulator will provide information on project risks, viability, and impact simulations based on different variables. This can support financing decisions and eliminate some of the data-based technical challenges in green project design at the national and sub-national levels. As a result, governments and financiers can work together more effectively to fund climate-positive green industrial projects in Africa.

However, setting up an AI green industry simulator will require overcoming some hurdles. Data governance and access frameworks, data transmission protocols, and data and privacy protection regulations are essential for ensuring responsible and ethical AI use.

Improving data availability and developing AI green industry simulators are part of ACET’s aspiration to mobilize external finance for climate-positive green industrialization. ACET is also exploring how AI can inform economic policymaking in areas such as tax policy, industrial investment incentives, and interest rate – all crucial for boosting investment. Moreover, ACET is looking at digital tools to enhance investor confidence, by addressing business environment bottlenecks, improving public financial management, and reducing corruption. Finally, ACET will support governments and the private sector in identifying the skills needed to support climate-positive green growth in Africa over the coming decades.