With abundant solar, wind, hydro, biomass, and geothermal resources, Africa can become a trailblazer in renewable energy solutions. Green Small & Medium-sized Enterprises (SMEs) in Africa can provide products and services to promote the transition to a green economy. Sustainable finance matters for SMEs because it can enable them to produce green products and services, adopt green business models, and improve their environmental performance. Sustainable finance facilitates directing funds towards sustainable activities and projects while considering the impact on the environment, society, and governance.

Green startups are crucial to addressing climate change. Sub-Saharan Africa has only been responsible for .55 percent of total global CO2 emissions, yet the continent is expected to suffer significantly from climate change. Additionally, agriculture in Africa is affected by climate change, and Agri-business SMEs can play a vital role in addressing the effects. Agricultural Green SMEs can also help farmers reduce their carbon footprint by providing products or services that promote greener practices. 

Green SMEs are diverse and encompass various industries, including waste management, organic farming, solar power, and eco-friendly manufacturing. Startups like NeedEnergy, a Zimbabwean startup that uses data intelligence to provide smart and clean energy solutions, and Octavia Carbon, a Kenyan startup that designs, builds, and is set to deploy machines that can directly capture CO2 from the atmosphere in the Kenyan Rift are some of the many businesses that are reshaping Africa’s green business ecosystem.  Their influence extends far beyond financial performance. They combine the roles of community organizers, climate warriors, and environmental champions into one. Consider them SDG superheroes, taking on global issues like pollution, resource scarcity, and climate change head-on.

What will it take for African green small firms to access financing? The article examines the challenges and opportunities for sustainable funding and offers recommendations for enabling Africa to achieve its climate adaptation goals through Green SMEs. Green/sustainable SMEs are not limited to those producing climate-smart products or services; they also include SMEs making a concerted effort to adopt green practices in their business operations. 

The green SME market in Africa is expanding and is not limited to startups and small businesses producing climate-smart products or services; they also include SMEs making the necessary changes to include circularity in their business operations. There are many opportunities, great potential, and challenges to overcome in this region. According to research, there has been a noticeable growth trajectory, and green SMEs are becoming essential participants in sustainable development projects all over the continent, especially in agriculture, where productivity is expected to decrease due to environmental changes.

Recent data indicates that the agro sector alone offers a stunning possibility of US$1 trillion for the digital technology market, demonstrating the enormous need and potential for innovation and growth in this field. With droughts and flooding from rainfall increasing, some regions have experienced drought every 2.5 years. Climate-smart SMEs are critically needed to help address the changes from the effect of climate change. 

However, despite their potential, green SMEs need help, especially when attempting to access finance to start or grow their businesses. Limited investments, institutional capacity limits, and poor management capacity exacerbate these financial issues. To effectively overcome these hurdles, it is imperative that stakeholders work together.

Challenges in Financing Green SMEs

SMEs worldwide face challenges that inhibit their access to finance, and for African green SMEs, these challenges can prove significant because they can also affect their survival and profitability. Financial institutions, governments, and development finance institutions must address these barriers to enable Climate-smart SMEs to realize their potential and contribute to sustainable development.

Climate Adaptation Financing – Analysis from the Nationally Determined Contributions (NDCs) indicates that Africa’s adaptation finance needs over the period 2020 – 2030 are close to $580 billion. Without an increase in financing, a gap of $453 billion will accumulate. Without general funding for Africa’s overarching climate adaptation goal, financing green SMEs would ultimately prove difficult.   

Climate Change Legislation – Climate change laws are important because they provide binding obligations and tools for action. Climate change laws that contain dedicated climate change references or considerations have been enacted in nineteen African countries, including Kenya, the Republic of Benin, Nigeria, South Africa, Uganda, and Mauritius. Legislations would mandate each country to take clear climate actions. Targeted actions would then be taken by major actors in the country, including large financial institutions and other corporations, who would recognize the need to finance and work with Green SMEs. 

Lack of Awareness: Awareness from local banks and low government commitment to taking climate action can affect the availability of sustainable financing. Without awareness, local actors can perceive climate-smart SMEs as not being viable. African governments must take the lead in raising awareness of climate change and taking relevant actions to show their nations that everyone should take action to protect the environment. Governments’ strategies and initiatives provide springboards for private sector interventions to finance and support green initiatives and SMEs. 

Additionally, Green SMEs need to be made aware of the various choices for green finance through their chambers of commerce and other networks. Many small and medium-sized enterprises, particularly those in developing nations, need targeted funding options like impact investment, green bonds, and grants to assist sustainable businesses. 

High perceived risk: Traditional banking institutions tend to have a high perception of risk concerning small and medium-sized enterprises, which poses a substantial obstacle for these firms. Additionally, these institutions frequently see green initiatives as riskier investments because of things like changing regulatory environments, unpredictable markets, and the perception of difficulty in quantifying environmental effects. The risk perception worsens the funding gap for green SMEs, resulting in fewer financing options, higher interest rates, and stricter eligibility requirements. Compounding this risk is the poor management capacity of some Green SMEs.  

Regulatory barriers and policy: A strong regulatory environment is needed for green SMEs seeking funding. Investors and SMEs face uncertainty due to inconsistent or ambiguous legal frameworks surrounding sustainability standards, carbon pricing, and environmental reporting obligations. Poor incentives and weak enforcement mechanisms further dampen the business environment, making it more challenging to implement climate laws. Hence, governments have a crucial role because they can affect the regulatory environment with climate-specific laws and enforcement that could remove obstacles for investors and improve the business environment for green SMEs to thrive. 

Governments, financial institutions, trade associations, and civil society organizations must work together to address these issues. It is essential to raise awareness of green financing choices through focused education and capacity-building programs to provide SMEs with the information and resources they need to get financing. Building standardized impact assessment procedures, promoting best practices in sustainable finance, and improving transparency can all help mitigate perceived risks and increase investor and financial institution confidence.

Opportunities for Green SMEs Financing

Research shows that the global green technology and sustainability market is forecasted to grow between 2022 and 2030.  

• Now is a good time to invest in Green SMEs: One of the most noteworthy new developments is the growing emphasis on impact investing for green SMEs. Investors are actively looking for ways to direct their investments into businesses that have a demonstrable positive social and environmental impact in addition to a financial return. This pattern indicates a move toward more comprehensive investment strategies that place sustainability and profitability side by side. As a result, green SMEs will have more chances to receive funding from investors who share their climate goals.

• In a 2023 survey by the OECD Platform on Financing SMEs for Sustainability, public and private financial institutions (FIs) stated that they are increasingly integrating climate considerations in their operations, including developing institutional objectives and plans and assessing some or all financing/investment opportunities. Innovative financing approaches, customized products, and capacity-building initiatives can result from cooperative efforts among development finance institutions, banks, and green small and medium-sized enterprises. Financial institutions can provide access to investor networks, risk management experience, and economic solutions tailored to the particular requirements of green businesses. These collaborations promote knowledge sharing and ecosystem growth within the green finance space in addition to improving financial accessibility.

• Government programs are essential for encouraging green entrepreneurship and making it easier for green SMEs to obtain finance. Numerous governments are putting into place financial, incentive, and policy initiatives that are expressly meant to support sustainable corporate practices. These programs support investment in green technologies, renewable energy, eco-friendly activities, and circular economy projects through grants, subsidies, tax breaks, and regulatory frameworks. Green SMEs can get additional funding and build connections with larger national sustainability objectives by utilizing these government initiatives.

Impact of Financing Africa’s Green SMEs

SMEs, on aggregate, account for about 40% of the business sector’s greenhouse gas (GHG) emissions. Supporting green SMEs and SMEs engaging in green operations has a direct positive impact on the environment. These businesses can employ environmentally friendly practices, technologies, and procedures that minimize waste production, cut resource consumption, and lower carbon emissions. Green Small and Medium enterprises (SMEs) are vital in reducing environmental degradation and addressing climate change using sustainable supply chain management practices, efficient resource utilization strategies, and renewable energy sources.

Sustainable financing enables green SMEs to become agents of positive change by striking a balance between social welfare, environmental stewardship, and economic growth. Green financing offers various social and ecological advantages that support inclusive growth because they create jobs and are advocates in their communities, raising awareness for climate action.  By interacting with their community suppliers and stakeholders, these businesses can build awareness for green initiatives like minimizing plastic use or managing water usage. Green small enterprises can also positively impact poverty reduction, social inclusion, and the standard of living in their areas by prioritizing fair labor practices, community engagement, and social responsibility.

Recommendations

To improve the chances of green SMEs accessing finance, it will take a collaborative effort between Development Finance Institutions (DFIs), developed countries (i.e., G8), African governments, Accelerators, and financial institutions. Recommendations to increase sustainable financing for African green SMEs include: 

• Increase climate finance for Africa. 

• Develop targeted funds for Climate-Smart SMEs.
  
