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.
