ADB calls for new wealth metric to include natural capital
African Development Bank Calls for New Way of Measuring Wealth to Address Climate and Green Growth Challenges, writes Charles Mkoka.
SHARM EL SHEIKH, Egypt - In a groundbreaking announcement during the closing remarks at the 2023 annual meetings, African Development Bank President Akniwuni Adesina revealed that the Board of Governors has requested a new approach to measuring wealth that incorporates biodiversity, natural account capital, and forest ecosystems, writes Charles Mkoka.
Adesina expressed concerns over the current method of using gross domestic product (GDP) as a yardstick for wealth, emphasising that it hinders progress on climate and green growth initiatives.
"I don't believe we can go from billions to trillions of dollars unless and until we change how we measure wealth," Adesina said, emphasising the importance of a more comprehensive approach.
He expressed disappointment that GDP fails to consider the manner in which wealth is generated and disregards the externalities associated with the growth process.
Moreover, he emphasised that GDP fails to acknowledge the contributions made by Africa in providing regional and global public goods.
"For the whole carbon sequestration in the world, the lungs to do that are largely going to be the lungs in Africa, specifically the Congo Basin, which is the largest in the world. What do we get from that?" questioned Adesina, flanked by the bank's governor, His Excellency Hassan Abdalla.
Adesina stressed the importance of properly pricing carbon and incorporating natural capital stock, carbon sequestration, and forest biodiversity into wealth measurements.
He asserted that countries accounting for these factors would be wealthier than they appear under the current system.
"This fundamental change is essential for our continent," Adesina emphasized.
Africa, known for its abundant natural resources, including minerals, has the potential to establish a lithium-ion production plant for batteries at a significantly lower cost than anywhere else on the planet.
The 2023 annual meeting of the African Development Bank centred around the theme, "Mobilizing private sector financing for climate and green growth in Africa."
This gathering aimed to follow up on the promises made at the United Nations Climate Change Conference, COP 27, regarding the allocation of $100 million to a loss and damage fund for developing countries facing the worst impacts of climate change.
Adesina's call for a new measurement of wealth that encompasses biodiversity, natural capital, and forest ecosystems aligns with global efforts to address climate change and promote sustainable development.
The proposal signals Africa's determination to prioritize climate and green growth on its path to economic prosperity.