• Create an enabling environment for green SMEs through targeted incentives, subsidies, and regulatory frameworks that encourage sustainable practices and investments. This entails creating green finance institutions, providing tax breaks, and expediting the approval procedures for eco-friendly initiatives.

• Create funds for Climate-Smart SMEs that will break down the barriers to accessing finance. 

• Partner with accelerators to create skills development programs to build the capacity of entrepreneurs and founders in the green space. 

Conclusion 

“Green transition requires financing for sustainable investment,” Linus Mofor, Senior Environmental Expert from the Economic Commissions of Africa. SMEs are responsible for more than 80% of the continent’s employment and contribute about 50% of GDP. These businesses have a major role in helping Africa transition to climate-friendly actions and net zero transmissions, but financing is an obstacle. Most entrepreneurs and SMEs reference access to finance as a significant obstacle to their green and net-zero transition. Supporting green and other SMEs engaging in actions to meet climate objectives is critical for these businesses’ growth and impact. 

SMEs are critical to economic growth and climate adaptation in Africa. Financial institutions, investors, and governments can accelerate the development of green SMEs and enhance their impact on the environment and communities by offering targeted financing tools, providing technical know-how, establishing supportive policy frameworks, and encouraging collaborations.

Written by:

Staff Writer

It’s March, and that means it’s Women’s History Month! It is a time to celebrate the incredible achievements of women throughout history and the ongoing fight for equality. This month, we’re turning the spotlight on women entrepreneurs. 

The entrepreneurship landscape is experiencing a remarkable shift, fueled by women entrepreneurs’ increasing presence and undeniable impact. No longer simply a niche segment, women are now leading the charge in diverse industries, driving innovation, and shaping the future of the global economy. According to the 2024 Wells Fargo Impact of Women-Owned Business Report, women entrepreneurs are on the rise: with 39.1% of all businesses now women-owned – that’s over 14 million – they’re not only creating jobs for 12.2 million people but also contributing a massive $2.7 trillion to the economy.

Through powerhouses like Ventureneer, CoreWoman, and WIPP (Women Impacting Public Policy), we’ve witnessed explosive support for women-owned businesses enabling their growth. Between 2019 and 2023, the number of these businesses soared to nearly double the rate of men-owned businesses, with the growth rate accelerating to a staggering 4.5 times in the last year. 

However, despite the remarkable progress, the journey for women entrepreneurs has its challenges. Unlike their male counterparts, women often face obstacles that hinder their ability to reach their full potential. These challenges range from systemic barriers, such as limited access to funding and support networks, to societal factors, like ingrained gender stereotypes and expectations.

According to UNWOMEN, Securing adequate investment remains a significant hurdle, with women needing help to access loans compared to men. Furthermore, societal norms that prioritize domestic responsibilities for women can create an additional layer of complexity, making it difficult for them to achieve a healthy work-life balance while pursuing their entrepreneurial aspirations.

This article examines women entrepreneurs’ distinct challenges and opportunities, offering a roadmap for their continued success. By showcasing practical solutions, this article aims to ignite a collaborative dialogue and empower all stakeholders to contribute to a future where women entrepreneurs can flourish and unlock their full potential, shaping a brighter and more inclusive economic landscape for all.

Understanding Women’s Entrepreneurship Needs and Challenges

The world of entrepreneurship is witnessing a remarkable rise in women leading and shaping businesses across various industries. This surge highlights their vital role in driving economic growth and development. Yet, despite their growing impact, a gender gap in business ownership persists.

Women entrepreneurs face distinct challenges compared to their male counterparts.

Financial Obstacles: Securing adequate funding remains a significant hurdle. Women-owned businesses need help accessing loans, venture capital, and angel investments, which hinders their ability to scale and achieve their full potential. Women entrepreneurs receive a disproportionately small share of VC funding: 2.3% for all-female founding teams and 10.4 % for mixed-gender founding teams.

Balancing Home & Business: Societal expectations often place the burden of domestic responsibilities primarily on women, creating a challenge when juggling personal and professional commitments. Finding support structures and managing these complex demands can be an ongoing struggle.

Need for Mentors: The need for more established female business leaders and mentors can limit access to invaluable guidance and inspiration. This lack of role models can hinder aspiring women entrepreneurs’ confidence and aspirations. Established female business leaders can help guide other entrepreneurs through the entrepreneurial landscape by spending time with them. 

Confidence and Network Hurdles: Societal biases and stereotypes regarding women in leadership positions can create additional difficulty. These implicit or explicit prejudices can deter women from building strong professional networks, which is crucial for business success.

Understanding these unique needs and challenges women entrepreneurs face is essential for fostering a more inclusive and equitable business environment. Addressing these specific barriers paves the way for tailored support systems and empowers women to achieve their full potential, shaping a brighter future for the global economy.

Strategies for Fueling Women Entrepreneurs’ Growth

Empowering women entrepreneurs goes beyond acknowledging their growing presence in the business landscape; it’s about unlocking their full potential and fueling sustainable growth. While they face unique challenges, numerous strategies exist to bridge the gap and propel them towards success. This section explores various solutions that can empower women entrepreneurs to thrive.

1. Financial Support: Building a Strong Foundation

Connect women-owned businesses with funding opportunities. Additionally, creating women-focused funds is a great way to increase financial support for women entrepreneurs. Government and financial institutions funding women-owned companies should also provide financial literacy training for these businesses, enabling them to manage their business finances better. 

Furthermore, entrepreneurs need strong financial skills for their businesses to be financially sustainable. Empowering women entrepreneurs through financial literacy training programs can improve their financial management skills, making them proper stewards of their business’s finances.

Financial literacy training programs on budgeting, bookkeeping, and cash flow management can allow women entrepreneurs to make informed financial decisions, including knowing the right loans or equity funding to apply for. Additionally, financial literacy programs can assist female-led businesses in developing a well-defined business plan, which can increase their competitiveness and strengthen their financial assistance applications. 

2. Networking and Mentorship: Building Bridges and Sharing Knowledge

Strong professional networks and access to mentors are invaluable assets for any entrepreneur. Connect female entrepreneurs with mentors and industry leaders, male or female. Men are allies in the fight for gender equality, and they are able to also mentor women entrepreneurs. 

Facilitate connections between women entrepreneurs and experienced mentors. These mentors, often successful women entrepreneurs themselves, provide invaluable guidance, share their expertise, and offer encouragement, fostering a sense of community and support.

Organize workshops and events specifically designed for women entrepreneurs. These events provide opportunities for networking, sharing experiences, and building valuable connections with other women in business. Also, harnessing the power of communities by encouraging women entrepreneurs to leverage the power of networking platforms and communities specifically designed to connect and support female business owners. These spaces will allow them to connect to a broader group of people, expanding their network horizons. 

3. Business Development and Skill-Building: Sharpening Tools for Success

Beyond financial resources and connections, successful entrepreneurs require a strong foundation in business development and essential skills. Training is the key to skills development.  

Develop targeted training programs that recognize the challenges that female-led businesses face and provide lessons that address the specific challenges. Programs should cover relevant topics on marketing and sales strategies, effective use of digital marketing and technology, leadership, and management skills. Mindset training has also been shown to prove beneficial for women entrepreneurs.

A personal initiative training by the World Bank found ‘business performance improvements for both male and female enterprises, and interestingly, the main effect of the training on women seemed to be an increase in women’s personal initiative.’ The report also found that training programs that set out to shift mindsets had a positive impact on female entrepreneurs. Personal initiative and mindset training programs can also deal with imposter syndrome and help improve women entrepreneurs’ confidence in their abilities. 

Skills development programs should emphasize the importance of constant learning and provide access to resources and workshops beyond their core programs. For developing countries, these programs should be accessible online or offline. Continuous learning programs will allow women entrepreneurs to stay up-to-date with industry trends, acquire new skills, and adapt to the ever-evolving business landscape.

4. Policy Advocacy: Advocating for a Level-Playing Field

It is essential to recognize systemic change’s importance, so advocating for a business-enabling environment is vital for fueling women entrepreneurs’ growth. In doing so, we recommend stakeholders to: 

Collaborate with policymakers: Collaborate with policymakers and advocacy groups to conduct research and advocate for policies that create a more level playing field for women in business. These policies could address issues like access to funding, gender bias in loan approval processes, and childcare support options.

Promote research and awareness: Contribute to research efforts highlighting the challenges women entrepreneurs face and their positive impact on the economy. Research can show where and how policymakers can make changes by bringing awareness and encouraging policymakers to implement the right policies.

Conclusion

This article has explored women entrepreneurs’ growing presence, their significant impact on the global economy, their particular obstacles, and strategies to mitigate them. Financial support through tailored funding initiatives, skills development programs, access to networks and mentors, and policy advocacy to improve the business environment are strategies that can fuel women entrepreneurs’ growth.

