Poverty is on the rise in South Africa, a new report from Stats SA says. The proportion of people living below the poverty line declined from 66,6% in 2006 to 53,2% in 2011, but increased to 55,5% in 2015, according to the August Poverty Trends in South Africa report.
At the same time, South Africa is facing an increasing population, fuelled by rising life expectancy and high levels of migration. Many of these people are young and unemployed.
This means two things. One, a robust, thriving economy is needed to support the expanding workforce. And two, the steadily growing population will place additional demands on resources.
A clear solution is investment in clean tech. Two birds, one stone: grow the economy and save the earth. But a little caution is needed.
What can we learn from the boom-and-bust of the early 2000s? Initially, clean tech inspired major optimism abroad. In 2006, Silicon Valley was abuzz, believing it had struck the next big thing. “Seduced by grand visions of making a fortune while saving the planet, venture capitalists invested a then-record $123 million in the first round of fundraising for 16 new companies that year,” reports Green Tech Media. By 2008, this would rocket to nearly $1 billion in over 100 new companies.
Sadly for investors, the bubble didn’t take long to burst. After 2009, barely 25 new clean tech companies were funded by venture capitalists. The harsh reality was that clean tech start-ups just could not deliver the outsized returns found in other sectors.
Wired sums up the initial mistakes. Comparing the early buzz around clean tech to the failed Internet bubble, Juliet Eilperin writes: “What followed was yet another Silicon Valley gold rush, as the firms on Sand Hill Road were pulled along by the promise of new fortunes and the hope that they would be the ones to wean America off fossil fuels… Never mind the fact that green technology had been struggling to achieve critical mass for decades.”
Therein lies the crux. Eilperin points out that for clean tech to succeed, patience, realism and investment in heavy industry are essential. Of all the energy start-ups that received their first VC funds between 1995 and 2007 only 1.8% achieved “unambiguous success”, or an initial public offering on a major exchange, she notes. The average time from founding to IPO was 8.3 years. “If you’re signing up to build a clean-tech winner,” she adds, quoting venture capitalist Matthew Nordan, “reserve a decade of your life.”
Despite a series of sobering realisations, clean tech is today experiencing a revival. Patience and perseverance have resulted in some key scientific breakthroughs, and enterprising companies that have stood the test of time are – as Business News puts it – “sitting pretty” at the centre of the clean tech boom. But clean tech is still not a silver bullet. And, especially in Africa, sustainability must be at the forefront of future efforts.
Rather than investing in solving risky and “big, scientific problems” that start-ups aren’t ideally positioned to fix in the first place, Fortune magazine argues, the next wave of clean tech investment should – and will – focus on taking now-existing clean technologies and combining them with software and sensors to build new and useful products and services that solve human problems and disrupt markets. “By itself a battery does little, but with battery-enabled propulsion, we can completely rethink transportation, mobility, robotics, drones, and much more,” writer Peter Shannon argues.
The only limit here will be the entrepreneur’s imagination, he continues. The creative combination of technology, software and business models holds great potential for those who are willing to step up and take them. Policy is aligning to support this.
In August, Olawale Ayeni, regional head for Africa investments at IFC Venture Capital, confirmed that the International Finance Corporation was “pushing the envelope” across Africa, including in the clean tech sector. And the South African Select Committee on Trade and International Relations expressed excitement about new industrial zones that will include green tech hubs. Plans are also in the pipeline for green phone towers across Africa.
A new approach can lead to big changes. With careful investment, savvy management, and targeted innovation that seeks out the sustainable rather than the sexy, the next phase in clean tech in Africa may just boost economies, create jobs and build the climate resilience we need and hope for.