OPEC Fund Quarterly - 2026 Q2

The OPEC Fund for International Development OPEC FUND QUARTERLY 2 2026

DEVELOPMENT NEWS New projects deepen

OPEC Fund’s footprint and impact

OP-ED Delivering the AI revolution

How emerging economies become part of the tech revolution Comprehensive innovation

THE OPEC FUND AT 50 Where Partnership Powers Progress

The OPEC Fund Quarterly is published four times a year by the OPEC Fund for International Development. The OPEC Fund works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world. The organization was established by the member countries of OPEC in 1976 with a distinct purpose: to drive development, strengthen communities and empower people. Views and opinions expressed by guest contributors are solely the authors’ and don’t reflect the opinions or beliefs of the OPEC Fund. The OPEC Fund Quarterly is available free. If you wish to be included on the digital distribution list, please contact us via opecfund.org . Back issues of the magazine can be found on our website. The contents of this publication do not necessarily reflect the official views of the OPEC Fund or its Member Countries. Any maps are for illustration purposes only and are not to be taken as accurate representations of borders. Editorial material may be freely reproduced, providing the OPEC Fund Quarterly is credited.

PUBLISHERS The OPEC Fund for International Development Parkring 8, A-1010 Vienna, Austria Tel: (+43-1) 51564-0 Fax: (+43-1) 51392-38 www.opecfund.org

EXECUTIVE EDITOR Nadia Benamara EDITOR Axel Reiserer EDITORIAL TEAM Howard Hudson, Axel Reiserer, Nicholas K. Smith

CONTRIBUTORS Elvis Korku Avenyo, Angus Downie, Rasmus Lema, Luiz Loures, Wandile Mlilo, Phumzike Ncube, Gideon Ndubuisi, Justina Adwoa Onumah PHOTOGRAPHS Abdullah Alipour Jeddi, Nayef Shoshare (unless otherwise credited) PRODUCTION Iris Vittini Encarnacion DESIGN Robin Turton, More Tea Design Ltd PRINTED IN AUSTRIA Print Alliance HAV Produktions Gmbh This publication is printed on paper produced from responsibly managed forests. Front cover illustration: 35lab/Shutterstock; ArtDawn/Adobestock; Satoshi Kikyo/Adobestock; Robin Turton, More Tea Design

CONTENTS

5-29

OUR MAIN FEATURES Cover story In search of comprehensive innovation for long-term development

6-7

Reframing the “innovation turn” in development strategy

8-10 More melody, less volume: Financing industrial transformation across Africa 11-13 Technology does not fail Africa’s farmers, systems do 14-15 Innovating for resilient agriculture across Africa 16-17 Africa’s green energy future must be written on African terms 18-23 New approaches in financial services and markets 24-27 Op-ed: AI as a new industrial revolution in the developing world 28-29 The OPEC Fund Young Leaders Initiative

Africa’s green energy future p 16-17

Photos: iStock; (inset) University of Johannesburg

IN OTHER SECTIONS

In the Field 30-31 The OPEC Fund in Senegal: “The key is how you manage your resources” Spotlight 32-35 The OPEC Fund celebrates its 50th anniversary, marking past achievements and preparing new endeavors

Development News 36-39

Review 46-49 Why we should not despair about climate change – but still need to worry The Back Page 50 The OPEC Fund launches revamped Annual Award for Development

New OPEC Fund projects in Bangladesh, Burkina Faso, Colombia, Côte d’Ivoire, Democratic Republic of the Congo, Egypt, Eswatini, Fiji, Grenada, Kosovo, Malawi, Nicaragua, Niger, Oman, Sierra Leone and the Solomon Islands Events 40-45 40-41 The OPEC Fund and Africa: Partnership in action 42-43 Strengthening ties with Latin America 44-45 W orld Governments Summit,

the Pacific Healthy Islands Project, IFAD Leaders’ meeting in Rome

EDITORIAL

WHY EVERYONE LOVES A SHORTCUT… UNTIL THEY GET HOPELESSLY LOST

Dear Reader,

T he road to development is paved with good innovations, to paraphrase a proverb. But if we want that road to become a path to success (and not fill up with potholes overnight), it will need a lot more than a quick tech tweak. It will need deep foundations and strong guardrails, all backed up by dedicated maintenance. In the real world, that means investing more in the institutions, coordination and capabilities that enable innovation. That is the premise of this month’s OFQ special feature, drafted by scholars from the University of Johannesburg, South Africa and Delft University of Technology, the Netherlands. In a series of essays, they explain how new technologies are routinely bolted onto projects in the hope of turbocharging development – and how they often stall because the supporting structures are too weak or politicized to drive real progress. All of which is happening across various sectors. In agriculture, we see (from page 11) how new digital platforms hold the tempting promise of higher yields and bigger profits; but how many farmers struggle to benefit when firms, researchers and support services fail to coordinate; or worse, are left in limbo when new parties come to power. Progress is possible when innovations are readily accessible, genuinely useful and funded to last. On energy, we see (from page 16) that solar and wind projects are expanding apace worldwide; but how most developing countries

