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How SMEs can deliver, hasten sustainability economic growth goals
Small and Medium-sized Enterprises (SMEs) have over the years been considered to be the backbone of Kenya's socioeconomic development. FILE PHOTO | SHUTTERSTOCK
Small and Medium-sized Enterprises (SMEs) have over the years been considered to be the backbone of Kenya's socio-economic development — accounting for most of the new jobs.
A recent National Economic Survey report by the Central Bank of Kenya indicates that SMEs constitute 98 percent of all businesses in Kenya and create 30 percent of jobs annually.
This has consequently cemented the importance of SMEs to our economy; and within it, sustainable growth.
With the mounting awareness of environmental, social and governance responsibilities, businesses across all sectors and industries are incorporating sustainable business practices as part of their business strategies.
Although previously considered an abstract concept, the sustainability agenda will not slow down, particularly in reference to small businesses, which are gradually gaining importance among multiple stakeholders. This includes investors.
However, despite providing a huge share of regional employment, SMEs still face major challenges with regards to working conditions, productivity, and informality even as they bid to remain competitive.
Most of them are mainly limited by financial and temporal constraints, as well as a lack of sustainability know-how.
These challenges notwithstanding, the tide is changing, which further calls for SMEs to embrace sustainability as an opportunity to promote their businesses and not as a burden.
Businesses that are driven by sustainability are likely to attract the rapidly growing consumer groups willing to pay more for products and services that act responsibly.
SMEs are crucial to the future of work, not just for employment creation and economic growth, but also for purposes of driving innovation and competition.
Governments in Africa should therefore partner with the private sector to promote, educate, and enable SMEs in an already volatile economy.
This can be done by providing SMEs with networking services, access to technology testing and demonstrations, specialized information, partner matchmaking, access to the market, financial services, and educational seminars. By doing so, small businesses will stand a better chance of thriving.
The other approach that governments could use to support the survival of SMEs is through providing training and upskilling business owners and staff on advanced technologies.
Practical examples of technology deployment and the value it creates should be provided. This will enable SMEs to embrace their “technology eco-advantage” by using advanced technologies and embracing ways of working that enable profitable solutions that also have a positive impact on environmental, social, and governance agendas.
A good example is a digital transport platform that could link transporters with customers on an Uber-like model creating value for both the transporter and manufacturer.
Some manufacturers are willing to pay premium rates for eco-friendly or electric vehicles granting carbon credits.
Furthermore, including sustainable business practices in one’s business model has the potential of improving business performance.
SMEs’ ability to meet demands for eco-conscious consumers and products besides generating better returns, can equally make improvements to the public health and environment as well as increase positive brand association — ultimately creating business environments that are future-ready; besides positively impacting the economy at large.
Additionally, SMEs have the power to solve the global climate crisis. The collapse of our supply chain caused by the recent Covid19 pandemic provides the perfect opportunity to reimagine and integrate supply chain strategies with sustainability.
More organizations could work with SMEs to help them realize their emissions output and eliminate the supply chain’s carbon footprint with benchmarking tools and end-to-end practical solutions.
Sustainability is a business approach towards creating long-term value by taking into consideration how an enterprise or organization operates in ecological, social, and economic environments.
Fundamentally, SMEs have a better chance to shape the sustainability agenda. However, we must work together to harness this potential.