By implementing these strategies, business support organizations, chambers of commerce, development organizations, and foundations can equip women entrepreneurs with the tools, resources, and support they need to overcome challenges, build successful businesses, and contribute significantly to sustainable economic growth. 

 Concerted efforts are imperative to reduce or remove the obstacles women-led businesses face. Unique challenges, including access to funding, balancing work and family life, and navigating societal biases, affect these women’s businesses’ survival and growth. KilSah Consulting has been a dedicated supporter of women entrepreneurs and Micro, Small, and Medium Enterprises (MSMEs) for eight years, promoting and advocating for an enabling environment where women’s businesses can thrive. 

Female-led businesses possess immense potential for driving sustainable and inclusive economic growth. They are a valuable investment that provides a high return for current and future generations.

Written by:

Staff Writer

This year’s International Women’s Day theme is ‘Invest in Women: Accelerate Progress’. To ‘Accelerate Progress’ and increase financing for women entrepreneurs, stakeholders must tackle those roadblocks that can seem trivial but are not. When investors and financial institutions invest in women-owned businesses, they can accelerate gender equality. A global credit gap for women-owned businesses is estimated at $15 trillion. Women entrepreneurs face systemic barriers that their male counterparts don’t face. In many countries, there are legal barriers to women’s entrepreneurship, including legal barriers that forbid women from signing contracts and opening bank accounts, cultural and social biases, and limited time and skill. 

Gender equality is a necessary foundation for a prosperous and sustainable world, but the world is not on track to achieving gender equality by 2030. Increasing women entrepreneurs’ access to funding by addressing some of the obstacles that prevent them from accessing needed financing can help promote gender equality in the area of female-led businesses.  

The lack of funding is a common constraint provided when speaking to women-owned businesses about their growth Still, when you ask them about current financing available and why they’re not applying for funding programs or contacting banks to apply for loans, the common answers are – not aware, don’t think they’d get approved, don’t know the right people, or burdensome application processes that require a lot of time. So, even though funding programs are out there, these limiting factors still affect women applying for and getting funding.

Addressing roadblocks that prevent women entrepreneurs from accessing available finance is even more critical now than ever, not only for current women entrepreneurs but for the ones to come. One study notes that more women are planning or starting businesses.

So, what are the subtle obstacles that inhibit female-led businesses from accessing funds to grow their businesses? 

Not aware of funding programs 

Anne K. is a young female entrepreneur living in Kampala, Uganda, who dreams of starting a hair care line of shampoo and conditioner. She currently collects used plastic bottles and sells them to an organization. She needs funding to start her business on a small scale, but she’s unaware of what is available, or if there’s something available for someone like her. she’s also unbanked. For now, her dream of starting a business remains just a dream.

Someone might say, well, it is the responsibility of women entrepreneurs to become aware of programs available to them. But it is important to understand that women also manage their homes; sometimes, there is only a little time to do everything. Women perform more unpaid care and domestic work, which constrains their time. Research by CARE International revealed that expectations about women being the primary caregivers are as strong as ever.

When a woman takes care of the home and runs a business, the home front can tip the scale in its favor, stealing her attention from the company. There’s not much time to spend searching for available funding options. As the World Economic Forum suggests, women need solutions to meet them where they are by creating women-centered designs that solve real problems.  

Additionally, the World Bank notes that women in developing countries are excluded from formal banking due to needing more official forms of identification, mobile device access, and informal and formal norms and structures that limit their financial capability and capacity.

Not included in networks

Omotayo A., a female agrireneur in Lagos, Nigeria, learned about a financing program for female-led businesses. She participated in the training associated with the program but needed to qualify for the funding. She stated that another entrepreneur in the same program who knew someone within the organization was able to get approved for the funds, unlike her, who did not know anyone. Omotayo started working on getting the connection to the network needed to access the funds required to scale her agribusiness. She was unable to obtain the funding. 

The saying ‘it is not what you know, but WHO you know’ plays a role in women-owned businesses accessing the funds they need. Besides not being aware of the funding programs, not knowing the ‘right people’ can also inhibit access to funding. The lack of access to networks affects women entrepreneurs and is increasingly being recognized as an essential way to empower women entrepreneurs and address inequalities. 

Access to networks can lead to collaborations and valuable partnerships that can help women entrepreneurs connect with the right people in the right industry and learn about the programs available to them.

Not big enough to invest in

Patricia W., an interior designer, runs her home-based business in Atlanta, GA. She works alone and has found it challenging to access loans through her bank to help her grow her business. Her credit and asset requirement has limited the amount of loan she can receive. The bank representative has advised that her business is small. 

According to Global Entrepreneurship Monitor, women are more likely than men to start a business with zero employees. The report notes that women are “very less likely” to begin a company with more than 20 employees and are more inclined to start a business with zero to 19 employees. In India, another study by Bain & Co showed that women-owned businesses are majorly managed by sole entrepreneurs.

Additionally, 30% of women worldwide are self-employed in the informal sector. The World Bank notes that 63% of women-owned businesses in Africa tend to be home-based and small-scale entrepreneurship. In the United Kingdom, a venture-forward study found women are running almost 40% of microbusinesses, an increase from 32% the year before.

A business’s size directly influences its available finance options. The access that larger companies have to finance is different from smaller firms. Research notes that women are more likely than men to be solopreneurs and run smaller businesses, which can affect their ability to access funding. Large businesses have more access to traditional bank loans than smaller firms because of their size and other reasons like assets, more extended history, and a more established reputation.

Conclusion

Accelerating gender equality by increasing women entrepreneurs’ access to funding is critical to reducing poverty and fostering economic growth. According to the World Economic Forum, prioritizing women’s financial needs could help add $10 trillion to the world economy by 2030. There is a financial incentive to address and remove roadblocks for women to access funds and grow their enterprises. To help close the funding gap, stakeholders must become aware of the subtle obstacles that inhibit available financing from reaching women entrepreneurs.

By tackling these obstacles, more women will become aware of financing options available, be accepted into networks that give them access, and be comfortable with the size of their businesses while being bold and confident to approach investors or financial institutions. 

There is more to financing women than just access to funds. Investors, financial institutions, mentors, and stakeholders must meet women where they are. Women-led businesses are asking for a chance. At Kilsah Consulting, for example, the annual grant funds mostly women-owned micro businesses. The application process for these grants takes into account women entrepreneurs’ limited time. Collateral and application forms are structured to remove unnecessary questions. This was to ensure a less burdensome application requirement and process for women, which increased the number of women applicants. 

When women are supported and empowered to overcome these subtle obstacles, they can build and grow their enterprises, create jobs, and reduce poverty. Take a real chance on female-led businesses. Maybe she’s too small, maybe she is not part of a particular network or circle, and she doesn’t come recommended by someone. Let’s rally behind women entrepreneurs and accelerate progress.   

Count her IN – in your network, investment decisions, and design processes when creating awareness for financing programs. Investing in women pays.

About the Author:

Elfreda K. Sheriff is the Managing Director of KilSah Consulting, a development firm that provides research, policy advisory, training, and mentoring services for Micro, Small, and Medium-sized Enterprises. She promotes women’s empowerment through entrepreneurship.

Collective impact, a paradigm shift in the development landscape, recognizes that tackling the intricate challenges of our world requires more than top-down pronouncements and one-size-fits-all solutions. It thrives on the diverse contributions of various stakeholders – government agencies, NGOs, corporations, and, yes, even the seemingly insignificant yet potent force of small businesses.

But why focus on small businesses? For too long, traditional development approaches have treated them as passive beneficiaries, overlooking their immense potential as agents of change. These unsung heroes, constituting a staggering 90% of all businesses globally (World Bank), are the lifeblood of local economies, employing over 50% of the global workforce (International Labour Organization) and contributing up to 40% of GDP in many developing countries (World Bank). Their agility, adaptability, and deep understanding of local contexts make them uniquely positioned to address their communities’ specific needs and aspirations.

Yet, their path is often riddled with hurdles. Lack of access to resources, limited marketing reach, and inadequate training stifle their growth and prevent them from fully contributing to the global sustainability agenda. This is where KilSah steps in, armed with a vision as inspiring as it is practical: to empower small businesses to survive and thrive as key drivers of positive change.

KilSah’s mission is not merely to empower small businesses with resources or advocate for solutions. It is about building partnerships, igniting collaboration, and creating an ecosystem where knowledge, expertise, and opportunities flow freely. We believe that by providing the skills, opportunities, and resources small businesses need to operate at their best, we can unlock their inherent potential to contribute to the Sustainable Development Goals (SDGs) and create a more equitable, sustainable future for all.

Imagine a network of interconnected small businesses empowered by KilSah’s support. Picture communities thriving under the economic impetus generated by these empowered businesses, creating jobs and promoting social inclusion. Envision a future where education and healthcare, once distant dreams, are brought within reach thanks to the innovative solutions fostered by this vibrant ecosystem.

