SMEs Need Support For Sustainability And Climate Change Resilience

Soko Directory Team

2 years ago

There is an urgent need to support small and medium enterprises (SMEs) within and without Africa for them to gain sustainability and climate change resilience. This is according to the Regional CEO of East & Southern Africa – Ebele Ogbue of United Bank for Africa (UBA).

Speaking at the Strathmore University Business School, Mr. Ebele Ogbue said that at a time when the world is moving towards green investment, SMEs in Africa will play a crucial role in ensuring the success of the same given that they form the majority of businesses in the continent.

“The urgency of mitigating climate change and building resilience cannot be overstated. Addressing climate change in Africa presents a $3 trillion economic investment opportunity in the continent by the year 2030,” he said.

SMEs are the backbone of the world economy, accounting for most businesses in nearly every region. In the developing world, SMEs make up 90 percent of the private sector and create more than 50 percent of jobs in their corresponding economies.

In Africa, SMEs provide an estimated 80 percent of jobs across the continent, representing an important driver of economic growth. Sub-Saharan Africa alone has 44 million micro, small, and medium enterprises, almost all of which are micro. For these businesses to grow, create more jobs, and generate economic growth, they need access to capital especially when faced with climate change-related risks, which pose additional threats, from supply chain disruptions to increased operating costs.

The private sector in Africa is critical to adapting to, as well as mitigating, climate change. This is especially true of SMEs, given that they make up a significant part of the continent’s private sector. Incentivization must exist for SMEs to function sustainably and achieve green growth.

“African SMEs’ lack of access to financing unfortunately often forces them to behave in ways that are not sustainable. It is harder for SMEs focused on sustainability and green business to gain financial support because there are typically higher up-front costs and the markets are underdeveloped. Green technology is expensive because it is newer and comes with many up-front costs,” he added.

It is therefore important to find ways for SMEs to access affordable financial support to build more climate-resilient businesses and business models. This involves assessing vulnerabilities, developing adaptation strategies, and ensuring the resilience of

supply chains and operations. Collaborative efforts with industry peers, government agencies, and international organizations can facilitate access to knowledge, resources, and support in this regard.

So How Can SMEs Turn these Challenges into Opportunities?

The current climate crisis demands innovation. It is the SMEs that are perfectly poised to turn this mammoth challenge into a plethora of opportunities.

Sustainable practices can lead to cost savings, access to new markets, and enhanced reputation, which can be particularly advantageous for SMEs. Some of these opportunities are:

Creating Sustainable Products & Services: Consumers globally are increasingly looking for eco-friendly products. African SMEs can carve a niche in producing sustainable goods, tapping into both local and global markets.
Developing Innovative Agri-business Models: With changing weather patterns, there is an urgent need for adaptive agricultural practices. This opens avenues for SMEs in areas like drought-resistant seeds, water-saving irrigation systems, and sustainable farming consultancies.
Energy Efficiency: SMEs can reduce their energy consumption and costs by investing in energy-efficient technologies and processes. This not only lowers their carbon footprint but also enhances their competitiveness by exploring opportunities in the production, installation, and maintenance of renewable energy technologies such as solar panels, biomass energy systems, etc. This sector is growing rapidly as governments and businesses aim to reduce greenhouse gas emissions.
Green Financing: Commercial banks like mine can play a pivotal role by offering green financing options tailored to SMEs. These loans can support investments in renewable energy, eco-friendly infrastructure, and sustainable supply chains.
Digital Transformation: Embracing digital technologies can enable SMEs to optimize their operations, reduce resource consumption, and access global markets more efficiently.
Waste Management, Climate Risk Assessment, and Adaptation: SMEs can provide Consultancy services and technology solutions to help businesses and communities assess and adapt to the impact of climate change. This includes developing strategies to minimize waste and reduce environmental impact, manage water scarcity, extreme weather events, and shifting climatic conditions.

This falls within the Tony Elumelu Foundation’s Theme for this year’s Seed Capital Funding working with UBA to support SMEs in the area of Sustainability and Climate Change Resilience.

The Tony Elumelu Foundation, founded by African investor, philanthropist, and Chairman of United Bank of Africa PLC, Tony E. Elumelu is a Non-Governmental Organization aimed at creating prosperity for all through supporting and creating African Entrepreneurs. It has thus far funded 15,847 young entrepreneurs and SMEs across 54 Countries in Africa.

Since its inception in Kenya in 2015, the Tony Elumelu Entrepreneurship Program has disbursed USD 3.42Mn as seed capital to a total of 684 Kenyan entrepreneurs who fall within the SME Space. It has also provided critical non-financial support such as: –

Mentoring
12-week business management training
Knowledge Resources on TEFConnect.net
Meetups and Networking
Annual TEF Entrepreneurship Forum

It is therefore no surprise that the theme for this year’s Seed Funding Capital is a resounding call to Green Entrepreneurs in the Waste Management Sector in Kenya to participate and be part of the #BeGreenAfrica Initiative a first-of-its-kind Green Entrepreneurship Program to address African youth unemployment.

The program aims to train 1,000 Kenyan MSMEs in the waste management sector, and subsequently economically empower 120 of these Entrepreneurs with Seed Funding Capital of USD 5,000 each to run their businesses. The Programme targets Entrepreneurs under the age of 35, with new or existing green businesses in Kenya.

So what is this BeGreenInitiative, some might ask?

BeGreen Africa is a green entrepreneurship pilot program co-created by The Tony Elumelu Foundation, in partnership with UNICEF Generation Unlimited (GenU), and the IKEA Foundation with the key objective to create a holistic, sustainable, and youth-led green entrepreneurship initiative in the waste sector in Kenya.

This Initiative aims to strengthen Kenya’s path towards sustainable, climate-resilient development while achieving low carbon emissions and aligns with the Sustainable Waste Management Act responsible for instituting the legal and institutional framework to sustainably and effectively manage waste in Kenya.

I, therefore, encourage all the young entrepreneurs and women in entrepreneurship gathered here today to check out and interact with the online platforms for the Tony Elumelu Foundation to ensure you do not miss such opportunities now and in the future.

At UBA Bank, we are committed to supporting the growth and development of SMEs across Africa. This is in line with our bank’s strategic focus on the SME segment being a catalyst for the economic development of Africa.

We, therefore, do have a pivotal role to play in supporting SMEs in Africa by:

Creating financial products tailored for SMEs focusing on sustainability.
Capacity Building through workshops, webinars, and training, to empower SMEs with the knowledge and skills required to navigate the changing landscape.
By Investing in Research and development to understand the evolving needs of our customers, ensuring that our financial solutions remain relevant.