Green hydrogen and foreign direct investment (FDI) are emerging as transformative forces in Southern Africa’s quest for economic growth and environmental sustainability. As the region grapples with the twin challenges of industrial development and climate change, new research and government strategies are converging to chart a cleaner future—one where investment and innovation go hand in hand with carbon reduction.
On August 10, 2025, South Africa’s Electricity and Energy Minister, Dr. Kgosientsho Ramokgopa, underscored the central role green hydrogen will play in the country’s future energy mix, economic expansion, and youth employment. According to Ramokgopa, South Africa is uniquely positioned to lead the global green hydrogen economy, which is projected to surpass $300 billion in exports over the next three decades. Speaking to local media, he emphasized, “Green hydrogen is a big part of the South African growth story because it helps us to beneficiate our upstream endowments in the form of our platinum group metals (PGMs).”
This optimism is not unfounded. South Africa holds a staggering 80% of the world’s PGMs and 40% of global platinum and palladium reserves—key ingredients in hydrogen production. Mining, traditionally a cornerstone of the national economy, also boasts the highest employment absorption capacity of any sector, making it a powerful lever for job creation. “It’s going to help get more people into employment,” Ramokgopa noted, highlighting the sector’s potential to address South Africa’s persistent youth unemployment crisis.
But the promise of green hydrogen extends far beyond jobs and exports. As South Africa seeks to decarbonize its most challenging sectors—especially transport and energy—green hydrogen offers a viable solution. While the national utility Eskom is working to mitigate electricity-related emissions, Ramokgopa acknowledged that “the country needs additional technology to reduce emissions in aviation and shipping—a gap green hydrogen can help close.” He added, “With maturity, the cost of the technology will drop, making it a viable solution for South Africa.”
These ambitions are set to take center stage at the upcoming Africa Green Hydrogen Summit, where policymakers and investors will discuss strategies to unlock the continent’s renewable potential. Ramokgopa pointedly remarked, “Africa can produce up to 60% of global renewable energy, but currently receives less than 1% of the total investment. Coordination is key.”
The green hydrogen economy is also expected to open thousands of new jobs—especially for young South Africans—across manufacturing, science, technology, and engineering. Two recent PhD graduates, Dr. Mphoma Matseke and Dr. Victor Mashindi of Isondo Precious Metals, shared their enthusiasm with SAnews. “Young people often don’t know what green energy is. This platform can change that,” Matseke said. “It feels amazing to be working at the cutting edge of technology. You leave university having studied science and end up in finance. Now, we can apply our knowledge to real problems, and that’s exciting.” He encouraged youth to pursue STEM fields, especially chemistry, to participate in what he described as a “bright future” powered by green energy.
Yet the region’s path to sustainability is complicated by the dynamics of foreign direct investment. A recent study published in Discover Environment (2025) analyzed the relationship between FDI and carbon dioxide (CO2) emissions in nine Southern African countries from 1990 to 2022. Using a sophisticated copula autoregressive model, the research found a weak negative dependence between FDI and CO2 emissions—a result that supports the so-called “Pollution Halo” hypothesis. This theory suggests that sustainable FDI can actually foster the adoption of cleaner technologies and more efficient production methods.
Energy consumption, however, tells a different story. The same study revealed a strong positive correlation between energy use and CO2 emissions, while economic growth showed a moderate positive association. In other words, as Southern Africa’s economies expand and energy demands rise, so too do their carbon footprints—unless targeted interventions are put in place.
Southern African countries are rich in natural resources—minerals, fertile land, and fossil fuels—which have long attracted foreign investment, particularly in extractive and manufacturing sectors. However, the environmental implications of this investment are mixed. While some FDI facilitates technology transfer and cleaner production, others contribute to environmental degradation. The study’s methodology included Granger causality tests and consumption-based CO2 emissions measures, adjusted for international trade, to more accurately reflect each country’s true carbon footprint.
The research also highlighted the complexity of the FDI-environment relationship, discussing two competing hypotheses: the “Pollution Haven” hypothesis, which suggests that lax regulations in developing countries attract polluting industries, and the “Pollution Halo” hypothesis, which posits that FDI can improve environmental outcomes by introducing advanced technologies.
According to the study, “Figure 1 illustrates a scatter plot that reveals a negative relationship between CO2 emissions and Foreign Direct Investment (FDI) among Southern African countries. As FDI increases, CO2 emissions tend to decrease, suggesting that countries attracting higher levels of foreign investment may also be adopting cleaner technologies that reduce their carbon footprint.” The findings further suggest that targeted green investments and regional collaboration are essential for aligning industrialization with ecological sustainability.
For policymakers, these insights offer both a warning and a roadmap. The study recommends that governments promote green investments and energy initiatives, leveraging FDI to drive technology transfer and sustainable industrialization. It also stresses the importance of regional cooperation, as “Africa can produce up to 60% of global renewable energy but currently receives less than 1% of total investment.” By aligning policies and investment strategies, Southern African nations could position themselves as global leaders in green growth.
Looking ahead, the challenge is to ensure that economic development does not come at the expense of environmental health. The rise of green hydrogen and the nuanced impacts of FDI present an opportunity for Southern Africa to pioneer a model of growth that is both inclusive and sustainable. As Dr. Ramokgopa and the region’s scientists and policymakers look to the future, the hope is that smart investments and innovative technologies will help decouple prosperity from pollution—setting a precedent for the rest of the continent, and perhaps the world.
The convergence of green hydrogen ambitions and evidence-based investment strategies could very well define Southern Africa’s next chapter—one where economic dynamism and environmental stewardship are not at odds, but inextricably linked.