There is a transformative power of collective impact, and KilSah stands as its champion, hand-in-hand with the small businesses and entrepreneurs who hold the seeds of change within their grasp. As we embark on this journey together, remember that significant developments sometimes bloom from the smallest beginnings, nourished by the collective spirit of innovation and collaboration. The seeds of change are sown, and it is time to watch them grow, blossom, and transform the world, one small business at a time.

The Untapped Potential of Small Businesses:

While the imposing silhouettes of multinational businesses often dominate the global development landscape, it is time to turn our attention to the rich soil directly beneath our feet. Small businesses are an extensive network of hardworking and dedicated men and women within communities worldwide. These entrepreneurial-spirited people, frequently disregarded, undervalued, and full of potential, are the key to opening the door to a sustainable future.

Small businesses are more than just corner shops and mom-and-pop cafes; they are a global phenomenon, employing roughly half of the global workforce and contributing significantly to local economies. According to the OECD, in emerging markets, Micro, Small, and Medium-sized Enterprises (MSMEs) generate seven out of every ten new jobs. This diversity is their strength, encompassing everything from innovative tech startups to traditional handicraft workshops, each with unique skills, ideas, and contributions to their communities.

But their impact continues beyond economic numbers. Small businesses are deeply embedded in the social fabric, serving as incubators for social change and active participants in pursuing the Sustainable Development Goals (SDGs). In the rural farmlands of Kenya, small cooperatives are fostering sustainable agricultural practices, reducing their carbon footprint and ensuring food security for their communities. In the bustling streets of Delhi, social enterprises are providing affordable healthcare solutions, bridging the gap between traditional medicine and modern treatments. Across the globe, young entrepreneurs are harnessing renewable energy technologies, not just powering their businesses but lighting up entire villages and driving the transition to a cleaner future.

The beauty of small businesses lies in their agility and local know-how. They can tailor solutions to specific contexts, overcoming one-size-fits-all approaches and catalyzing systemic change. Picture a thriving network of solar microgrids spearheaded by local energy entrepreneurs, providing clean energy access, generating jobs, and fostering skill development within their communities. This “multiplier effect” sees the success of small businesses ripple outwards, empowering local stakeholders, strengthening local economies, and paving the way for broader sustainable development.

Challenges Faced by Small Businesses:

However, despite their immense potential, the path for small businesses is not without thorns. Access to finance remains a major hurdle, with limited understanding of their needs and stringent lending requirements often leaving them in the financial shadows. According to the World Bank, 56% of SMEs worldwide report limitations in access to finance. Technical knowledge and expertise – from sustainable farming practices to digital marketing – can be scarce, hindering their ability to innovate and compete effectively. One-third of small businesses struggle with digital adoption and lack basic digital skills. (Microsoft) Moreover, navigating complex market networks and building strong partnerships can be daunting for these resource-constrained enterprises.

Yet, these challenges are manageable. By nurturing an ecosystem of support, we can unleash the transformative power of small businesses. Collaborative partnerships between governments, development institutions, large corporations, and other organizations can provide vital financial resources, training programs, and market access opportunities. Fostering knowledge-sharing platforms and peer-to-peer networks can equip small businesses with the skills and expertise they need to thrive. Recognizing and promoting their innovations empowers them and sends a powerful message – that sustainable solutions can blossom even in the smallest corners of the world.

It is necessary to embrace the mosaic and move away from the monolithic to bring about a change in our growth paradigm. With their diverse stories and boundless potential, small businesses are not just beneficiaries of change; they are agents of it. By nurturing their seeds of innovation, providing the necessary support, and acknowledging their critical role in pursuing the SDGs, we can weave a tapestry of sustainable progress stitched together by the tireless threads of small businesses worldwide.

KilSah’s Collaborative Model:

Empowering small businesses is a collaborative act. Recognizing the power of collective impact, KilSah’s unique model thrives on collaboration, forging strategic partnerships that nurture and amplify the potential of these local changemakers. At the heart of its approach lie three key pillars:

1. Advisory Expertise: KilSah is a trusted advisor, providing small businesses with tailored guidance from financial management and marketing strategies to sustainable business practices and navigating regulatory hurdles. Through workshops, mentoring programs, and one-on-one consultations, its team of experts demystifies complex challenges and equips entrepreneurs with the tools to navigate the business landscape confidently.

2. Research & Advocacy: KilSah understands that change starts from the top. By working closely with governments, development agencies, and industry stakeholders, we conduct robust research to inform policy decisions that foster an enabling environment for small businesses. Through advocacy campaigns and collaborative workshops, we push for reforms that simplify regulations, increase access to finance, and create a level playing field for entrepreneurs to thrive.

3. Business Support Services: Beyond theoretical knowledge, KilSah bridges the gap with practical support. Recognizing the unique needs of each sector and region, it connects businesses with essential resources like funding, technology, and market networks. This includes facilitating partnerships with financial institutions to unlock access to loans and grants, equipping businesses with digital tools to enhance their online presence and connecting them with potential customers and investors.

Success Stories and Impact:

These pillars come alive in powerful partnerships that spark tangible results. Take the success story of KilSah Consulting’s collaboration with MSME Africa. Their joint venture, the Small Business Annual Grant 2023, attracted a staggering 400 applications, showcasing the vast potential waiting to be tapped. Through a rigorous selection process, 50 finalists received intensive virtual training, honing their business plans and pitches before a distinguished panel. Ultimately, three inspiring companies – Baams Creatives, Phena Coconuts, and Durojay Production Ltd. – emerged victorious, receiving cash prizes to fuel their ambitious dreams. This initiative stands as a testament to the transformative power of collaborative action, empowering not just the winners but a whole ecosystem of aspiring entrepreneurs.

KilSah has also supported over 4,000 MSMEs and entrepreneurs, equipping them with essential business skills for growth. This training and mentoring has improved business management skills, increased income, and enhanced family care for the beneficiary. Additionally, KilSah’s services have contributed to creating 240 jobs by fostering the formalization and growth of enterprises. Recognizing the financial constraints faced by MSMEs, particularly women-owned businesses, KilSah addresses this by awarding grants—36 in total. These grants offer opportunities for small businesses to access funds for equipment and resources, facilitating the scaling of their enterprises.

Scaling Our Model:

For development organizations or foundations seeking to maximize their impact, partnering with KilSah offers a strategic advantage. KilSah acts as a bridge, harnessing its deep understanding of local contexts and extensive network of small businesses to amplify initiatives. By channelling resources and expertise through KilSah’s collaborative model, development partners can reach farther, deeper, and faster, ensuring their efforts resonate with local communities’ specific needs and aspirations.

KilSah doesn’t simply envision success; it meticulously plans for it. The organization is actively scaling its model, recognizing the need to reach beyond its immediate impact. Through strategic partnerships with regional and local organizations and knowledge-sharing initiatives, KilSah is creating a replicable blueprint for supporting small businesses. This approach empowers local partners to adapt the model to their unique contexts, ensuring long-term sustainability and amplifying its reach across diverse communities.

As KilSah’s collaborative model takes root, the development landscape of small businesses and entrepreneurs shifts. Small businesses, once overlooked, are now seen as vital partners in a flourishing grassroots ecosystem. Fueled by expert guidance, practical support, and a network of collaborative champions, these engines of change are poised to drive sustainable progress, one empowering partnership at a time. The seeds of change, sown by KilSah’s model, are taking root and blossoming, promising a future where small businesses and development organizations forge a united front, paving the way for a brighter, more equitable future and a supportive ecosystem for all.

Join the Movement: Unleashing the Power of Collective Impact with KilSah

The seeds of change have been sown through KilSah’s collaborative model. But for this transformation to truly blossom, a collective effort is needed. With their vast resources and global reach, development organizations and non-profit foundations have the unique opportunity to join forces with KilSah and propel these small businesses and entrepreneurs toward a sustainable future.

Stepping into this partnership doesn’t require grand gestures. It starts with a shift in perspective, recognizing the immense potential inherent within local communities and the vital role small businesses play in driving systemic change. By embracing KilSah’s collaborative model, development organizations can leverage their expertise and resources to empower these grassroots changemakers, ensuring their initiatives resonate with local communities’ specific needs and aspirations.

The path to partnership is simple. It begins with genuine engagement: listening to the needs and aspirations of small businesses, understanding their challenges, and tailoring support accordingly. Open communication channels are crucial, fostering trust and building a foundation for a thriving collaboration.

Next comes identifying areas of synergy. Does your organization focus on environmental sustainability? Partner with small businesses developing innovative renewable energy solutions or organic farming practices. Are you passionate about promoting gender equality? Empower women-led enterprises through targeted training programs or market access initiatives. The possibilities are limitless, waiting to be unlocked through intentional engagement and creative collaboration.