are still heavily reliant on imported technologies. To break free of this “path dependency” and make renewable energy a viable route to development, investments should be channeled into training and local manufacturing, while giving communities a voice in deciding policies. The financial sector also needs to resist the primal urge to expand for expansion’s sake. We see (from page 8) how many developing countries settle for short-term, foreign‑currency loans that will never fit their long-term industrial development needs. More is not better if it perpetuates a mismatch. A sounder approach is to structure finance that manages risk, promotes long-term investment and supports the broader industrial goals of the nation in question. Digging deeper, in an article by our Senior Economist Angus Downie, we see (from page 18) why certain financial innovations succeed in some parts of the world more than others. Be it real- time payments, digital ID or parametric insurance, fintech can broaden access and reduce vulnerabilities when combined with strong institutions and sound regulation. Meanwhile, Jason Slater from UNIDO argues (from page 24) that AI can help countries clear traditional hurdles by guiding farmers, improving logistics and supporting manufacturing. But again, without decent digital infrastructure, skilled workers and strong governance, AI may fail like so many other “technological solutions.” Worse still, it may even widen divides.

One recommendation is to give tailored AI training via UNIDO Centers of Excellence, of which there are more than 20 worldwide. Across all these articles, the same message rings clear: Technological innovations must go hand in hand with institutional investments that last beyond political cycles; governments need to invest in skills and local ownership; and finance needs to align with long-term goals. We see where systems are strong, innovation can accelerate inclusive growth and transformational development. But equally, where systems are weak, even the best innovations will struggle to bring meaningful change. Elsewhere we cover a recent mission to Senegal (from page 30), where our delegation witnessed climate action on the ground; namely, how the country is managing its water resources amid the seesaw effects of deluge and drought. We also take a deep dive into renewable energy (from page 46), with our book review of Here Comes the Sun: A Last Chance for the Climate and a Fresh Chance for Civilization by journalist and environmentalist Bill McKibben. It may be too late to stop global warming, he writes, but the global rollout of solar panels may restart civilization on saner ground. Simply put: “An energy source that gets cheaper the more you use it marks a turning point in industrial history.” We wish you an innovative read.

Howard Hudson, Senior Editor

Photo: Dee karen/Adobestock

COVER STORY

COMPREHENSIVE INNOVATION How systemic change must drive the tech revolution across emerging economies

COMPREHENSIVE INNOVATION MYTHS AND REALITIES

A series of essays by scholars of the African Network for Learning, Innovation and Competence Building Systems (Africalics) and the South African Research Chair in Industrial Development (SARChI-ID) examines ways forward By Rasmus Lema, Professor, University of Johannesburg REFRAMING THE “INNOVATION TURN” IN DEVELOPMENT STRATEGY

I nnovation has returned to the center of development thinking. Faced with climate pressures, energy transitions and rapid digital change, policymakers are placing their bets on technology. From solar photovoltaics to artificial intelligence, innovation is presented as the engine that can deliver growth, sustainability and competitiveness all at once. The message is appealing: Invest in new technologies and development will follow. This narrative, however, oversimplifies how development actually happens. Innovation can certainly support progress. It can raise productivity, open new industries and help economies move toward low-carbon pathways. For countries in need of latecomer development, technological shifts can create new opportunities. Yet the leap from innovation to development is not automatic. Too often, policy debates blur the distinction between technological change and structural transformation. Development is not just about new ideas or new technologies. It is about shifting resources into more productive activities and, crucially, about building capabilities within firms, workers and institutions. Innovation only contributes when it is firmly embedded in these

processes. Without that, it remains isolated. New technologies may be adopted, but cannot alone transform the economy. This matters because much of today’s innovation agenda focuses on visible outputs, with a strong emphasis on entrepreneurship, SME startups and innovation hubs. These are easy to measure and politically attractive. But they say little about whether firms are learning, whether industries are upgrading or whether economies are becoming more productive. The risk is a form of “tech solutionism”, where technology is treated as a shortcut to development. What innovation really looks like On the ground, especially in developing countries, innovation rarely takes the form of frontier breakthroughs or vanguard technologies. It is more often incremental, practical and adaptive. Firms adjust production processes, combine existing technologies in new ways and find solutions that fit local constraints. This is where most learning actually happens. These forms of innovation tend to be undervalued. Policy agendas often favor high-tech sectors and advanced

Rasmus Lema

Rasmus Lema is a Professor at the University of Johannesburg and South African Research Chair in Industrial Development. He is also a Professorial Fellow at UNU-MERIT and Editor-in-Chief of Innovation and Development. He holds a DPhil in Development Studies from the Institute of Development Studies (IDS), University of Sussex, UK. His research focuses on industrial development, innovation and sustainability, with particular attention to green and digital transformations in the Global South.

