Africa’s green superpower

This is an audio transcript of the FT News Briefing podcast episode: Africa’s green superpower

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, October 6th, and this is your FT News Briefing.

[MUSIC PLAYING]

Today, we’re gonna take you to the Congo Basin rainforest. Our Africa editor David Pilling went there to find out about a radical plan to create value from preserving the rainforest.

David Pilling
The problem at the moment is that the forest is really valued at zero. And when you value something at zero, the incentive is to chop it down and turn it into something that is worth something.

Marc Filippino
Plus, private equity groups are snapping up publicly owned companies for more than a pretty penny. But first, a former Facebook employee was on Capitol Hill yesterday to give US lawmakers a damning inside look at the social media company.

Frances Haugen
I’m here today because I believe Facebook’s products harm children, stoke division and weaken our democracy.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

[MUSIC PLAYING]

Facebook whistleblower Frances Haugen was in Washington yesterday, and she told the US senators that the social media company repeatedly chose to maximise online engagement instead of minimising harm to users. The FT’s Kiran Stacey said Haugen had powerful specifics to back up her point.

Kiran Stacey
She described how a bunch of Facebook employees had come to Mark Zuckerberg to suggest that the company might want to tone down some of its algorithms so that, in her words, the platform became less twitchy. It became less likely to promote content heavily because people were interacting with it. And they said, look, we don’t have to do this everywhere. We just want to do it in certain countries where there’s a real risk of violence. I think she was mentioning at the time Myanmar. And she used that as an example of a broader theme, which is that whenever Mark Zuckerberg and Facebook in general were given the choice, do you want to tone down the virality of what happens on your platforms or do you want to keep everything tuned up to the max and thereby absolutely milk every penny of revenue you can out of this platform? They chose the latter, and that was her broader point.

Marc Filippino
And Haugen also had a specific suggestion to lawmakers about regulating Facebook. She said they should focus on the algorithms, not content.

Kiran Stacey
Facebook, along with other social media companies, enjoys legal protections under something called Section 230 of the Communications Decency Act. This means that Facebook, Twitter as well other platforms can essentially publish other people’s content without getting sued. She said, look, if you do want to limit those legal protections, which is something that Congress has talked a lot about, but don’t limit it in terms of what content is allowed to be on there. Limit it in terms of what the platform is liable for in terms of its own algorithms. So Facebook has an algorithm that massively promotes a piece of disinformation. Make sure it can be punished legally for that, specifically. Target your regulation at its algorithms. Don’t try and ban certain types of content.

Marc Filippino
That’s the FT’s Washington correspondent Kiran Stacey.

[MUSIC PLAYING]

You could say private equity firms haven’t been shy about paying top dollar for listed companies. According to Refinitiv, PE firms have offered the highest premiums for listed companies in more than two decades. Buyout groups have taken advantage of share prices dented by the pandemic, and in the case of UK companies, Brexit did some denting as well. Some warn of a bubble. One lawyer who’s advised private equity firms on deals to take companies private, told the FT he’s reminded of the pre financial crisis era, when buyers struggled to deliver returns on some high-priced deals. But he added, buyout groups now have more ways to exit their investments.

[MUSIC PLAYING]

The Central African nation of Gabon is unusually wealthy. It makes money from oil. But the country is also blessed with another extraordinary natural resource. A huge section of the Congo basin rainforest known as the lungs of Africa.

David Pilling
It really is a magical place.

Marc Filippino
That’s the FT’s Africa editor David Pilling. He recently visited Gabon.

David Pilling
The forest was pretty still and quiet. You did hear occasional sounds of monkeys, birds flying overhead, chirping a kind of a background shrill. I also saw forest elephants, which appear and then in a second or two, just completely disappear and you wonder how they’ve managed to hide themselves. But the forest is so thick in parts anyway that even something the size of an elephant can just really vanish from sight.

Marc Filippino
This thick and intentionally preserved rainforest is the reason Gabon is a net carbon absorber. It absorbs more carbon than it emits. And the country is hoping to capitalise on that with a radical new financial product, a bond whose underlying asset is this forest. But the valuable part isn’t timber, but rather carbon credits sold to companies that need to offset their own carbon output. Here’s David again.

David Pilling
As oil runs down, Gabon’s idea is to use really its main natural resource the forest, as an engine of economic development. The question is how without destroying it. So sustainable forestry, as it’s called, is one way. Persuading someone else that it’s providing a service not only in carbon capture, but also in regulating weather systems around Africa.

Marc Filippino
So is that how Gabon came up with this idea to become an environmental leader or role model?

David Pilling
Well, in a sense, yes. What Gabon is saying and what indeed, some private companies who are operating in Gabon are saying is, look, here is this ecosystem service. You’ve got a whole biodiverse forest with many ancient trees busily kind of sucking carbon out of the atmosphere and storing that carbon as these trees grow. And in kind of Gabon’s viewpoints, you know, we can breathe clean air or cleanish air around the world. And part of that is thanks to the second biggest rainforest after the Amazon rainforest, of which Gabon’s rainforest is the most intact part. And so what they’re saying is this is providing huge functions not only for Gabon, not only for Africa, but even for the rest of the world. And at the moment, the value that’s put on that is minimal.

Marc Filippino
And valuing its well-preserved rainforest is going to be Gabon’s big ask when it goes to the COP26 climate conference at the end of the month, right David? How do they go about determining the value?

David Pilling
Well, there is an organisation called the Central African Forest Initiative. CAFI. And CAFI has paid Gabon $17 million. Not a huge amount of money, but it’s the first payment of its kind. The interesting thing is that Gabon is complaining about the methodology because CAFI has actually paid money to other countries that have a much worse record than Gabon of preserving their forests. CAFI says if you restore your forest, then we will incentivise you to do that. This is funded basically by the Norwegian government. In comparison to many other countries, Gabon’s forest really are very much intact, and what they’re saying is surely there should be some mechanism to reward us for that.

Marc Filippino [
Do you think when they go to COP26, they’ll be taken seriously?

David Pilling
In a word, no. But that doesn’t mean that this is pure fantasy. What I think will happen is that actually this will be taken up by private companies. And there is in fact, a private company in Gabon called the African Conservation Development Group. They have got a concession to about three per cent of Gabon’s forest. What they are saying is what we would like to do is to quantify how much carbon we are saving by our stewardship, and we will sell those as carbon credits and they want to sell them to companies, to airlines, to oil producers, to banks. And what this company is saying is we have these credits. We can sell them to you and then we can package up those credits and float them off in a $300 million bond. Now, if they can persuade markets that this is valid, then Gabon could presumably follow in its tracks.

Marc Filippino
David Pilling is the FT’s Africa editor. Thanks, David.

David Pilling
Thanks so much, Marc.

[MUSIC PLAYING]

Marc Filippino
And before we go, a quick mention that the efforts Behind the Money podcast is dropping a new episode today. It’s the David and Goliath story of the tiny, climate focused hedge fund that took on ExxonMobil and won, I’ve included a link to the new episode in our show notes. Make sure you check it out. You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.