Remember, successful partnerships are not one-directional. In the era of local-led development, KilSah is firmly established in the small business community in Nigeria, Liberia, and Ghana and continues to expand her reach to other parts of Africa, including Uganda, Kenya, & Ethiopia. Development organizations can learn from the agility and local knowledge that KilSah has, allowing them to refine their strategies and reach communities they might have previously overlooked. This two-way exchange of knowledge and expertise leads to deeper understanding, more significant impact, and a more robust sustainable development ecosystem.

Building a collective future demands the commitment of all stakeholders. Governments can create an enabling environment through supportive policies and regulations. Investors can provide crucial financial backing to fuel promising small business ventures. Consumers can make conscious choices, opting for products and services supporting small enterprises. Every action, however small, contributes to the tapestry of change being woven around the world in elevating small businesses. 

As we stand at the threshold of a transformed future, let us remember the immense power of collective impact. When development organizations join hands with small businesses fueled by KilSah’s collaborative model, we unleash a force capable of reshaping our world. Visualize communities thriving on locally-driven solutions powered by the ingenuity and resilience of empowered small businesses. Imagine a future where social, economic, and environmental progress blossoms from the very heart of grassroots innovation.

This is not a distant or impossible dream but a tangible possibility within our reach. By embracing collaboration, nurturing partnerships, and investing in the potential of small businesses, we can collectively write a new narrative for sustainable development – one where the seeds of change, sown today, bloom into a brighter future for generations to come.

Written by:

Staff writer

The final round of the pitch contest to determine the winner of this year’s Small Business Annual Grant was held on Thursday, December 14, 2023, at the ICAN-BOI Hub, Yaba, Lagos.  

The program, an initiative of KilSah Consulting in partnership with MSME Africa, lasted over one month. It recorded over 400 applications, and 50 individuals participated in a virtual boot camp before ten finalists were selected to pitch for the grand prizes. 

A 3-man jury panel comprising of Mr Paul Adeyinka of Adeyinka Vine Ltd., Mr Paul Omugbe, the National President of the Association of Project Managers in Nigeria, and Ms Angela O. Elefor judged the presentations made by the ten (10) contestants.

The contestants were evaluated based on their Product, People, Potential and Predictability.

After keen consideration, the judges selected three winners out of the ten finalists:

1st place (1 million naira) – Comfort Badmos of Baams Creatives

2nd place (700,000 naira)- Victoria Adeyeye of Phena Coconuts

3rd place (500,000 naira)- Durojaiye Olusegun of Durojay Production Ltd.

The guest speaker at the event, Usman Imanah of Friska Food, encouraged the business owners to focus on capacity building and development as potent tools for entrepreneurial excellence. He shared his personal experiences and gave tailored advice to the contestants to help them maintain a competitive advantage in the business landscape.

The organizers congratulated all participants for their commitment to making a difference and assured them of continuous support in the future.

The highly anticipated Annual Small Business Grant program, an initiative of Kilsah Consulting in partnership with MSME Africa, has successfully completed its initial application phase and is now moving forward with 50 selected businesses to the boot camp stage.

The grant program, launched on November 9, attracted a remarkable number of applications, showcasing the vibrant entrepreneurial spirit within Nigeria’s small business community. Receiving over 500 applications from various industries, including agriculture, education, health, beauty and lifestyle, creative, manufacturing and retail, and the service sector.

After a rigorous review process, the Grant Committee carefully selected 50 candidates who demonstrated exceptional business potential and a strong need for financial support to scale their operations.
“We were blown by the number and calibre of applications we received,” said a member of the Grant Committee. “It’s evident that Nigeria is brimming with innovative and determined entrepreneurs who are driving economic growth in the country.”

The selected business owners will now embark on a virtual boot camp designed to provide them with comprehensive training and mentorship. This intensive program will equip them with the necessary skills and insights to refine their business models, enhance their marketing strategies, and strengthen their financial management practices.
“The boot camp is an integral part of the grant program,” said another member. “We believe that providing these aspiring entrepreneurs with the right tools and guidance will significantly increase their chances of success.”

Following the boot camp, 10 outstanding businesses will be invited to the final pitching and award ceremony, where they will present their business plans to a panel of distinguished judges. The top 3 businesses will share a total prize pool of ₦2.2 million, providing them with the financial support to propel their ventures to new heights.
“We are committed to fostering a supportive ecosystem for small businesses in Nigeria,” said the representative of MSME Africa. “Through this grant program, we aim to identify and empower promising entrepreneurs who will contribute to the nation’s economic prosperity”, added the KilSah Consulting representative.

The Small Business Annual Grant program is a testament to the unwavering commitment of Kilsah Consulting and MSME Africa to nurturing and empowering Nigeria’s entrepreneurial landscape. By providing financial assistance, training, and mentorship, the program paves the way for a brighter future for the country’s small businesses.

There are many reasons for this gender gap in entrepreneurship. Women often face discrimination in accessing finance, and lack of training, and mentorship opportunities. They are also limited by cultural norms discouraging women from taking risks or starting their businesses.

However, there is growing recognition that investing in women’s businesses is a win-win for the economy and society. Women-owned businesses are likely to create jobs, pay taxes, and reinvest in their communities. They are also more likely to be sustainable and profitable. Investing in women-owned businesses can generate higher returns for society because women invest more of their income in their families. There are economic and social benefits to supporting women entrepreneurs, including helping to meet Sustainable Development Goals (SDGs) 5 & 8, Gender Equality, and Economic Growth, respectively. 

This blog post will explore seven ways to invest in women-owned businesses.

1. Provide Access to Finance and Credit

Women face a $1.7 trillion financing gap. A critical area of any business is access to finance and credit; for women business owners, this access is frequently constrained. Women entrepreneurs receive less funding and investment compared to their male counterparts. Financial institutions and investors can highly influence the leveling of the playing field between female and male-owned businesses in terms of accessing financing needed to grow. It is important for venture capitalists and lending institutions to develop gender-specific financial products and services by offering alternative solutions like cash flow financing or removing some collateral requirements. 

The gender prejudices that have long prevented women from obtaining necessary financial resources should be aggressively addressed by organizations as they actively endeavor to provide equitable lending opportunities. Targeted financial assistance to women-owned enterprises can foster innovation and spur economic expansion. Institutions can empower women’s enterprises to scale by providing access to finance, lending, and funding.

2. Provide Training and Mentorship Programs

The foundations of entrepreneurship must include mentoring and education. Like their male counterparts, female entrepreneurs can gain much from training and mentorship programs designed specifically for them. Training and mentorship programs can boost female entrepreneurs’ confidence and business management capabilities. Training programs should get funding from governmental bodies, businesses, and nonprofit groups to assist women in acquiring the information and abilities required to excel in the business. Strong training and mentorship programs would enable women-owned businesses to manage entrepreneurship challenges successfully. 

KilSah Consulting offers specific training and mentorship programs targeting women-owned businesses, which address obstacles they face and how they can overcome them and build thriving companies. 

3. Reform the Legal and Regulatory Landscape

Legal and regulatory obstacles frequently facing female business owners make it difficult to launch and expand their enterprises. According to the World Bank, over 90% of economies worldwide possess legal structures that discriminate against women. These structures include laws that limit women’s ability to establish, manage, and grow a business. 

Governments and civil service organizations play a big part in removing these obstacles. Reforms to eliminate discriminatory laws and put laws that favor gender equality in business are crucial. To improve the regulatory landscape, local, national, and regional governments should provide more accessible and equitable processes for women entrepreneurs that limit gender bias.

Women’s World Banking (WWB) is a global non-profit organization that provides financial services and training to women entrepreneurs in developing countries. WWB’s legal and policy work focuses on advocating for reforms that make it easier for women to access finance and providing technical assistance to governments and businesses to implement these reforms in the business environment. 

Regionally, 83% of economies in sub-Saharan Africa, 72% of economies in East Asia and the Pacific, and 65% of economies in Latin America and the Caribbean do not protect women from gender-based discrimination in access to credit. Implementing women-friendly laws can remove the structural barriers that have kept women-owned businesses back.

4. Promote Positive Role Models

Women are underrepresented in leadership positions. According to Women CEOs, 8.8% of Fortune 500 CEOs are women; although an increase, there’s much work to be done to get parity. For aspiring and current women entrepreneurs, role models are essential. Role models can inspire future generations and show them that being a successful entrepreneur is possible. Women who run their businesses need to see other women who have overcome obstacles and succeeded in their fields. 

To inspire and motivate the upcoming generation of female leaders and entrepreneurs, highlighting the stories of successful women entrepreneurs in the media, academic programs, and business events is pivotal. These entrepreneurs serve as role models for women, proving that gender is not a barrier to entrepreneurship success and encouraging them to set lofty goals and make wise business decisions.

