Innovating for impact: How SMEs can lead Africa’s sustainability revolution
Introduction: A new era for African SMEs
Africa stands at a turning point—a continent rich in resources, culture, and potential, yet burdened by environmental degradation, energy crises, and socioeconomic inequality. Small and medium-sized enterprises (SMEs) form the backbone of African economies, contributing around 40 per cent of Gross Domestic Product (GDP) and creating approximately 80 per cent of jobs in the informal sector across the continent.
However, their untapped potential to lead a sustainability revolution is often overlooked. In a world increasingly shaped by climate change and resource scarcity, African SMEs are uniquely positioned to innovate for impact, driving sustainable development from the ground up. This isn’t just about survival—it’s about thriving in a greener economy.
If empowered with the right tools, policies, and funding, these SMEs could become global role models for sustainable business practices.
Why African SMEs hold the key to sustainability
Unlike large corporations, SMEs are agile and adaptable, making them faster to innovate, pivot, and scale sustainable solutions. They’re embedded in local communities, intimately understanding regional challenges—from unreliable energy grids and waste management issues to food insecurity.
Take M-KOPA Solar in Kenya, for example. This SME pioneered affordable, pay-as-you-go solar energy systems, providing over one million homes with clean electricity. Similarly, Wecyclers in Nigeria incentivises low-income households to exchange recyclables for rewards, simultaneously addressing waste management and poverty.
In Ghana, companies such as AgroCenta empower smallholder farmers through digital platforms, reducing food waste and enhancing food security.
RePATRN, another Ghanaian social enterprise, transforms plastic waste into sustainable textiles, directly confronting the plastic pollution crisis.
Moreover, Blue Skies Ghana, a fresh fruit exporter, has pioneered sustainable practices by processing fruits locally, reducing carbon emissions associated with export logistics and providing employment in rural areas. These success stories demonstrate that sustainability and profitability are not mutually exclusive — they can thrive together.
These enterprises aren’t merely exceptions — they are trailblazers, demonstrating what’s possible when SMEs leverage sustainability to resolve local challenges.
Challenges hindering SMEs from scaling sustainability
Despite their potential, many African SMEs face three major roadblocks to sustainable innovation:
• Limited Access to Green Financing
Many African SMEs operate on tight margins, making it difficult to invest in eco-friendly technologies or sustainable practices. Only 20 per cent of African SMEs report having access to sufficient finance, and even fewer can secure green loans or impact investments.
• Regulatory Barriers
Burdensome and inconsistent environmental regulations often impede SME innovation, discouraging rather than enabling sustainability efforts.
• Knowledge Gaps and Technology Access
Many SMEs lack the expertise to implement Environmental, Social, and Governance (ESG) frameworks or access emerging green technologies. Without adequate training or mentorship, they remain excluded from emerging sustainable markets.
How SMEs can lead Africa’s sustainability revolution
To transform Africa’s economic future, SMEs must shift from survival mode to becoming sustainability pioneers. Here’s how:
• Embrace Green Innovation & Circular Economies
SMEs can rethink waste as a resource. Companies like AgroCenta in Ghana already illustrate this — leveraging technology to connect smallholder farmers with buyers, reducing food waste, and boosting incomes.
Innovations in recycling, renewable energy, eco-friendly packaging, and water conservation can provide SMEs with competitive advantages while protecting the planet.
• Secure Green Financing
Impact investors and development banks should adapt financing models to better support SMEs.
Programmes such as AfDB’s Green Bond Initiative and USAID’s Development Innovation Ventures (DIV) should prioritise SME access. Additionally, governments must create incentives — such as tax breaks or grants —for SMEs adopting eco-friendly practices.
• Foster Public-Private Partnerships (PPPs)
Governments, corporations, and NGOs should collaborate to develop eco-friendly supply chains, providing SMEs with sustainable raw materials and energy solutions. Initiatives like Power Africa have already demonstrated that such partnerships can accelerate SMEs’ adoption of clean energy.
SMEs are well-positioned to offer green services, including eco-tourism, green consulting, and sustainable business practices. African SMEs are prepared to adopt renewable energy sources and reduce their reliance on fossil fuels, provided appropriate incentives are offered. Governments across Africa must support SMEs in transitioning more easily from fossil fuels to renewable energy.
Conclusion: Africa’s SMEs Must Lead—and We Must Let Them
African SMEs are more than just economic drivers — they hold the key to unlocking a sustainable, resilient future. By investing in innovation, encouraging collaboration, and removing barriers, we can empower these enterprises to lead the continent’s green revolution — and inspire the world in the process.
The time for African SMEs to act is now — and the world must pay attention.
The writers are Development Finance Expert, and Esteemed Economist and Professor in the Department of Economics at the University of Ghana.
BY: SANDRA ADAMAH & PROFESSOR EBO TURKSON