Exclusive interview with Lisa Johansson, Programme Manager: Green Finance at GreenCape and an advisory board member of the upcoming Africa’s Green Economy Summit, taking place 19–21 February 2025.
Let’s start with some background about yourself and your role at GreenCape.
My personal background is grounded in investment banking. I’m currently the Programme Manager for Green Finance at GreenCape. GreenCape is a non-profit organisation that drives the widespread adoption of commercially and economically viable green economy solutions here in South Africa. Our focus is really about driving investments and job creation, utilising the green economy as the mechanism to drive prosperity and economic growth. The green finance team has the benefit of being cross-sectoral and able to tap into GreenCape’s deep sectoral expertise in renewable energy, both at utility scale side and embedded generation, sustainable mobility, water, sustainable agriculture, circular economy and waste management.
One keeps hearing that it is difficult to procure finance for green projects. Is this changing in your view?
Yes, it does seem to still remain a bit of a challenge. From GreenCape’s perspective, we annually host the GreenPitch Challenge for very-early-stage innovative projects. We’ve also developed and implemented the Green Outcomes Fund for businesses looking for seed funding from fund managers. And then we’re also the in-country delivery partner with the National Business Initiative for the UK government-funded Climate Finance Accelerator, which typically looks for businesses looking for an initial funding ask of about $4 million.
On the green business demand side, we’re seeing a large increase in companies applying to be part of these programmes. And then of course, on the supply side of the equation, we’re seeing an encouraging increase in the number of financiers and funders looking to participate in these events and platforms to connect. It really does speak to a growing appetite from financiers to participate in the green economy and seek out this budding and emerging green pipeline of investable projects. So from a GreenCape side, we’re really hoping to support green businesses in this space, to graduate from the GreenPitch to potentially participating in the Green Outcomes Fund and then landing in the Climate Finance Accelerator.
Just as a side note, it is interesting that the South African banking system is actually notoriously stable, which can translate to a fairly low risk appetite. We also have a venture capital market that can tend towards fintech and technology solutions with low capital requirements. So, while there’s an encouraging sign of movement towards investments into green businesses and projects, we do acknowledge that the early stage startups and potential solutions still in pilot phase are actually tricky.
You are one of the authors of the report, The South African Climate Finance Landscape 2023. What are the gaps and opportunities that were identified?
Yes, I was a participating member and an author. It was a technical report commissioned by the Presidential Climate Commission written in partnership with Climate Policy Initiative. In the South African climate finance landscape and the gaps and opportunities where we see potential for growth, there is definitely this opportunity to scale a pipeline of investment-ready, low-carbon and climate-resilient projects. I think this is in particular an area to which the African Green Economy Summit is answering the call and creating a platform to actually support in this space.
There’s also a need to prioritise and scale concessional finance to target less mature technologies and hard-to-abate sectors. This is particularly seen in a lag of 12% of climate finance going to adaptation in South Africa, as opposed to the 81% going towards mitigation and 7% being dual benefits. I think of course industry, urban infrastructure and transport could be potential areas of further investments. Another opportunity to scale climate finance in South Africa is the international risk-sharing mechanisms and innovative finance solutions to stimulate investments. Again, another opportunity for DFIs, financiers and investors to collaborate on. The type of products to emerge would be partial guarantees, first-loss facilities, carbon credits and outcome-based funds, to name a few. Another area potentially is that climate finance in South Africa does need to increase by at least three- to five-fold to meet its net zero goal by 2050 and its NDC targets by 2030, respectively.
So, there is still a fairly large gap in funding expectations to meet our promises.
Which low-carbon sectors are currently attracting the majority of climate finance investment in South Africa?
Clean energy generation and energy efficiency continue to dominate investments accounting for more than 79% of total tracked climate finance for the period that were tracked over the 2019, 2020 and 2021 periods, as discussed in the Climate Finance Landscape report for 2023.
Encouragingly, however, we did find a notable increase in funding towards sustainable agriculture and water, leading from our 2021 report; which was similar in nature to the 2023 report, although tracking the years 2017 and 2018. Within the sustainable agriculture space, we experienced this sort of a continued expansion, with agriculture producers investing increasingly in sustainable agricultural production methods, and really focusing on regenerative, circular and organic agriculture and leading those opportunities for soil remediation through technologies like no-till tractors, bio-stimulants and waste-to-soil production via anaerobic digestion.
On the water side, again we see an encouraging growth in investment, and the majority of these investments were contributions towards the development of pre-financial closed wastewater and water treatment and recovery projects in South Africa. We believe this was on the back of the Green Drop and Blue Drop reports which were released during that period. We also did see support track for new water resources and water distribution and reticulation on the back of the most recent national droughts from 2018 to 2021 with Cape Town and the Western Cape obviously experiencing day zero-type trauma.
