7 December 2018

Southern Africa: El Nino Is Bringing Drought Threats for Business in Southern Africa

Coinciding with one of the strongest El Niño events since at least 1950, widespread droughts occurred throughout southern Africa during 2015/2016. The scale of impact on urban areas was reflected in the widely reported 'Day Zero' water situation in Cape Town, South Africa, which began during the El Niño, but extended into 2018, as drought conditions persisted.

However, other cities in the region also faced their own versions of 'Day Zero' during the 2015/2016 El Niño.

In Botswana, drought conditions contributed to historically low lake levels in the Gaborone Dam, the main piped water source for the capital Gaborone. By the end of 2015, demand for water in Gaborone surpassed supply by almost 33 million litres a day. Gaborone experienced decreased water pressure and complete cut-off of supply, lasting several weeks in some of the worst affected areas.

A similar pattern was seen in Lusaka, Zambia. This time low lake levels affected hydropower, which accounts for 94 percent of national electricity generation capacity. Low water levels in the Kariba Dam, following low rainfall and increased dam outflows to meet rising demand for power, contributed to a national power deficit estimated at 985 megawatts in October 2015. This resulted in unprecedented daily electricity load shedding to balance supply and demand, often lasting 8 hours at a time.

For businesses, the impacts of electricity and water supply disruption were severe.

In the capital cities all sectors were disrupted, but new research published this week finds that micro, small and medium enterprises (MSMEs), in particular, faced major disruption to their business activities.

In Gaborone, lack of water for food preparation, butchery, irrigation, laundry, cleaning and sanitation, meant many service and processing businesses were unable to operate, provide services to customers, or maintain hygiene standards.

In Lusaka, activities reliant on electricity, such as water pumping, manufacturing, processing, carpentry, building, cooling and communications were interrupted, as equipment was immobilised. At the same time, business inventory and assets were lost through lack of reliable heating and refrigeration.

As El Niño drew to a close, MSMEs in Gaborone and Lusaka reported water supply disruption and power outages, respectively, to be the greatest obstacles in their business environment.

More than half of MSMEs reported lower profits and almost a third believed that their business was at risk of closing down as a result of the disruption. In Gaborone, the estimated declines in profits were anticipated to be between 25 percent and 40 percent, with micro businesses the most concerned.

A WAKE-UP CALL

When the 2015/2016 El Niño was forecast, governments in southern Africa focused on preparing for its potential impacts on agricultural production and were largely unprepared for disruption to urban water and electricity supplies.

Yet the nature of climate risk in sub-Saharan Africa is changing. More people are moving to cities, setting up businesses and connecting - often for the first time - to water and electricity grids, which is increasing demand on existing infrastructure.

At the same time, a complex set of factors has limited the development of new infrastructure, and the effective management of existing resources, to keep up with demand. In Botswana, Zambia and South Africa, these non-climate factors moderated and exacerbated the impacts of drought in urban areas.

Disruption in southern Africa also has to be seen in the context that rainfall anomalies during the 2015/2016 El Niño were not actually extreme, considering the strength of the El Niño event. More extreme and extended periods of drought are likely in the future due to climate change.

Yet, this El Niño highlighted that even fairly moderate changes in rainfall can contribute to major consequences for the businesses that underpin economies. This, in turn, could have significant implications for the realisation of several Sustainable Development Goals.

With the NOAA Climate Prediction Centre predicting an 80 percent chance of El Niño conditions forming again during the 2018/2019 northern hemisphere winter, the 2015/2016 El Niño is an important learning moment for Botswana and Zambia, and for sub-Saharan Africa more widely.

Action is needed across sub-Saharan Africa to increase understanding of the vulnerabilities in existing water, energy and urban infrastructure - and of the effects of increasing urbanisation and a changing climate. In particular, consideration for MSMEs, which currently experience numerous challenges in their business environment that limit their ability to cope with disruption, need to be supported to cope with a wider range of climate impacts.

This blog by Kate E. Gannon, Patrick Curran and Declan Conway is based on research produced by the Grantham Research Institute on Climate Change and the Environment, the University of Barotseland, the Botswana Institute for Technology Research and Innovation and the University of Nairobi.

Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.

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