COMPREHENSIVE INNOVATION

research, even when the foundations for such activities are weak. As a result, support is directed toward areas that are disconnected from the realities of production. The everyday innovation that sustains firms and builds capabilities receives far less attention. This disconnect has consequences.

feature. Contributions by colleagues and emerging scholars active in the African Network for Learning, Innovation and Competence Building Systems (Africalics) and the South African Research Chair in Industrial Development (SARChI-ID) examine how innovation unfolds across different sectors and systems. In agriculture, climate-smart and digital technologies hold considerable potential, but their impact depends on access, affordability and complementary infrastructure, particularly for smallholders. Moving beyond individual technologies, the analysis of agricultural innovation systems highlights how weak coordination between actors, short- term project logics and institutional discontinuity prevent innovation from diffusing and delivering sustained productivity gains. In the energy domain, the rapid expansion of renewable technologies reveals a similar pattern: Without deliberate efforts to build domestic capabilities, foster local ownership and ensure inclusive participation, technological change risks reinforcing dependency rather than enabling transformation. At the firm level, local enterprises play a key role, but the wider effects of projects and programs do not materialize on their own. Innovation is shaped less by the sheer availability of capital than by how finance is

structured and aligned with long-term industrial development. Where finance is short-term, fragmented or poorly matched to productive needs, even promising activities struggle to scale. Taken together, these contributions reinforce a common message: the main constraints to development are not the absence of innovation, but the absence of alignment between technologies, capabilities, institutions and production systems. Innovation only becomes developmental when it is embedded in these broader processes of learning and structural transformation. Innovation policy therefore needs to be grounded in the realities of production and learning. It should focus on helping firms build capabilities, supporting industries where countries can realistically compete and ensuring that technologies are embedded in local systems. Make no mistake: Innovation lies at the heart of economic development. It will be central to shaping the industries of the future, while addressing climate change and other societal challenges. But it is not a shortcut. Development requires a slower, more demanding process of structural transformation. The real task is to connect innovation to that process. Only then

Initiatives that focus on startups without an industrial base, or on

importing technologies without building local skills, often struggle to take root. In other words, innovation does not work as a plug-and-play solution. It depends on how firms, universities, governments and financiers interact – and on whether technologies are adapted and used in practice. Reframing the innovation turn There is also a deeper risk. If innovation is pursued without attention to capabilities, it can reinforce existing inequalities. Advanced technologies are concentrated in a few countries and many others risk being confined to low-value roles. Participation in new industries does not automatically lead to upgrading. Without deliberate efforts, it can lock economies into dependence on imported technologies and external knowledge. The challenge, then, is not simply to promote more innovation, but to rethink how it is linked to development. This broader perspective is explored in specific domains across this special

can it support growth that is not just faster, but more inclusive and sustainable.

“Innovation does not work as a plug-and-play solution.” Rasmus Lema, Professor and South African Research Chair in Industrial Development, University of Johannesburg

COMPREHENSIVE INNOVATION GREEN FINANCE IN AFRICA

Africa’s green industrial transformation needs finance that transforms and not just flows By Gideon Ndubuisi, Associate Professor, Delft University of Technology, and Elvis Korku Avenyo, Associate Professor, University of Johannesburg FINANCING INDUSTRIAL TRANSFORMATION MORE ABOUT THE MELODY, LESS ABOUT THE VOLUME

COVER STORY COMPREHENSIVE INNOVATION

T he global transition to a low-carbon economy has opened a window of opportunity for Africa’s industrial transformation. Amid the constrained fiscal space of many African states, the dominant narrative around financing the green industrial transition remains narrowly fixated on closing the financing gap. Policymakers, development partners and investors frequently converge on a familiar diagnosis: the continent simply requires more capital to unlock its green industrial transformation. While this framing is intuitively appealing, it is analytically incomplete. The emphasis on the volume of capital obscures a more fundamental constraint – one that lies not in mobilizing more finance, but in its structure, quality, purpose and alignment with Africa’s industrial development. How can finance be truly transformative? Green industrialization, at its core, is not just capital intensive; the projects that underscore it are also fundamentally different from traditional investment. They involve long-horizon, technology-intensive and system-wide transformation. They require African economies and firms to coordinate the development of new energy systems, industrial capacity, infrastructure and markets, while complying with evolving global green standards. Yet much of the conventional finance flowing into Africa is fundamentally incompatible and unfit to address these dynamics. Most of the finance channeled into green projects is short-term and high-cost capital, creating a structural mismatch that often renders otherwise viable projects financially unsustainable. To properly understand these dynamics and how best to shift away, we need to move beyond volume-centric financing models and instead focus on “design- oriented frameworks” that promote alignment and coordination – the core principles of transformative finance. A useful way to guide this transition is through what we call the Green Industrialization Transformative Finance (GITF) framework. The GITF framework comprises three interdependent dimensions: i) temporal alignment,

ii) currency and risk alignment, and iii) structural alignment. It captures the extent to which finance is configured to reshape and support, rather than constrain, Africa’s green industrial transformation. The Green Industrialization Transformative Finance (GITF) Framework

Gideon Ndubuisi

Gideon Ndubuisi is an Assistant Professor of Economics at Delft University of Technology. He previously worked at the German Development Institute, contributing to the Research Network Sustainable Supply Chains. With over 10 years’ experience, he has conducted academic and policy‑oriented research and consultancy for institutions including UNIDO, the World Bank and AfDB. He holds a PhD in Economics from Maastricht University and his research focuses on Africa’s green transformation.