5. Invite them to Supportive Networks and Communities

Entrepreneurship can be a difficult and sometimes lonely journey, but supportive networks and communities can make it better. Supportive women’s groups and networks can help strengthen women-owned businesses by giving them a group of other women to talk to and access opportunities. These support networks, which provide guidance, resources, and moral support to female entrepreneurs, are beneficial. Female entrepreneurs can even start a small group of other business owners or join networks sponsored by governments or regional bodies, commercial enterprises, and nonprofit organizations. Supportive networks enable women to successfully traverse the entrepreneurial landscape by developing a sense of community and giving access to valuable tools.

A great women’s network group is Ellevate Network. They provide women with access to mentors, training, and networking opportunities. Another excellent support network group is Women Who Startups. They provide women with access to resources, events, and support that help them grow their businesses. Strong networks like these provide valuable support and resources, open doors to new opportunities, and can drive female entrepreneurial success.

6. Buy from Women-Owned Businesses

Nothing beats buying from women-owned businesses. Purchasing from women entrepreneurs is one of the surest and obvious ways to support them. In addition to buying from them, write positive reviews and recommend their businesses to your family and friends. 

This straightforward but powerful action can promote the expansion of women-owned businesses, inspire more women to launch their businesses and advance the nation’s economy.

7. Speak Up Against Gender Discrimination

In many regions of the world, gender discrimination is still a significant problem. One in three female entrepreneurs still face gender bias. It could take up to 132 years to bridge the gender gap. Women face assumptions and stereotypes that can affect their access to finance.

Research has shown that female entrepreneurs face a higher level of bias compared to their male counterparts, especially in male-dominated industries. For the most part, it costs nothing to speak up against gender biases that are affecting women entrepreneurs, especially if you are in a position of authority. It is everyone’s responsibility as informed and accountable citizens to speak out against gender bias whenever we see or hear it. Everyone can help create a fairer environment for female entrepreneurs by standing up against prejudice so that women-owned businesses are valued for their skills and innovative ideas rather than their gender.

Conclusion

Supporting women-owned enterprises benefits society’s advancement both economically and socially. According to Boston Consulting Group, the world economy would grow up to $5 trillion if women and men participated equally as entrepreneurs. Women-led businesses have repeatedly demonstrated that they can create jobs, pay back loans, pay taxes, and reinvest in their local communities. Additionally, they have a higher chance of long-term sustainability and profitability.

We must all work together to remove the obstacles that women entrepreneurs confront if we are to realize their potential fully. Equal access to financial resources, specialized training and mentorship programs, the revision of discriminatory laws and regulations, the promotion of positive role models, and the development of caring networks and communities are all part of this.

People can also make a difference by promoting women-owned businesses, giving their time and talents, and speaking out against gender inequality. The list here is not exhaustive, and other ways exist to support women entrepreneurs. You can do your part by adding to this list and coming up with your way to support women-owned businesses. Any support counts towards creating a level playing field for women-owned businesses.

By following these actions, we can unleash the unrealized potential of female entrepreneurs and promote social and economic progress for all.  It’s time to acknowledge and appreciate the essential contributions made by women in business and open the door to a future that is both inclusive and lucrative, as women-owned businesses positively impact the local economy and can create jobs.

Written By: Staff Writer

The Role of Job Creation in Poverty Alleviation

At the heart of poverty alleviation lies the fundamental need to provide individuals with opportunities to improve their economic circumstances. Job creation serves as a direct route to fulfilling this need. When people secure employment, they gain a steady source of income that enables them to access necessities, invest in education, and improve their living conditions. However, mere employment isn’t enough; the concept of a “living wage” plays a pivotal role. A living wage ensures that individuals earn enough to not only meet their basic needs but also participate in their communities’ economic and social life.

Numerous studies have highlighted the positive correlation between job creation and poverty reduction. . For instance, research conducted by the International Labour Organization (ILO) found that countries with higher employment levels tend to have lower poverty rates. In nations where job opportunities are abundant and accessible, individuals are better equipped to break free from the cycle of poverty that often spans generations.

Types of Job Creation Initiatives

The responsibility for job creation is shared by various stakeholders, each playing a crucial role in shaping economic landscapes. 

Government initiatives 

Governments implement policies and programs aimed at stimulating job growth. These initiatives can encompass investments in infrastructure, education, and healthcare, all of which contribute to creating a conducive environment for businesses to flourish. Additionally, governments can provide incentives to attract both local and foreign investments, leading to increased economic activity and job opportunities.

Private sector initiatives

Private sector entities also play a significant role in job creation. Businesses, ranging from small enterprises to multinational corporations, generate employment. Companies create new positions and contribute to the labor market’s growth by expanding their operations. Moreover, socially responsible businesses take this further by integrating poverty alleviation into their core strategies. This approach benefits the individuals they employ and generates a positive ripple effect throughout society.

NGO initiatives 

In recent years, social enterprises and nonprofits have gained prominence as drivers of sustainable job creation. These organizations operate with a dual mission: to achieve financial sustainability while addressing social challenges. Creating job opportunities within marginalized communities empowers individuals who might otherwise be excluded from the formal job market. This approach not only combats poverty but also fosters a sense of urgency and belonging among those it serves.

Challenges and Barriers

While the potential for job creation to alleviate poverty is undeniable, various challenges and barriers can impede progress. Structural obstacles within economies can perpetuate income inequality and hinder the creation of decent jobs. Issues such as inadequate infrastructure, inefficient regulatory frameworks, and corruption can deter investments and limit employment opportunities.

Another critical challenge is the skills gap. As industries evolve rapidly, the demand for specific skill sets shifts accordingly. Many job seekers lack the skills required for the available positions, resulting in unemployment or underemployment. Addressing this challenge necessitates a holistic approach that combines education and vocational training to equip individuals with relevant and adaptable skills.

The informal sector is another facet of the job market that challenges poverty alleviation efforts. Informal employment lacks the stability, benefits, and legal protections associated with formal work, leaving individuals vulnerable to exploitation and limited upward mobility. Moreover, marginalized populations, including women, youth, and individuals with disabilities, often face additional barriers to decent job opportunities.

Social Impact of Job Creation

Beyond the economic benefits, job creation holds profound social implications that extend far beyond financial gains. One of the most notable impacts is improving individuals’ overall quality of life. Employment provides a source of income and fosters a sense of purpose, dignity, and self-worth. When individuals are gainfully employed, they can participate actively in society, engage in meaningful activities, and contribute positively to their families and communities.

Furthermore, job creation has a ripple effect on community development. As people earn income, they spend it on goods and services, stimulating local economies. The economic activity that results from spending, in turn, helps businesses grow as they provide more goods and services to the public, leading to further job creation. A thriving job market can transform the fortunes of entire neighborhoods, as increased economic activity leads to improved infrastructure, better access to education and healthcare, and an enhanced quality of life for residents.

Addressing income inequality is another aspect of social impact tied to job creation. By providing equitable access to job opportunities, societies can reduce the stark income disparities that often fuel social unrest and hinder cohesive development. Employment acts as a leveller, enabling people from diverse backgrounds to share in the benefits of economic growth and participate in shaping their collective future.

Case Studies

The real-world impact of job creation initiatives can be witnessed through various inspiring case studies. 

The Grameen Bank

One example is the Grameen Bank in Bangladesh, founded by Nobel laureate Muhammad Yunus. The bank pioneered microfinance, providing small loans to impoverished individuals, many of them women. This infusion of capital allowed recipients to start micro-businesses, creating a sustainable income source that lifted them out of poverty. The success of the Grameen Bank’s approach has been replicated globally, demonstrating how even modest financial support can lead to transformative change.

EPWP

In South Africa, the Expanded Public Works Programme (EPWP) stands as a testament to government-led job creation efforts. The program provides temporary employment opportunities in sectors such as infrastructure development, environmental conservation, and social services. By offering short-term jobs to unemployed individuals, the EPWP not only addresses immediate financial needs but also equips participants with valuable skills that enhance their employability in the long term.

The Jua Kali sector

In Kenya, the informal sector, commonly called the “Jua Kali” sector, has significantly impacted job creation and poverty reduction. The Jua Kali sector consists of small-scale businesses that operate in manufacturing, construction, and artisanal trades. These businesses have become a crucial source of employment for a substantial portion of the population, particularly those with limited formal education or skills training. The sector’s resilience and adaptability have contributed to the livelihoods of countless individuals and families.

Partnership is key

The journey toward effective job creation and poverty alleviation requires collaboration on multiple fronts. Governments, private sector entities, and civil society organizations must unite their efforts to achieve meaningful results. When these stakeholders work in concert, they can pool resources, share expertise, and create holistic solutions that address the multifaceted nature of the challenge.

An excellent example of such collaboration is the “African Agriculture Alliance”. It has demonstrated the power of collaboration in addressing food security and poverty reduction. This alliance brings together government agencies, agricultural corporations, and local farmers’ cooperatives to transform the agricultural landscape. Governments contribute by providing infrastructure support, access to land, and policy frameworks that promote sustainable farming practices. Agricultural companies bring investment, technology, and market linkages to ensure efficient production and distribution. Local farmers’ cooperatives share traditional knowledge and community insights that enhance the effectiveness of modern agricultural methods. 

