Africa’s $6trn in natural capital is invisible to GDP—and to policymakers
By Fridah Mbugua
At COP29 in Baku last November, African heads of state issued an unusual technical demand: recalibrate how their economies are measured. The request was precise. When Africa’s GDP stood at approximately KES 328 trillion (USD 2.5 trillion) in 2018, the continent’s natural capital was valued at KES 813 trillion (USD 6.2 trillion) – 2.5 times higher. Yet conventional accounting captures none of this environmental wealth.
The measurement gap carries direct economic consequences. According to African Development Bank estimates, adjusting Africa’s 2022 GDP for carbon sequestration alone would have added KES 8.7 trillion (USD 66.1 billion), exceeding the combined GDP of 42 African nations. For the six Congo Basin countries, this single adjustment would have increased measured economic output by nearly 64 per cent.
The problem extends beyond carbon. Gross Domestic Product, the dominant metric of economic performance since the mid-20th century, was designed to measure market transactions. It fails to account for services provided by natural capital, including carbon sequestration by forests or water regulation for agriculture. For resource-rich African economies, this omission creates systematic distortions.
The measurement constraint
Traditional GDP indicators overlook value embedded in informal economies, community networks, and indigenous knowledge systems, structures that dominate African economic activity. The informal economy in sub-Saharan Africa ranges from 20-25 per cent of GDP in Mauritius, South Africa, and Namibia to 50-65 per cent in Benin, Tanzania, and Nigeria.
When Rwanda began compiling natural capital accounts in 2014, land was immediately identified as a priority. Rwanda is the most densely populated country in Africa, and land is a key constraint to economic activity. The accounts revealed patterns invisible in conventional statistics: how urbanisation pressure intersected with agricultural productivity, where ecosystem degradation threatened water supplies, and which land-use decisions generated sustainable versus extractive returns.
South Africa’s river ecosystem accounts, developed between 2014 and 2016, documented declining ecological condition across major watersheds. This information helped inform the National Water and Sanitation Master Plan, highlighting the importance of maintaining freshwater ecosystem integrity as part of the water value chain. The accounts identified specific catchment areas requiring intervention – data unavailable through GDP measurement.
Institutional progress
Several African governments have moved beyond pilot projects to systematic implementation. Rwanda’s National Institute of Statistics has embedded natural capital into its System of National Accounts, enabling data-driven decisions. The country developed land, water, minerals, and ecosystem accounts, hosting the 7th Global Policy Forum on Natural Capital in 2024.
The economic results are measurable. Rwanda recorded record tourism revenues and employment growth in 2024, supported by natural capital data that positioned the country as a hub for nature-based tourism and green investment.
Zambia has compiled accounts for forestry, water, land, and ecosystems since the late 2010s. Wildlife Protected Area Accounts support nature-based tourism, which accounts for up to 6 per cent of GDP and half a million jobs. The accounts directly inform the Ninth National Development Plan and shaped the design of climate-resilient landscape investments.
Uganda developed water, forest, and ecosystem services accounts, integrating natural capital into macroeconomic frameworks through its Third National Development Plan. Tools such as UGAMOD, a macroeconomic model tailored to environmental data, allow policymakers to evaluate trade-offs and assess economic progress beyond GDP.
Botswana produced its fourth edition of water accounts and has presented findings to UN Commission sessions on Sustainable Development Goal monitoring mechanisms. The water accounts have been identified as essential tools for water sector reforms, whilst mineral accounts inform fiscal rules for managing resource revenues.
The carbon price disparity
The measurement gap creates opportunities for value extraction. Carbon prices in Europe can reach USD 200 per tonne under EU Emission Trading Standards, whilst carbon prices in Africa range from USD 3 to USD 10 per tonne. African Development Bank President Akinwumi Adesina has described this as “carbon grab”—African countries surrendering vast land areas to carbon credit schemes whilst receiving minimal returns.
Kenya received 11 million voluntary carbon market credits in 2022, second only to the Democratic Republic of Congo’s 24 million credits. Kenyan credits have concentrated in nature-based carbon removal projects, including sustainable grassland management and forest regeneration. However, the country lacks mechanisms to capture the full economic value these projects generate in international markets.
The pricing discrepancy reflects information asymmetry. Without standardised natural capital accounts, African governments cannot effectively negotiate carbon finance arrangements or assess whether proposed transactions represent fair value. European entities purchasing African carbon credits benefit from rigorous environmental accounting frameworks that quantify avoided emissions. African sellers often lack equivalent data infrastructure.