Inter-temporal alignment

Transformative finance

Currency and alignment

Structural alignment

First, inter-temporal alignment refers to the relationship between the time horizons of finance and those of industrial projects. Green industrialization is inherently a long-term process. Investments in renewable energy infrastructure, mineral beneficiation (the processing of raw ore), green hydrogen and industrial ecosystems typically involve high upfront costs and extended gestation periods before returns are realized. However, the financial landscape in many African economies is dominated by short-term, high-cost capital that demands rapid returns. This mismatch between long-term assets and short- term liabilities creates a structural tension that undermines project viability from the outset. Ultimately, projects that are technically sound and economically justified become financially strained under the pressure of premature repayment schedules and high financing costs. Second, currency and risk alignment highlights the vulnerabilities introduced by the financial architecture within which many projects are embedded.

Elvis Korku Avenyo

Elvis Korku Avenyo is an Associate Professor at the South African Research Chair in Industrial Development at the University of Johannesburg. He holds a PhD in the Economics of Innovation from UNU‑MERIT at Maastricht University. His research focuses on industrial development, innovation and technology, with publications in leading journals. He has worked with and co‑authored papers for organizations including the World Bank, ILO, UNIDO and UNCTAD.

COMPREHENSIVE INNOVATION

Taken together, the implication of this transformative finance perspective is that Africa’s green industrial transformation will not be defined and unlocked solely by how much capital the continent can mobilize, but whether that capital is innovatively configured and structurally aligned in ways that are compatible with the long-term, systemic and risk-laden nature of green industrialization. The prevailing focus on mobilizing capital must be replaced by a focus on structuring finance in ways that achieve alignment across time horizons, risk profiles and industrial systems across Africa. Designing finance that transforms, not just flows The challenge of financing Africa’s green industrial transformation is not one of access, but of architecture. It is about designing financial instruments that can support the scale, complexity and time horizons of green industrialization on the continent. The shift from capital mobilization to financial design has important implications for policy. To align today’s decisions with tomorrow’s impact, we need to strengthen the sources of long- term finance, including development finance institutions, sovereign wealth funds and regional financial institutions. To align currency and risk considerations, we need to deepen local financial markets, promote regional financial integration and expand the use of risk- sharing instruments. Ensuring structural coherence, in turn, calls for a closer integration of financial strategies with industrial policy, with an emphasis on supporting interconnected investments across sectors. The various alignments needed for transformative finance are not independent; they must be pursued in a coordinated manner. Misalignment in any one dimension can undermine the overall effectiveness of financing strategies. Africa’s green industrial transformation depends ultimately on finance that transforms, not just flows. To realize that vision, we need to see finance design and architecture not as a neutral input, but as a catalytic component of Africa’s green industrial development strategy.

“Current financing models tend to operate in silos, supporting standalone renewable energy projects without adequately considering the industrial base required to absorb and utilize that energy.”

A common feature of green industrial investments in Africa is the reliance on foreign-denominated debt to finance projects that generate revenues in local currency. This creates significant exposure to exchange-rate volatility, which rapidly erodes financial viability in the face of currency depreciation. Projects are also subject to a range of uncertainties, including fluctuating demand, policy inconsistency and underdeveloped markets. Yet these risks are often inadequately managed or improperly allocated across stakeholders. The consequence is that projects that appear viable under stable assumptions become highly fragile in practice. Third, the structural alignment dimension captures the fit between financing and the broader industrial ecosystem. Green industrialization is not a collection of discrete projects; it

is a process of systemic transformation that involves the co-evolution of energy systems, industrial capacity, infrastructure and markets. However, current financing models tend to operate in silos, supporting standalone renewable energy projects without adequately considering the industrial base required to absorb and utilize that energy. This results in a pattern of disarticulated development, where power generation capacity expands in the absence of sufficient industrial demand, or where industrial projects are constrained by unreliable and costly energy supply. Such fragmentation reflects a deeper failure to align finance with the structural requirements of industrialization. Without deliberate efforts to integrate investments across sectors and value chains, there is a high risk of creating projects that are technically complete but economically underutilized.

COMPREHENSIVE INNOVATION BUILDING BETTER SYSTEMS “TECHNOLOGY DOES NOT FAIL AFRICA’S FARMERS, SYSTEMS DO”

When the actors that make up systems

interact strategically, innovation can spread and scale.