Through this collective effort, the alliance has increased food production and improved rural communities’ livelihoods. By fostering partnerships among diverse stakeholders, the African Agriculture Alliance showcases how combining resources and expertise can lead to comprehensive solutions for pressing challenges like job creation and poverty alleviation.

Future Direction

As we navigate an ever-evolving global landscape, the nature of work is transforming. Emerging technologies, automation, and changing consumer behaviors are reshaping industries and redefining the skills required for success. In this context, the concept of job creation must evolve as well. 

Also, green jobs are gaining prominence as the world grapples with environmental challenges. These jobs encompass sectors such as renewable energy, sustainable agriculture, and environmental conservation. Investing in green jobs not only addresses ecological concerns but also generates employment opportunities that align with the needs of the future.

According to Forbes, As of 2023, 12.7% of full-time employees work from home. The rise of remote work and the digital economy presents new avenues for job creation. Digital skills are essential for future jobs, especially for women. The World Bank notes that “women without basic digital skills will face continued barriers to accessing jobs and developing financial independence.” In addition, online platforms and freelance opportunities offer individuals the flexibility to participate in the labor market, regardless of their geographical location. Embracing technology-driven job creation can bridge gaps in employment and enable economic inclusion for a diverse workforce.

Conclusion

In conclusion, the relationship between job creation and poverty alleviation is profound and multifaceted. By providing individuals with gainful employment and equipping them with the skills needed to succeed, societies can break the chains of poverty and foster positive social impact. The concerted efforts of governments, businesses, and civil society are crucial in realizing this vision of a more equitable and prosperous world.

As we progress, let us champion initiatives prioritizing economic growth and social well-being through decent job creation. By doing so, we can create a future where job creation is not merely a means to an end but a powerful catalyst to alleviate poverty, uplift individuals, transform communities, and pave the way for a brighter and more inclusive tomorrow.

Written by:

Staff Writer

The Sustainable Development Goals (SDGs), adopted by the United Nations (UN) as a call to action, aim to improve the quality of human life and the planet. The goals are expected to be achieved by the year 2030. Even as progress has been made, multiple crises, including the COVID-19 pandemic and Russia’s war in Ukraine, have affected the advancement of the goals. For example, high living costs have tipped millions of people into poverty, as reflected in the latest Human Development Index. While governments and other development stakeholders play an essential role in achieving the SDGs, the goals are for all to work towards, and with adequate support, small businesses can play a vital role in achieving global goals. 

Micro, Small & Medium-sized Enterprises (MSMEs) comprise a huge percentage of businesses. According to the International Finance Cooperation (IFC), “MSMEs account for up to 90% of all businesses in African markets and, as such, remain one of the main sources of employment.” Additionally, MSMEs contribute to Africa’s GDP, and they can play a vital role in advancing the SDGs through their operations if they are supported with access to finance, managerial skills training, an enabling business environment, and access to the market to increase their competitiveness.

The SDGs’ five critical areas of importance are people, planet, prosperity, peace, and partnership. MSMEs cut across multiple sectors, including agriculture, creativity, technology, health, and education, and as a result, can contribute to the five critical areas of the SDGs. MSMEs also cut across vulnerable groups, including women and youths. 

Small businesses can contribute immensely to all the goals, but this article will focus on SDGs 1, 5, 8, and 13 – No Poverty, Gender Equality, Decent Jobs, and Climate Action. Intentionally empowering small enterprises to be competitive can propel them to become great enablers of global goals. 

SDG 1- No Poverty

Goal 1 calls for an end to poverty in all its manifestations. It also aims to ensure social protection for the poor and vulnerable, increase access to essential services and support people harmed by climate-related extreme events and other economic, social, and environmental shocks and disasters.

Poverty in Africa is at an all-time high, exacerbated by the COVID-19 pandemic and Russia’s invasion of Ukraine. Before 2020, African countries were growing, but the pandemic reversed decades of hard-won macroeconomic and socioeconomic gains. In addition, “Russia’s war in Ukraine has disrupted Africa’s promising recovery from the COVID-19 pandemic by raising food and fuel prices, disrupting trade of goods and services, tightening the fiscal space, and reducing the flow of development finance in the continent” said United Nations Assistant Secretary-General Ahunna Eziakonwa.

Microbusinesses, usually operated by a single person, are key players in developing countries, providing jobs for millions. Their contribution to poverty reduction has been substantial, and they are a major point of entry into the labor market for many African youths. Nigeria alone records around 38.4 million registered micro-enterprises, with a large percentage operating in the informal economy. Microbusiness owners use their earnings to care for their families financially.

However, operating in the informal sector limits their growth because they need access to formal sources of financing, which is difficult to access in the informal sector. Formalizing micro businesses could help them survive and grow, increasing their influence in ending poverty.

Small businesses are part of the community, and when they grow, the community benefits. With adequate resources, micro and small business owners can contribute to ending poverty by operating successful businesses, which will allow them to create jobs, send their children to school, and improve their families’ conditions. Their success could have a ripple effect in their communities.  

Poverty, a multifaceted problem, will require more than one solution to end. Since MSMEs are job creators, supporting them is a great tool for promoting economic growth and lifting people out of poverty.

SDG 5- Gender Equality

Goal 5 aims to achieve gender equality and empower all women and girls. MSMEs play critical roles in closing the gender gap and ensuring women’s full and effective participation in the economy and society. In addition, female entrepreneurs make up the majority of business owners in Africa. According to the Global Entrepreneurship Monitor Women’s Report, the female entrepreneurship rate in sub-Saharan Africa is 25.9% of the female adult population, meaning that one in four women starts or manages a business.

For most of these women entrepreneurs, the obstacles preventing their growth are overwhelming. Female businesses face social bias, lack of access to finance, and technical assistance barriers that inhibit their success. The World Bank notes that while male and female entrepreneurs face constraints such as lack of capital, social bias constraints specifically impact women-owned enterprises. Due to this and other constraints like lack of collateral, female-owned enterprises post monthly profits that are, on average, 38% lower than those of male-owned enterprises. 

Investing in WSMEs (Women-owned Small & Medium-sized Enterprises) pays. When women entrepreneurs are supported, they use funds to invest in their families. Research shows that women typically reinvest up to 90% of their income in their family and community’s education, health, and nutrition – compared to up to 40% for men. Additionally, African women take care of their immediate families and extended families, including parents, younger siblings, nieces and nephews, etc. This additional responsibility means investing in women’s enterprises can significantly impact communities. A successful woman-owned enterprise can have a far-reaching impact on herself and those around her. Investing in women’s businesses is investing in the community. 

Governments and investors can facilitate the economic empowerment of female enterprises by providing access to finance schemes, training, and other business support services. Women entrepreneurs can start or grow businesses and achieve financial independence if they receive the necessary resources to empower themselves and their enterprises. 

By investing in women-owned businesses, investors and stakeholders enable women entrepreneurs to experience growth similar to what their male counterparts experience, promoting gender equality in business. 

SDG 8- Decent Work and Economic Growth

Goal 8 promotes sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. MSMEs are a significant source of employment and income generation in Africa, and MSMEs help reduce poverty levels through job creation and economic growth. Small businesses are key job creation and entrepreneurship drivers for women, youth, and groups in vulnerable situations.

Most small businesses in Africa are micro, and most operate in the informal sector, where they need access to formal financing opportunities to scale and grow their enterprises. Small businesses contribute to their nations’ GDP, and competitive MSMEs can contribute to economic growth by paying taxes and creating jobs.

Target 8.3 of the goals aim to promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity, and innovation and encourage the formalization and growth of micro, small, and medium-sized enterprises, including through access to financial services. 

Africa has the youngest population in the world with a pressing job need. 70% of sub-Saharan Africa is under the age of 30, and the continent needs at least 15 million new jobs every year for its young people. By promoting entrepreneurship and creating decent work opportunities, MSMEs can advance global goal 8 through job creation. 

MSMEs are the backbone of Africa’s economy, and their impact can be increased if they are provided with the proper support. With increased functionality, MSMEs can contribute immensely to economic growth and development. 

SDG 13 – Climate Action

Goal 13 aims to curb the effects of climate change by pushing for urgent action to protect the planet. Climate change is real. The global temperature has risen, and the impact of climate change affects millions of people, sinking them into poverty and hunger, denying them access to essential services such as health and education, expanding inequalities, stifling economic growth, and even causing conflict. Climate change is increasing the frequency and intensity of extreme weather events such as droughts and floods. Climate change can destabilize local markets, exacerbate food insecurity, limit economic expansion, and intensify hazards for investors in the agricultural sector. 

