The latest Intergovernmental Panel on Climate Change (IPCC) global synthesis report has sounded a sobering alarm. The stakes could not be higher, and time is running out. UN Secretary-General Guterres has urged us to embrace an “everything, everywhere, all at once” approach to confront this challenge head on. The enormity of the task is daunting, but we are not without hope.
Groundbreaking and recently released research by the Aspen Network of Development Entrepreneurs (ANDE) undertaken with support from the IKEA Foundation can help illuminate a path forward, one that allows leaders to act with the urgency and purpose that this crisis demands. By seizing the business opportunities unveiled by this research, we can take some of the necessary steps to reduce greenhouse gas emissions and ensure we leave behind a habitable planet for future generations. The time to act is now.
The private sector will play a critical role in mitigating and/or adapting to climate change. Green enterprises can reduce not only negative environmental and health impacts through their products and services but also create sustainable employment and livelihood opportunities, particularly for marginalized groups, women, and youth. Although large companies in the private sector have a significant role in mitigating their emissions profiles, it is equally important to examine their value chains. Small and medium-sized businesses employ approximately 80 million employees (40% of workers) in India and constitute 98% of businesses in Kenya. The International Labour Organization (ILO) estimates that India has the potential to create over 50 million jobs by 2070 on its path toward net zero, and the Kenyan government is committed to creating 1.3 million new jobs annually. Particularly, growth-oriented entrepreneurship can bring new ideas into practice, introduce technical innovations, and create demand for new environmentally friendly goods and services.
Small and medium-sized businesses (SMEs) or small and growing businesses (SGBs)—those that need capital and support to thrive and are the ones that create the most jobs and societal benefit—are the primary components of these value chains. They are a critical yet underutilized focus area of support for innovative solutions to address growing climate-related challenges.
Small and growing businesses form the backbone of all economies. According to the UN, India has the second largest number in the world after China. In Kenya, SBGs constitute 90% of all businesses. They continue to be the most significant workforce employer in most countries. By greening their operations, these small and growing businesses can contribute significantly to emissions reductions and national climate adaptation goals if they are supported effectively.
At first glance, and just by watching their size, the economies of both India, with a 2022 GDP of US $3.2 trillion, and Kenya at $264 billion, could not be more different. However, ANDE’s research showed that India and the smaller East African nation shared more similarities than differences in their small business sectors. ANDE’s research shows that if those countries could guide their small business sectors toward the green economy, they would awaken a giant and largely untapped economic potential totaling over US $120 billion for Kenya and up to US $3.46 trillion for India between now and 2030.
ANDE‘s research in those countries has also shed light on sectors with maximum growth potential urgently needing more tangible stakeholder support. For example, waste management and the circular economy present one of Kenya and India’s most significant market opportunities. Yet, more funding, policy and technical support is needed to help ventures in this sector scale. Moreover, efforts to reduce informality and improve pathways for small businesses to partner with government-run systems need to follow suit to unlock the sector’s full potential. Investors and entrepreneurs often overlook water management as they perceive it as a public sector domain. However, this research reveals that ventures do operate in business segments like water treatment and usage monitoring, and require more support from the ecosystem across the board.
While some key differences exist between Indian and Kenyan green ecosystems, the support that both require pressingly is financial investment. About seventy and ninety percent of support organizations in India and Kenya reported that access to finance and growth capital is the most significant challenge entrepreneurs in the ecosystem still face. Intermediaries in both countries focus primarily on supporting early-stage ventures. However, there needs to be more investment or grant support to ideation and initial launch stages.
As we confront the challenge of climate change, we must adopt a comprehensive approach that considers every facet of the issue. We cannot afford to address this crisis piecemeal. Instead, we must take a holistic view encompassing local and global perspectives. ANDE’s research in India and Kenya has revealed a plethora of opportunities for small businesses to dive into the green economy, which can serve as a driving force for economic growth in those countries. The onus is on us to learn from it, seize these opportunities, and take action on a massive scale, everywhere and all at once. We must not let this moment pass us by. It is time for us to step up and embrace our responsibility to drive sustainable development for ourselves and future generations. ◊
To learn more, access the full research reports on ANDE’s website:
https://andeglobal.org/publication/green-entrepreneurship-in-kenya
https://andeglobal.org/publication/green-entrepreneurship-in-india