Unless we treat system building as a generational investment rather than a political instrument, agricultural transformation will remain largely out of reach By Justina Adwoa Onumah, Principal Research Scientist, STEPRI Ghana

A cross much of Africa, growth in agricultural productivity remains slow despite decades of investment in improved seeds, fertilizer subsidies, mechanization programs and donor-supported initiatives. The challenge is rarely the absence of technologies or innovation initiatives. Rather, it

Justina Adwoa Onumah

Justina A. Onumah is Principal Research Scientist and Head of the Agriculture, Medicine and Environment Division at CSIR– STEPRI in Ghana, and a Senior Research Associate at the University of Johannesburg. Her work lies at the intersection of innovation and development economics, focusing on poverty, agricultural innovation systems, enterprise development, impact evaluation, gender and evidence‑informed policymaking. She is also active in policy engagement and mentorship.

reflects weaknesses in the systems used to support their development, dissemination and sustained use. All too often, the actors that make up these systems – farmers, agents, universities, cooperatives, agribusinesses, financial institutions, NGOs and policy-makers – operate in silos, with limited coordination and continuity. Far too frequently, their efforts become isolated interventions that fail to build a functional system for all relevant actors.

The problem is one of perception and purpose. An agricultural innovation system (AIS) should not be viewed as a project, but rather as a network of relationships through which knowledge is generated, shared and applied. When these actors interact strategically, innovation can spread and scale. However, many initiatives are organized around short-term project cycles; an innovation platform here,

COMPREHENSIVE INNOVATION

a value chain intervention there or a digital agriculture pilot elsewhere. When such projects end, the platforms often dissolve, networks weaken and momentum is lost, leaving behind reports rather than durable systems. The effectiveness of an AIS depends largely on how the roles of different actors are connected. Some serve as brokers linking farmers to research, inputs, finance and markets; others generate technologies or mobilize resources. When these roles are weak or poorly coordinated, innovation struggles to move beyond pilot stages. Farmers embedded in stronger networks are more likely to adopt improved practices because they benefit from trust, peer learning, feedback loops and institutional support. Crucially, adoption translates into improved productivity and income only when complemented by services such as advisory support, alongside access to markets and finance. These dynamics highlight how agricultural innovation

many of these platforms remain tied to short-term projects. Once interventions end, the platforms often disappear, revealing a paradox: While we speak of building systems, we frequently fund isolated initiatives. Long-term sustainability is rarely built into their design. That fragmentation is reflected in how actors operate. Extension services, including support and training for farmers, may promote new technologies without ensuring the availability of inputs, such as seeds and fertilizers. Universities may generate innovations without strong feedback mechanisms from farmers. Cooperatives formed during projects often weaken or dissolve once support ends, only to re-emerge when another intervention arrives. Similarly, private firms may enter value chains during subsidy or pilot programs but withdraw once incentives disappear. As a result, participation becomes project-driven rather than institution- driven. Instead of strengthening durable institutions and networks, efforts are scattered across temporary initiatives.

and support innovation beyond the life of individual projects. In a word: concentration. The political economy of discontinuity Even more damaging is how we build systems around political cycles. Agricultural transformation takes time. Building trust between actors, strengthening cooperative governance, reforming extension systems and aligning research with market demand are not next-election projects; they require a decade or more of consistent investment. Yet in many contexts, agricultural policy is tied to electoral timelines. One government launches a flagship program, the next government discontinues it; sometimes not because it failed, but because political incentives favor launching a new initiative rather than consolidating an existing one. We have seen input subsidy schemes rebranded rather than reformed. Innovation platforms dissolved and replaced. Digital agriculture registries abandoned midway. Institutional memory is eroded because attributing success to a predecessor carries little political reward. In such an environment, actors hesitate to invest deeply in relationships. Why commit to a long-term platform if it may not survive the next administration? Why align business models to a government program that could be reversed? This instability is a failure of coordination, rooted not in technical constraints but in political (dis)incentives, which constrain systems building.

systems are essential not only for diffusing technologies, but also

for ensuring that they bring meaningful and sustained livelihood improvements.

Innovation platforms become occasional engagements for the

project deliverable, rather than stable coordination mechanisms. What is missing is the sustained investment in coherent system structures that allow actors to build lasting relationships, coordinate effectively

Many projects, few systems

Over the last few decades, the concept of agricultural transformation via innovation platforms has gained increasing traction across Africa. Yet in practice,

Key takeaways Fully functional agricultural innovation systems cannot be built on short-term project or political timelines; they require commitment, consistency and political continuity. The temptation to launch new flagship programs at every political

Photo: arrowsmith2/Shutterstock

COMPREHENSIVE INNOVATION

How to reimagine system roles and policy levers If each node fulfils its role in the network of relationships, agricultural innovation systems can flourish. But how does that look in practice?

Extension services Extension services must move beyond simple message delivery to actively assist networks within the agricultural innovation system. They are the connective tissue of the system: Translating research into practice while channeling farmers’ feedback to researchers and policymakers. For this to happen effectively, performance metrics should reward outcomes such as adoption, problem solving and coordination among actors, rather than merely counting farmer visits. The growing reach of digital advisory tools also presents an opportunity to strengthen extension systems and expand their coverage. In many agricultural innovation systems, extension actors play the critical role of bridging institutions – linking farmers to research, markets and services. Strengthening this group is key to the system functioning effectively. Universities and research centers Universities and research centers must transition from “ivory towers” to “innovation hubs.” Innovation can be shared more effectively when universities or research centers are embedded in networks, co-designing research with farmers and agribusinesses. Criteria for promotions should include more than just publications; they should also include engagement, connections with other AIS actors, as well as translational research leading to practical solutions. Cooperatives Cooperatives are the aggregation mechanism. They reduce transaction costs, strengthen bargaining power and enable smallholders to participate in structured markets. Yet many remain fragile due to governance weaknesses. Strengthening cooperative management – building capacity, leadership and transparency – is not a social add-on. It is central to innovation scaling. Cooperatives must move beyond being vehicles for project participation and become institutions that farmers themselves sustain.

