The African Development Bank Group has initiated the second phase of its Mainstreaming Natural Capital in Africa's Development Finance project, backed by a $4.23 million grant from the African Development Fund's Climate Action Window. This three-year initiative will support 13 sub-Saharan African countries, including the Central African Republic, in integrating natural capital data into economic planning and development finance decisions. The project aims to make the losses in natural capital more visible in economic planning, enabling governments to assess whether resource revenues are accompanied by declining natural asset stocks.
The project will be implemented by the Africa Natural Capital Accounting Community of Practice and the Bank's African Natural Resources Management and Investment Centre. It builds on an earlier phase that demonstrated the feasibility of integrating natural capital accounting into development finance. A Joint Steering Committee meeting was held, involving national focal points and technical partners, including AUDA-NEPAD, GIZ, the United Nations Economic Commission for Africa, the United Nations Environment Programme, and the World Wide Fund for Nature.
The African Development Bank's project appraisal estimates that including the value of forest carbon sequestration in Africa's measured GDP could have added $66.1 billion to the continent's 2022 GDP. This illustrates how conventional GDP can overlook ecosystem services, including the role forests play in absorbing and storing carbon. Natural capital accounting can reveal economic contributions that conventional indicators miss, but it does not automatically generate financing, jobs, or income.
The Bank's African Economic Outlook 2023 highlights a significant decline in Africa's natural capital between 1992 and 2019, with renewable natural capital falling by 24% and non-renewable natural capital by 37%. Such depletion is not adequately reflected in conventional GDP figures, which record resource extraction as economic production without fully accounting for the loss of the underlying assets. This information can support better decisions on public investment, land use, and climate risk.
The project promotes the United Nations System of Environmental-Economic Accounting, an international framework for organising environmental and economic data in a manner consistent with national accounts. A 2025 UN global assessment found that 98 countries were implementing the SEEA, with 71, representing 72%, at Stage III, meaning they regularly compiled and disseminated accounts. Energy accounts were the most commonly compiled, followed by environmental protection expenditure and air emissions accounts.
Ghana, one of the participating countries, offers an example of how natural capital accounting can strengthen environmental and economic decision-making. Supported by the World Bank's Global Program on Sustainability, the country has developed substantial NCA capacity. Its cost of environmental degradation was estimated at 10% of GDP in 2006 and 10.7% in 2017, highlighting the economic burden associated with unsustainable resource use. Ghana has also developed a National Plan for Natural Capital Accounting and strengthened technical capacity across 16 institutions.
Other countries, such as Zambia and Rwanda, have also made significant progress in natural capital accounting. Zambia has developed official land, forest, and water accounts, which have informed its National Development Plan, climate policies, and World Bank-funded projects. Rwanda's experience illustrates how environmental data can inform investment decisions, with its first land accounts revealing a notable shift from forest cover to cropland, providing evidence for its National Land Use Development Master Plan.
Key points
- The African Development Bank has launched a project to support 13 sub-Saharan African countries in integrating natural capital data into economic planning and development finance decisions.
- The project aims to make the losses in natural capital more visible in economic planning, enabling governments to assess whether resource revenues are accompanied by declining natural asset stocks.
- Natural capital accounting can reveal economic contributions that conventional indicators miss, but it does not automatically generate financing, jobs, or income.