Systemic accounting challenges
The System of Environmental-Economic Accounting (SEEA), adopted by the UN Statistical Commission in 2012, provides internationally standardised methodology for natural capital measurement. The SEEA Ecosystem Accounting was adopted in March 2021 following comprehensive testing, consultation, and revision. Over 34 countries now use ecosystem accounts to inform policy development.
Implementation requires sustained institutional commitment. Before compiling accounts, countries utilise diagnostic tools to assess institutional environments and data availability. National plans identify policy priorities and determine which environmental-economic accounts can best inform those priorities. The process demands collaboration across government ministries, statistical offices, and environmental agencies.
Data constraints pose manageable rather than insurmountable obstacles. Most countries already have data needed for SEEA accounts from national statistical offices and government institutions. The challenge lies in organising existing information within a coherent accounting framework and establishing regular compilation procedures.
Ethiopia provides an example. With renewable natural capital comprising 28 per cent of national wealth, natural capital accounts are foundational to climate resilience and sustainable land management work. The accounts support economic development planning by quantifying relationships between ecosystem services and productive sectors.
Fiscal implications
The measurement gap constrains sovereign financing capacity. Credit rating agencies assess debt sustainability based on GDP. Higher GDP calculations from natural capital adjustments could provide larger headroom to take on financing and invest in green economies, potentially improving debt sustainability calculations.
A 1 per cent increase in resource revenue reduces non-resource revenue by 0.12 percentage points in sub-Saharan Africa, according to International Monetary Fund analysis. Resource-rich countries systematically collect less non-resource tax revenue than resource-poor countries with similar income levels. This correlation appears linked to weaker institutions rather than deliberate policy choices.
The African Development Bank estimates that with appropriate policies, Africa could mobilise an additional KES 187.7 trillion (USD 1.43 trillion) in domestic resources from tax and non-tax revenue sources through efficiency gains alone. Natural capital accounting would strengthen this revenue mobilisation by providing clearer baselines for resource extraction taxation and environmental service payments.
The Beyond GDP movement
At the Fourth International Conference on Financing for Development in July 2025, African Union Development Agency CEO Nardos Bekele-Thomas called for moving beyond GDP towards more holistic metrics. The AU’s Agenda 2063 prioritises inclusive growth, environmental sustainability, and human development over conventional economic metrics.
Several African nations have begun experimenting with alternative measurements. Botswana is trialling the Genuine Progress Indicator, which integrates economic, social, and environmental dimensions including income inequality and public sentiment. South Africa’s National Development Plan 2030 employs multidimensional metrics focused on health, education, and inequality. Rwanda’s Imihigo system tracks governance and human development beyond monetary terms.
These initiatives remain complementary to rather than replacements for GDP. The objective is not to abandon economic growth measurement but to provide decision-makers with more complete information. Natural capital accounting integrates with existing national accounts frameworks rather than displacing them.
Structural barriers
Over half of African nations depend on oil, gas, or minerals for at least 60 per cent of export earnings, creating vulnerability to volatile global markets. The 2014 commodity price collapse and COVID-19 pandemic highlighted these dependencies. Gross fixed capital formation fell from 11.4 per cent in 2014 to 4.8 per cent in 2015.
Nigeria exemplifies the resource curse dynamic. Oil revenues per capita increased tenfold over 35 years, yet income per capita stagnated since independence in 1960, making Nigeria one of the 15 poorest countries globally. During this period, poverty headcount ratios nearly doubled.
Botswana demonstrates that resource wealth can support development when paired with effective institutions. Forty per cent of Botswana’s GDP stems from diamonds, yet the country achieved the world’s highest growth rate since 1965, with GDP per capita ten times that of Nigeria. The country maintained second-highest public expenditure on education and used hydrocarbon wealth to modernise infrastructure and establish generous welfare systems.
Implementation requirements
The African Economic Outlook 2025 recommends making natural capital accounting mandatory and enforcing domestic value retention through beneficiation requirements. Tax administration digitalisation, broadened tax bases, and strengthened social contracts would improve revenue compliance.
African leaders stated they will work with other developing countries and regions, including Latin America, the Caribbean, and Asia, to forge a global alliance ensuring natural capital inclusion in GDP. They plan to present outcomes to the African Union Assembly of Heads of State and Government at the 2025 summit.
Sub-Saharan Africa’s economy is projected to grow from 3.3 per cent in 2024 to 3.5 per cent in 2025, reaching 4.3 per cent in 2026-27. Whether this growth trajectory proves sustainable depends partly on whether measurement systems capture the natural capital depletion or enhancement that accompanies it.
The technical framework exists. International standards are established. Several African nations have demonstrated successful implementation. The remaining obstacle is political will to mandate systematic natural capital accounting across the continent and negotiate international recognition of these expanded economic measures in credit assessments and development finance decisions.