Private sector actors Private sector actors bring capital and efficiency, but often require incentives and usually invest where the policy environment is stable and favorable. Governments and multilateral development banks must crowd in private actors through risk-sharing instruments, blended finance and stable regulatory frameworks. Each actor has a role to play, but roles without coordination do not birth progress. To build agricultural innovation systems that work, we must shift from project logic to institutional logic via the following policy levers:

Institutionalize multi-stakeholder platforms by embedding innovation platforms within ministries or regional authorities with permanent mandates and budgets (rather than tying them to donor projects with contractual timelines). Create cross-administration agricultural compacts by establishing bipartisan or multi-party agreements that protect core agricultural institutions from political discontinuity. Agricultural transformation should be a national, not a partisan, agenda.

Reform incentives within public institutions by aligning extension, research and ministry performance metrics with long- term coordination and impact. Invest in cooperative governance and digital infrastructure; help well- functioning farmer organizations

and transparent information systems to anchor innovation networks beyond project and political cycles.

transition must give way to the discipline of strengthening what already exists. If we commit to institutional continuity, coordinated roles and long-term investment, agricultural innovation systems can move from isolated success stories to

systemic transformation. Technology does not fail Africa’s farmers, systems do. Unless we treat system building as a generational investment rather than a political instrument, agricultural transformation will remain largely out of reach.

COMPREHENSIVE INNOVATION FOOD SECURITY

INNOVATING FOR RESILIENT AGRICULTURE ACROSS AFRICA

Agricultural resilience is not an end in itself, but a means to achieving food security and sustainable livelihoods By Phumzile Ncube, Senior Researcher, University of Johannesburg

B eyond the fundamentals of food security, agriculture remains central to many African economies, providing employment and income for large segments of the population. Agriculture contributes around 50 percent of employment and almost 30 percent of GDP across Africa, according to World Bank estimates.

Perhaps more striking is that, despite increased urbanization, more than half the population still lives in rural areas and that agriculture remains “the source of livelihood for 70 percent of people,” according to the African Union. The sector is, however, fraught with significant challenges. Low productivity, poor infrastructure and widespread informality mean that most agricultural ventures are fundamentally precarious – and becoming more so in the context of climate change. Unpredictable weather patterns such as erratic rainfall and prolonged droughts, juxtaposed with extreme weather events such as floods are placing growing pressure on farming systems, particularly for small-scale farmers already operating under fragile conditions. In 2024, southern African countries faced a severe drought, resulting in harvest failures and livestock deaths in countries such as Zambia and Malawi. The drought was later followed by floods in many parts of the region, which not only affected agricultural output, but also displaced thousands of people. Floods battered the continent that year, submerging half a million hectares of cropland in Nigeria alone. Infrastructure damage also affects access to markets, fertilizers and other inputs – and again, climate change is set to have long-term impacts. Research estimates that in some parts of Africa, yields of cereal crops such as maize and millet, two important staples and sources

of income, will decrease by an average of 6 percent by 2050 and up to 24 percent by 2090 due to heat stress and drought. 1 There has never been a more crucial time to build resilience in African agriculture – to improve the ability of farmers and other agricultural players to absorb external shocks.

Yields of maize and millet –

two African staples – may decrease by up to 24 percent by 2090.

Phumzile Ncube

Phumzile Ncube is Senior Researcher at the DSI/NRF

South African Research Chair in Industrial Development, University of Johannesburg. She holds a PhD in Economics from the University of Johannesburg. Her research focuses on agro-industrial development, global and regional value chains, with a specific focus on the southern African region. She has engaged in academic and policy-related research with institutions such as UNU-WIDER, UNIDO and ERSA.

Photos: Pic_It/Adobestock; Nantu/Adobestock

1 https://www.sciencedirect.com/science/article/pii/S1161030124000583?via%3Dihub

COMPREHENSIVE INNOVATION

There are several innovations geared particularly toward smallholder farmers. Kenya’s Index-Based Livestock Insurance (IBLI) 3 combines digital remote-sensing through satellite imagery with financial products to address climate vulnerability during dry spells. However, without supportive policy programs and institutions – like Ethiopia’s Agricultural Transformation Institute 4 which specifically aims at “improving the livelihoods of smallholder farmers” or Kenya’s Agricultural and Livestock Research Organization 5 , which supports smallholder farmers with agronomic recommendations via SMS – technological innovations may be confined to commercial farms or pilot projects.