Where do you see the opportunities in the circular economy?
We are seeing five main areas where we’re seeing growth related to the circular economy. They involve food systems, so converting food waste to organic fertiliser to increase circularity in food systems.
It’s also worth mentioning within this context, the rise of the black soldier fly and processing organic waste into marketable alternative insect protein for animal feed. The benefits of this is that it is a fairly low-tech solution and can be localised for waste recovery.
Another area is packaging and of course, recycling plastic packaging within the packaging industry.
We also see this element of electronic waste remediation and solving that problem. Of course, this is promoting circularity in the electronic circulate sector through recycling and collection facilities. Globally, we’re seeing this as a potential challenge where a lot of our local electronic waste is being diverted back into developed countries where there are more sophisticated processing units. What this does mean is that we are losing access to our raw materials that are essentially built into these electronics. So, this is certainly an opportunity for localisation and regionalisation of dealing with electronic waste.
Another area within the circular economy is fashion and textiles and the role that fashion plays in our world and how we responsibly respond to this threat of fast fashion and textile waste.
And then of course the built-in environment is fairly relevant in the South African context, and how we look at builders’ rubble and redesigning how we build using input resources that supports sustainability and avoid rubble and builders’ waste ending up in landfills.
Job creation is seen as an important goal in developing a green economy in Africa. We have also seen the emergence of a new breed of green entrepreneurs which is exciting. Is South Africa doing the right things in your view to promote and accelerate a green economy?
We definitely are seeing a huge amount of encouraging signs, such as the newly signed Climate Bill by President Cyril Ramaphosa as well as the increase in our nationally determined contributions. So, very strong signals to both the local and international market that South Africa is working towards a green economy and that the policy landscape is maturing in this space. I previously mentioned the South African Climate Finance Landscape Report for 2023, which shows an average annual investment of R131-billion p.a. going into climate finance, specifically in South Africa. As mentioned, this was over the years 2019, 2020 and 2021, and in our next report for 2025, covering years 2021, 2022 and 2023, we are anticipating a further strong increase in that climate finance flow into South Africa.
Another encouraging finding is of course that we are anticipating over approximately 32 GW of installed capacity of renewable energy coming online in South Africa by 2030. And these sort of findings do come out of GreenCape’s annually published market intelligence reports, which are available online.
I think it is also worth mentioning that there’s a lot happening in the skills development space in the green economy. One of the projects GreenCape is involved in is called PowerUp, and that’s working with the Energy and Water Sector Education Training Authority or EWSETA as a deliverable within the South African Renewable Energy Masterplan, or fondly known as SAREM.
What excites you most about the opportunities that the green economy can have for Africa?
I think that this links to the opportunities to diversifying economic growth and providing an opportunity for investment into Africa and job creation. I think that there’s also a huge potential for South-on-South collaboration. So: how is the African continent growing together and actually collaborating? And we do see this Global North flow of funds coming into Africa and South Africa and really, is there an opportunity for us to actually fund the transition to a greener economy, utilising each other, as well as doing a little bit more collaboration with regards to our climate tech and economic solutions?
You are a member of the AGES advisory board. How important is such an event for the continent?
I think it’s hugely important. Again, this speaks to a level of collaboration and how the African continent works together so that we ultimately sit at the table when it comes to these discussions; and in fact are not on the table with regards to our resources going forward and how we position ourselves in the global conversation of green economy. I really feel that there’s a real opportunity for us to act together and create opportunities for further investments, specifically the South-on-South collaboration.
How do you think AGES can have an actual impact?
Spaces like AGES really create a platform for getting people together in a room. I don’t think that this can be underestimated with regards to the ecosystem and pulling together the potential partners that can collaborate. When we speak about the ecosystem, I’m talking about not only the financiers, the DFIs, the accelerators, incubators as well as the policy makers and the actual green businesses.
So I do think that this is a massive opportunity in being able to pull the correct people into the room and have the conversations that ultimately results in further investments and job creation into not only South Africa, but the African economy as a whole.
Anything you would like to add?
I think that it’s a massive opportunity for me to sit on the advisory board. I think GreenCape does bring a lot of expertise, and I’m hoping that I will be able to bring those through into the conversations that can direct how the AGES programme runs. I think that this is an incredibly exciting space and specifically in the financial space, and we are seeing this uptick in appetite for further investments into this space. So this is an awesome opportunity to be part of the AGES programme, and then also to be able to support businesses in green economy to further their investment journey along the line.
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