MSMEs can build community resilience to climate change by developing climate-resilient goods and services, upgrading their current products, and directly engaging with community members to construct adaptive practices. MSMEs’ participation in the circular economy can help reduce plastic use which is harmful to the environment. 

In addition, MSMEs can take climate action by committing to reduce, reuse, and recycle while updating their operational processes to include more eco-friendly methods. Informed small businesses can also switch to solar panels instead of generators that emit harmful toxins into the atmosphere increasing carbon footprints. Small businesses can also analyze their supply chain links to ensure their suppliers are also working to reduce carbon emissions. 

To advance SDG 13, MSMEs in Africa can foster the development of renewable energy solutions, promote eco-friendly systems, and minimize waste generation. They can also promote awareness of climate change and advocate for policies that support sustainable practices. Additionally, by adopting eco-friendly actions and sustainable and competitive business practices, MSMEs can take climate actions to help the world fight climate change. When it comes to taking action, every little drop helps, and as a group of small businesses, their impact can contribute to the changes required to protect the planet.

Conclusion

Micro, Small, and Medium-sized Enterprises are the backbone of economies worldwide. They create employment, enhance communities, and they can play a crucial role in achieving the SDGs. Not only are MSMEs part of the community, but they operate in the community and have a stake in the SDGs. Advancing global goals is beneficial for small businesses and for the planet. For example, incorporating relevant climate-change actions into their daily business processes can also be profitable for small businesses. 

MSMEs need support to increase their competitiveness if they are to contribute to the goals. An enabling business environment, access to finance, business skills, access to the market, and mentoring are some areas where governments and stakeholders can support small enterprises. With adequate support for growth and development, African MSMEs can thrive and advance global goals. 

The 2030 Agenda for Sustainable Development provides a global blueprint for dignity, peace, and prosperity for people and the planet, now and in the future. Through the collective efforts of the millions of small businesses in Africa, MSMEs can contribute towards the shared goals and create a brighter, more prosperous future for all people, ending poverty, promoting gender equality, providing decent jobs, and fighting climate change.

About Author:

Elfreda K. Sheriff is the Managing Director of KilSah Consulting, a Business Support Organization that provides research, policy advisory, training, and mentoring services to empower small businesses and women and youth entrepreneurs.

Africa’s informal economy presents a huge opportunity for the continent to create decent jobs. The informal sector, which accounts for approximately 55% of the region’s gross domestic product (GDP) and up to 83% of employment, is significant for alleviating poverty and promoting economic development. The role of the informal sector is expected to continue in the foreseeable future in light of Africa’s growing population, up to 224 million by 2030. The sector has seventy-four percent of women’s employment, and informal work is standard among most youth on the continent. Transforming this sector using digital tools is vital for Africa’s economic growth.

Digital technology can transform the informal economy by improving the type of job opportunities in the sector, particularly in the areas of digital entrepreneurship, digital marketing, e-commerce, and other technology services. A World Bank report, Digital Africa: Technological Transformation for Jobs, points to evidence that shows that internet availability has a positive impact on creating jobs and reducing poverty in Africa. Access to e-commerce and online information via digital tools is necessary for workers in the informal economy to succeed.  

While the usage of technology in Africa has been increasing over recent years as technological strategies are now being implemented in various industries, the digital divide continues to grow in Africa. Only 2% of micro-sized firms owned by young women and 8% of micro-firms owned by young men use a computer. The World Bank notes that “sub-Saharan Africa, of all the regions in the world, displays the largest gap between the availability of digital infrastructure and people’s actual usage.” Governments must create an enabling digital environment to allow the informal sector to incorporate technology into their daily lives. 

Digital transformation can improve financial inclusion in the informal sector by offering access to mobile banking and payment solutions, enabling informal businesses to conduct financial transactions more efficiently and access formal financing. Fifty-seven percent of Africans do not have a bank account. Mobile banking and payment solutions provide easy ways to carry out financial transactions online. Digital payments enable cost savings that can benefit micro and small businesses and allow them to access finance through traditional banking methods. 

For Micro, Small, and Medium-sized Enterprises (MSMEs) operating in the informal economy, digital technology can give them access to relevant information which can help them make more informed decisions and improve their business operations. Digital transformation can also provide the informal business sector access to new markets and customers beyond their borders through e-commerce platforms, social media, and digital marketplaces. The informal sector’s participation in the digital economy will be a vital factor for them to reap the benefits of the African Continental Free Trade Agreement (AfCFTA).

Several factors are limiting digital transformation in the informal economy. Some of these factors include:  

High cost – 40% of Africans fall below the global extreme poverty line, and the cost of basic phones and mobile data plans are often out of their reach. In addition, the cost of necessary technological resources, such as computers, and smartphones, affect technology usage. This high cost limits people in the informal economy’s ability to adopt new technology. For informal businesses, even if technological resources are available, the cost of maintenance can be a significant challenge for many. Micro and Small businesses do not have the financial resources to invest in technology, so they end up sticking to manual processes instead of incorporating technology into their operations. 

Insufficient digital infrastructure – In many parts of Africa, there is little or no technological infrastructure to increase the use of digital products. Electricity and data centers to support storing data and hosting websites are vital to the digital economy and increasing the use of digital products in the informal economy. Africa lags behind the rest of the world in terms of fiber network and broadband connectivity, spectrum, and data center processing capabilities. In addition, fewer than one-third of Africans have access to broadband connectivity with a poor internet penetration rate which affects technology adoption.

Lack of digital skills – Africa faces a huge digital skills gap. The International Telecommunication Union (ITU) data suggests that only 2% of Kenyans are using the Internet to find and apply for jobs, against a global average of 17%. In Sudan and Zimbabwe, the data also suggests only 4% of adults are able to copy and paste files. Low education and digital skills are associated with lower technology adoption. Statistics show that ninety percent of children in Africa leave school without learning any basic digital skills. Without the requisite skills, it is difficult for the informal sector to use digital tools. 

While the factors above slow digital adoption in the informal sector, there are things governments and stakeholders can do that could accelerate digital usage.

Areas of opportunities to increase digital usage include the following:

1. Public-Private Partnerships (PPPs)

 Public-private partnerships (PPPs) can be a vital building block for the successful digital transformation of the informal economy. Governments should partner with banks, fintech, education, telecommunication, market associations, and other companies in the private sector to develop personalized digital solutions designed for the informal sector with the sector’s limitations in mind. Furthermore, the private sector can digitally transform government services to enable easy use for the informal sector. For example, government and telecommunications companies can ensure that data is affordable. At the same time, regulators can take steps to allow banks to accept e-signatures, and the education sector can include a technology curriculum in all schools. PPPs can bring the needed knowledge to deliver on digital goals. 

Additionally, African governments need to intensify the efforts channeled toward policy development. Governments should implement policies and regulations that support technology usage in the informal sector. This includes reducing barriers to entry for private companies entering the technology market, developing an enabling legal environment, implementing cybersecurity laws, creating sound digital policies, and focusing on holistic investment in the ICT (Information and Communication Technologies) sector.

2. Provide digital skills training and support

Training for those in the informal economy will help them learn digital skills ranging from the use of mobile phones, the internet, and social media to more advanced skills which will help improve usage rate. Governments should provide training and support through the use of hubs, primary schools, government agencies, and other skills support providers. 

A study by the International Finance Corporation (IFC) shows that some 230 million jobs in Africa will require some level of digital skills by 2030. For the informal sector to take advantage of these jobs, a concerted effort must be made to develop and support digital skills.

3. Incentivize digital usage

Governments can incentivize those in the informal sector to adopt and use technology. First, the government and other companies in the private sector should slowly transition to online services. Creating easy-to-use applications can incentivize more people in the informal economy to use digital tools. Another incentive is a faster response time for those who apply for government benefits online. 

In addition, another incentive is for government offices to have mini-centers within their ministries to assist those applying for services physically learn how to apply online. An incentive can also include a telephone hotline for regular assistance. Lastly, providing a discount on the payment of services if an application is processed online can push the informal sector to increase its usage of digital services.

Conclusion

Nearly eight out of ten employed persons in sub-Saharan Africa were in vulnerable forms of employment in the informal sector. Technology is essential to transform the African informal economy and promote decent jobs. With the aid and usage of technological innovations and resources, Micro, Small, and Medium-sized enterprises (MSMEs) can also carry out business activities more competitively. Micro-firms are a large part of the informal economy, and digital transformation can increase their chances of business success by giving them better access to finance, greater access to markets, and improved productivity. 

Certain factors are limiting the adoption of technology in the informal economy. These limiting factors include high cost, limited digital infrastructure, and lack of digital skills. The public and private sectors can work together to promote the usage of digital tools by investing in digital infrastructure, providing incentives, and digital skills training. Additionally, personalized digital solutions and a supportive regulatory and legal environment would encourage digital adoption by the informal sector. Increasing the adoption of digital technologies could drive employment growth for the women and youth that operate in the informal economy.