Digital and climate-smart agricultural innovations

yields, such as for citrus products in South Africa, but also raise quality and shorten maturity time, thereby reducing production costs. They create a more stable microclimate under the shade by reducing both heat stress and frost risk, providing protection from extreme sunlight and rain. Controlled environments also allow farmers to comply with stringent plant health and quality standards demanded by export markets. Combining some of the elements above, digital technologies are often paired with climate control technologies. Controlled growing environments can be used alongside digital temperature monitoring systems for either fresh produce or animals, for instance where poultry houses are equipped with temperature monitoring systems. However, the benefits of innovation depend on whether technologies reach the farmers who need them most. Innovation in agriculture is often geared toward high-tech solutions, but smallholders often face barriers such as high costs, limited technical knowledge and weak infrastructure. For example, the capital costs of installing shade nets at scale are often prohibitively high for smallholder farmers. Similarly, the cost of internet access and unreliable rural connectivity hinder the uptake of digital technologies. This is particularly stark for smallholder women farmers, who bear a disproportionate burden of climate impacts in Africa, while facing greater barriers to accessing technologies, finance and extension services. 2

Innovation has always been important in various types of agricultural technology. Even relatively small changes, such as moving from handheld ploughing to more mechanized agriculture, can increase agricultural productivity and income over time. However, innovation is becoming even more essential for addressing the challenges of climate change. Climate-smart agricultural technologies are emerging as important tools that can help farmers adapt to changing environmental conditions while maintaining productivity. These innovations include drought-resistant seed varieties, controlled growing environments or protected cultivation, improved irrigation systems, as well as digital tools such as sensors that monitor soil conditions, temperature and moisture levels in real time. Digital technologies are particularly promising. By providing farmers with timely information on weather conditions, crop health and input use, digital tools can help improve decision making and reduce risk. Soil probes that continuously monitor moisture, chemical levels and other soil characteristics have been used by farmers to keep track of their plants and make rapid decisions in challenging conditions. Meanwhile, platforms such as DigiFarm, ViaziSoko and M-Shamba in Kenya have enabled access to inputs, credit and markets via mobile payment systems. Controlled environments like growing tunnels and shade nets not only improve

Final thoughts

Agricultural resilience is not an end in itself; it is a means to achieving greater goals such as food security and sustainable livelihoods. Building resilience in African agriculture requires more than simply introducing new technologies. It also requires significant investments in digital infrastructure, access to finance, training, extension services and rural infrastructure. Public and private actors must work together to ensure that innovations are accessible and adapted to local conditions. Innovations such as Index-Based Livestock Insurance (IBLI), an insurance platform, and DigiFarm are directly geared toward the needs of the smallholder farmers that they serve. If supported by appropriate policies and institutions, climate-smart technologies and digital tools can help farmers adapt to environmental uncertainty while improving productivity and livelihoods across the continent.

2 https://onlinelibrary.wiley.com/doi/full/10.1002/fes3.567 3 https://ibli.ilri.org/2019/08/21/novel-kenyan-insurance-programs-recognized-for-helping-women-as-well-as-men-pastoral-herders/ 4 https://ati.gov.et/ 5 https://cepr.org/voxeu/columns/harnessing-benefits-digital-agriculture-smallholder-farmers-east-africa

COMPREHENSIVE INNOVATION RENEWABLES

AFRICA’S GREEN ENERGY FUTURE MUST BE WRITTEN ON AFRICAN TERMS

The success of the energy transition should be measured by its ability to generate shared prosperity By Wandile Mlilo, PhD Student, University of Johannesburg

A cross Africa, the expansion of renewable energy technologies is widely seen as a pathway toward sustainable development. Solar and wind projects are spreading rapidly, supported by climate finance and growing global commitments to decarbonization. In countries such as South Africa and Kenya, the rollout of renewable energy has become central to energy planning and economic strategy. Yet the transition to green energy raises an important question: Will it also be just? The transition provides an opportunity to replace fossil fuel systems, contributing to global climate targets such as the Paris Agreement, while also creating job opportunities. Yet such narratives often prioritize speed and efficiency to meet targets and grow sectors – overlooking who the transition is designed for, who is included in shaping it and ultimately who owns, controls, funds and benefits from these green technologies. Because technological deployment alone cannot guarantee equitable outcomes such as access, fairness, decent work and sustainability, these outcomes are influenced by institutions. The lack of deliberate, justice-centered institutions risks reinforcing Africa’s dependency on the Global North while deepening existing inequalities. Africa needs to redefine its innovation policy for a just transition by focusing on local industrial growth, inclusive skills development and local ownership to prevent the recurrence of past inequitable, extractive practices. The energy transition must be more than a

technological change; it should involve a deep reorganization of power dynamics, production capabilities and social equity. Green technologies, jobs and local industrial development Across the continent, countries are expanding their clean energy infrastructure. South Africa, for example, is doing this through its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). As of 2026, Kenya generates nearly 90 percent of its electricity from renewable sources, with significantly increased capacity from solar and wind power, according to the International Energy Agency. But industrial gains remain elusive as many countries are still heavily dependent on imported technologies, such as solar panels, wind turbines and battery components that are manufactured abroad, limiting opportunities for domestic manufacturing and capability development. Green technology projects are often funded by international capital, developed by foreign firms and integrated into global value chains where domestic policymakers exercise little control. Most projects initiated in Kenya are funded by international donors because local stakeholders often face high upfront costs, including import expenses that hinder cost-effective renewable energy production. African countries find themselves in a paradoxical position: Exporting critical minerals while importing

