A country’s economy is often measured through indicators such as gross domestic product (GDP), which captures the value of goods and services produced. However, GDP tells only part of the story. It does not fully reveal whether economic growth comes at the expense of forests, soils, water and other natural assets. Nor does it routinely capture the economic value of ecosystems that protect communities, store carbon, support agriculture and sustain livelihoods.
The African Development Bank Group has launched the second phase of its Mainstreaming Natural Capital in Africa’s Development Finance project (NC4-ADF II) in Addis Ababa, backed by a $4.23 million grant from the African Development Fund’s Climate Action Window. The three-year initiative will support 13 sub-Saharan African countries in integrating natural capital data into economic planning and development finance decisions.
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The participating countries are Burundi, Cameroon, the Central African Republic, Côte d’Ivoire, the Democratic Republic of Congo, Ghana, Kenya, Mozambique, Rwanda, Tanzania, Togo, Zambia and Zimbabwe. 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 (NCA) into development finance.
The launch included a Joint Steering Committee meeting involving national focal points and technical partners, including AUDA-NEPAD, GIZ, the United Nations Economic Commission for Africa (UNECA), the United Nations Environment Programme (UNEP) and the World Wide Fund for Nature (WWF).
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 is an accounting illustration, not evidence that African economies would have generated additional cash or that governments could have collected the amount in tax revenue. Rather, it demonstrates how conventional GDP can overlook ecosystem services, including the role forests play in absorbing and storing carbon.
The distinction is important. 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.
NC4-ADF II seeks to make these losses more visible in economic planning, enabling governments to assess whether resource revenues are accompanied by declining natural asset stocks. 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 (SEEA), 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, each reported by 54% of countries for the latter two categories.
Through NC4-ADF II, participating African countries will receive support to develop and use these accounts, integrate natural capital evidence into national planning and budgeting, and mobilise development finance for nature-positive investments.
Ghana 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, established a high-level steering committee and strengthened technical capacity across 16 institutions through a practical, learning-by-doing approach. Its participation in NC4-ADF II will build on these foundations while encouraging knowledge-sharing with other African countries.
Zambia demonstrates how natural capital accounting can move beyond data collection to influence public policy. Natural resources account for nearly 40% of the country’s national wealth. Since 2016, Zambia has developed official land, forest and water accounts and completed its first ecosystem services account in 2025.
These accounts have informed the country’s Ninth National Development Plan, climate policies and World Bank-funded projects. Zambia’s Ministry of Finance leads the programme, working with the national statistics agency and other ministries through specialised technical groups. This approach helps embed natural capital accounting in planning and budgeting rather than leaving it as a standalone statistical exercise.
Rwanda’s experience also illustrates how environmental data can inform investment decisions. The country’s first land accounts, launched in 2018, revealed a notable shift from forest cover to cropland, providing evidence for its National Land Use Development Master Plan.
Water accounts help Rwanda monitor progress towards Sustainable Development Goal 6.4, which addresses water-use efficiency and water scarcity. Ecosystem accounts measuring water yield, sedimentation and carbon sequestration are also informing projects such as the Volcanoes Community Resilience Project and the rehabilitation of five urban wetlands in Kigali to reduce flooding.
Rwanda has appointed a State Minister for Economic Planning as its natural capital accounting focal point, demonstrating high-level political commitment. The National Institute of Statistics and the University of Rwanda are also incorporating NCA into their work and curricula.
A central component of NC4-ADF II is support for the Africa Natural Capital Accounting Community of Practice, which enables countries and practitioners to exchange knowledge, methods and experience. This regional cooperation is particularly important because rivers, forests and wildlife corridors cross national borders, while climate risks rarely remain confined to individual countries.
The initiative builds on two African NCA Policy Forums held in Uganda in 2019 and Kenya in 2023. The African Development Bank’s Innocent Onah described the project as “the next chapter in Africa’s NCA journey”, emphasising the importance of turning evidence into action and building a community of practice that generates lessons for the continent.
Reliable information about natural assets can help governments and investors assess environmental risks and identify nature-positive investment opportunities. However, accounting alone does not guarantee financing. Investors also require credible project plans, clearly defined land and resource rights, reliable monitoring systems, community safeguards and transparent benefit-sharing arrangements.
Capacity constraints remain another challenge. Participating countries highlighted the need for stronger technical skills, data systems and institutional coordination. Zambia’s experience illustrates these difficulties: coordinating key institutions required formal arrangements, while the initial pool of national experts capable of developing water statistics and conducting natural capital accounting was limited.
Ultimately, NC4-ADF II’s success should be measured not simply by the number of accounts produced, but by whether the information influences real decisions. Key indicators include the use of natural capital data in government budgets and investment appraisals, the regular publication and updating of accounts, and policy responses to measurable changes in ecosystems and natural resource stocks.
Over its three-year implementation period, the programme offers an opportunity for participating countries to strengthen their capacity to incorporate nature into economic decision-making.
The lasting test, however, will be whether African governments can translate better environmental accounts into more informed fiscal choices, stronger environmental safeguards and investments that preserve the natural systems on which economies and communities depend. As the Bank’s project task manager described the initiative, it represents “a step change in how Africa approaches natural capital”. Delivering that change will require sustained action from finance ministries, policymakers and investors, alongside the statisticians who produce the data.
