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SMEs as catalysts for progress in sustainability 22 Nov 2023

The world faces acute environmental and social challenges while these issues are also negatively impacting the economy. Addressing the challenges requires businesses worldwide to prioritise sustainability as a core aspect of their strategy and operations. While large corporations have made strides in this direction, it is the often-overlooked Small and Medium Enterprises (SMEs) that hold the key to transformative change.

On a global scale, SMEs are the lifeblood of economies. They represent the majority of businesses in both developed and developing nations, contributing significantly to job creation and economic growth. Particularly relevant is the fact that SMEs represent about 90 percent of businesses and more than 50 percent of employment worldwide. In Nigeria, SMEs are responsible for creating approximately two-thirds of the net new jobs. They also generate about half of the non-oil Gross Domestic Product (GDP). Their sheer number and adaptability provide a unique opportunity to drive sustainability action. Moreover, their operations are typically rooted in local communities, making them well-positioned to address specific environmental and social issues on the ground.

SMEs are more agile and can adapt to changing market dynamics faster than large corporations. This inherent flexibility enables them to swiftly embrace sustainable practices and develop innovative solutions that are relevant to their local contexts. Whether it's implementing energy-efficient processes, reducing waste, or adopting environmentally-friendly sourcing, SMEs can lead the charge.

In Africa, the significance of SMEs in the context of sustainability cannot be overstated. Africa, with its rich natural resources and diverse ecosystems, faces a unique set of challenges and opportunities when it comes to sustainability. While its rich biodiversity and fertile landscapes promise opportunities for responsible resource management and eco-friendly development, they also expose the continent to the ravages of habitat destruction, poaching, and climate change.

The challenge lies in conserving the unique flora and fauna that reside within these ecosystems while simultaneously addressing the profound needs of its burgeoning population. Africa's vulnerability to climate change and the resulting impact on agriculture, water resources, and food security call for robust adaptation and mitigation strategies. Furthermore, harnessing its vast potential for renewable energy sources, promoting sustainable agricultural practices, and embracing green technologies can chart a path towards economic growth and environmental preservation. This is why we must start to think about widescale behavioural change in our quest to implement lasting solutions to these issues, and in the process pay closer attention to SMEs as an answer to grassroots penetration.

SMEs play a pivotal role in addressing Africa's unique sustainability challenges by virtue of their local relevance, agility, resource efficiency, job creation, inclusivity, and innovative financing models. Their direct ties to communities and ecosystems enable tailored and contextually relevant sustainability initiatives, while their nimbleness makes them adept at adopting and promoting eco-friendly practices. SMEs contribute not only to environmental preservation but also to poverty alleviation, social equity, and the development of green jobs, making their impact more holistic and inclusive. Their active engagement in ecosystem stewardship and advocacy for sustainability further underscores their significance as key players in Africa's sustainability journey, often surpassing the contributions of large corporations.

Despite the potentially crucial contributions of these enterprises to the achievement of the Sustainable Development Goals (SDGs), they also face several challenges that hinder their full potential. One primary challenge is limited access to financing and resources. Many SMEs, particularly in developing regions, struggle to secure the necessary capital to invest in sustainable practices, research and development, or technology upgrades required to align with the SDGs. Solutions to this challenge include enhancing access to microfinancing, fostering public-private partnerships, and creating incentives for banks and financial institutions to offer affordable loans to SMEs focusing on sustainable projects.

Another significant hurdle is the lack of awareness and capacity in many SMEs regarding the SDGs and sustainable business practices. Education and awareness campaigns are needed to inform SMEs about the SDGs and equip them with the knowledge and tools necessary to integrate sustainability into their operations. This could involve government-led training programmes and collaboration with non-governmental organisations and industry associations to build awareness and provide practical guidance on sustainable practices.

Furthermore, regulatory and policy frameworks need to be streamlined and simplified to facilitate compliance with sustainability goals. Governments can play a role in reducing bureaucratic red tape, offering tax incentives, and providing regulatory clarity to create a more conducive environment for SMEs to adopt sustainable practices. Overall, addressing these challenges through a multi-stakeholder approach, involving governments, businesses, civil society, and international organisations, is essential to unlock the full potential of SMEs in advancing the SDGs.

Access Bank, recognising the significant gaps and challenges facing SMEs, has been at the forefront of implementing strategic projects to empower and support these businesses. Among its recent initiatives, the Smallholder Farmer Project, executed in partnership with the ACT Foundation, stands out. This project has been instrumental in equipping smallholder farmers and rural households in Northeast Nigeria with the tools and resources they need to enhance their livelihoods and build resilience in the face of multiple challenges, including conflict, environmental issues, economic shocks, and social stressors. The remarkable results of this project include reaching 24,162 direct beneficiaries, with a strong focus on gender inclusivity, empowering 16,913 females and 7,249 males from vulnerable rural farming households. By providing the necessary support, Access Bank has made substantial strides in improving the economic and social well-being of these communities, fostering stability and prosperity.

Another notable project undertaken by Access Bank is Somo Kijani, which aims at empowering youth entrepreneurs in low-income urban communities in Kenya. This initiative focuses on imparting valuable skills, providing essential resources, and offering business support to young entrepreneurs in the Kenyan communities. The bank’s objective is to address not only economic challenges but also environmental and social issues within the communities, primarily by establishing green businesses related to food production, waste management, and environmental enhancement. Through this project, Access Bank has empowered 162 young green entrepreneurs, offering training and mentorship in entrepreneurship and innovation. This support not only fosters entrepreneurship but also ensures that these businesses are environmentally sustainable.

As stakeholders across the continent continue to work collaboratively towards achieving the SDGs, SMEs can be the agents of change. However, to unlock their potential, policymakers, investors, and international organisations must provide support and incentives. This includes access to funding, training, and technology, as well as the creation of an enabling regulatory environment. Collaborative efforts are essential to ensure that SMEs can thrive while pursuing sustainable practices.

In addition to the laudable initiatives that individuals, governments, social enterprises, and corporates alike are executing, we must collectively realise the role of SMEs in advancing sustainability, both on a global scale and within the African context. We must also remember that embracing sustainability is not only a moral imperative, but also a strategic advantage, as it can improve long-term viability.

The time has come for SMEs to take their place at the heart of sustainability action and contribute their quota towards shaping a more sustainable and prosperous future for all.

Omobolanle Victor-Laniyan is Head, Group Sustainability, Access Holdings Plc.