technologies built from them, thus maintaining dependency. To change the current landscape, governments must intentionally develop and fully commit to innovation policies that align with their energy and industrial policies. This means incentivizing local firms to acquire technological capabilities, implementing procurement strategies that promote local manufacturing, facilitating technology transfers and encouraging joint ventures, while strictly enforcing local content thresholds for goods, services and labor. Critical to this approach will be maintaining effective political coordination, enhancing bureaucratic capacity and the courage to challenge entrenched domestic and international interests that benefit from the existing system. Without that political will, the expansion of renewable energy infrastructure may generate clean electricity without creating significant local industrial development or employment. Because of limited manufacturing capacity in African countries, construction and installation jobs remain the main categories of renewable energy employment, as seen in the Lake Turkana Wind Power Project in Kenya that houses around 11 percent of the country’s installed capacity and provides low-cost energy to the national grid. However, construction jobs are often short-term while installation tasks are limited in scope. The main driving force behind structural change lies in manufacturing, engineering and research, along with the educational and skills development

COMPREHENSIVE INNOVATION

systems needed to support them. Unless countries prioritize anticipatory skills planning that matches their industrial goals, they risk training workers for jobs that will always be overseas.

ministries, domestic and foreign investors, as well as labor and energy interests. In South Africa, this complexity is reflected in the tensions between labor movements and environmental advocates. In Kenya, the significant presence of international actors and reliance on their expertise have increased their influence over domestic policies. A significant challenge many African countries face is a lack of coordination among ministries, leading to disjointed policies that fail to complement one another. To foster meaningful change, we must cultivate an inclusive and lasting alignment among diverse coalitions. Only then can we develop cohesive policies that not only address energy needs but also promote social equity and environmental sustainability. An innovation policy that supports fairness in Africa should be intentionally developed, reflect regulatory credibility, allow for learning, relearning and adaptation as the world changes – while also investing in local capability building and African-led research. African governments need to boldly embrace innovation policies, civil society must be able to hold these transition strategies accountable and international partners should provide funding that fosters independence rather than perpetuating dependency. Without such deliberate institutional redesign, the transition will follow the same concentrating logic that has long defined the fossil fuel economy. Owning the transition A just energy transition presents a tangible opportunity for development, though it requires more than the deployment of green technologies. Deliberate efforts are needed to align innovation policy, industrial development strategies and social objectives. For Kenya, South Africa and the broader continent, the goal cannot simply be participation in the transition; it must be ownership of it. The success of the transition should be measured by its ability to generate shared prosperity, stronger communities and genuine political agency, rather than simply the share of green tech in the energy mix. Africa’s green future is still being written – this is the moment to author it on African terms.

Wandile Mlilo

Avoiding exclusion As decarbonization accelerates

to advocate for their inclusion. Justice requires substantive public participation and innovation policies deliberately designed to redistribute not only energy but also economic and political power. How innovation policy can support fairness Addressing these exclusions depends on how innovation policy is designed and by whom. Innovation policy serves as the institutional mechanism that connects green technology, job creation and justice. It shapes decisions on research funding allocations, the structuring of renewable energy auctions, the enforcement of local content requirements and the design of skills development incentives, among other aspects. By prioritizing local manufacturing, promoting technology learning and encouraging inclusive participation, innovation policy can ensure that the transition to renewable energy fosters meaningful structural transformation. Innovation policy is itself political, shaped by bargaining between Wandile Kelly Mlilo is a DPhil Innovation and Development student at the SARChI-Trilateral Research Chair in Transformative Innovation (TRCTI) at the University of Johannesburg. Her research focuses on the political economy of renewable energy innovation and transitions in Sub-Saharan Africa. Her research engages both the policy and socio-economic dimensions of energy transitions. She has worked on projects in renewable energy, local economic development and emerging digital technologies, developing social plans, impact assessments and exit strategies for coal power plants.

across South Africa, coal-dependent communities face increasing economic uncertainty, while poor communities still suffer from regular blackouts. Kenya tells a different story with a similar experience; while it has made significant progress in its energy mix, rural communities remain underserved or priced out of the market. The need to address such challenges is reflected in the common phrase of the just energy transition, “leave no one behind”. There is another stark divide between small and large firms, where established corporations, often with foreign ties, enjoy streamlined access to resources due to their size and influence. Local cooperatives, small businesses and community-led initiatives find themselves marginalized in the procurement process, sidelined in the ongoing energy transition. African countries thus struggle to define fair and independent strategies for the energy transition. A key area of inclusion is the involvement of affected workers, rural communities or those historically marginalized in the transition process. Unless these groups are actively included, their exclusion is a predictable outcome. Sadly, the communities most at risk of being overlooked are those that lack the political influence

“For Kenya, South Africa and the broader continent, the goal cannot simply be participation in the transition; it must be ownership of it.”

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