succeed in business because they are focused, determined and driven Research shows that women reinvest a large portion of their income in the development of their communities and tend to build businesses that yield strong returns on investment These are among the many reasons why the NEF is dedicated to growing its funded portfolio of women-owned businesses in pursuit of its mandate of growing black economic participation across South Africa, and contributing towards social transformation and growth.
The NEF Women Empowerment Fund, which celebrates a decade in 2024, can help make your dream become a reality, whether it is for agro-processing, beneficiation, construction, energy, franchising, manufacturing, property, services, tourism, transportation or any other sector of the economy. Over the past 14 years, 40% of approvals have benefited black women entrepreneurs. The NEF invites black women entrepreneurs to apply for funding because to Fund a Woman if to Fund a Nation.
Unlocking sustainable economic opportunities for youth entrepreneurs through innovative finance and technology
IS it possible for South Africa to develop a more inclusive, resilient, and sustainable economy while responding adequately to climate change at the same time? According to the World Bank’s Country Climate and Development Report (CCDR), it certainly is – provided that key policies and investments are made with a view to achieving a just, low-carbon, climate-resilient “triple transition”. Not only would implementing a low-carbon growth trajectory slash greenhouse gas emissions, but investments in new technologies would help resolve the energy crisis, strengthen South Africa’s competitiveness, and cut down on the air, water, and soil pollution that poses such a threat to people, the environment, labour productivity, and food and water security.
A critical accelerator in implementing climate change actions is technology, as developers take climate change into consideration when designing energy-consuming products. Renewable-energy technologies are developing rapidly at all scales. However, net-zero solutions are achievable only through technological innovation. As a result, countries should prioritise technology and place an emphasis on resources for innovation, while fostering enhance public and private research and development partnerships and demonstrating climate technologies.
South Africa has ample resources and capacity in this regard, with researchers of proven excellence and plenty of collaboration among universities, technology developers and multi-lateral agencies, including organisations such as the International Renewable Energy Agency and the International Energy Agency. Finance is a stumbling block, however, with energy and climate research funding on the decline since 2008 as there are a number pressing needs, all competing for state funds. These include lack of access to healthcare, housing, water and other basic services. This means that the funding of solutions to climate and energy challenges has itself become a key site of innovation. The good news is that if funding solutions are found, improved socio-economic conditions across a broad spectrum will inevitably follow.
Forward-thinking corporate backers are already on board with this vision. One example is MTN South Africa. The company has partnered with nature conservation organisation WWF South Africa to launch the PachiPanda Challenge. This dynamic initiative is a clarion call for young innovators to tackle South Africa’s numerous environmental challenges. The ultimate goal is to mobilise young climate
THE GREEN AGENDA TEAM
EDITORIAL DIRECTOR Royston Lamond
entrepreneurs and increase the number of technology solutions in support of South Africa’s Just Transition while unlocking the kind of sustainable economic growth that can mitigate climate change and solve many pressing socioeconomic issues, including the challenge of providing the youth with meaningful employment.
Another corporate with its eye on the ball as far as the Just Transition is concerned would be Old Mutual. Gender equality is one of the official UN Sustainable Development Goals, and the Old Mutual SMEgo project is providing a comprehensive suite of services tailored specifically for women-owned businesses as well as access to critical financial and nonfinancial resources such as market access and networking opportunities. As a result, female entrepreneurs are supported from the inception of their projects through to financial maturity. Old Mutual SMEgo is also helping to create an enabling environment for female youth entrepreneurs to leverage funding from commercial and development banks as well as incubation programs.
An excellent opportunity for youth entrepreneurs to grapple with the realities of the climate tech space is the National Cleaner Production Centre’s (NCPC) 6th biennial Industrial Efficiency Conference, free to attend at the CSIR ICC in Pretoria in September 2024.
This year’s theme is enabling circularity and decarbonisation in industry. Dependence on electricity generated from fossilfuel has made South African industry among the most carbon intense in the world, ranking 13th in global greenhouse-gas emissions. This is bad news for companies that want export commodities like iron and steel, aluminium and cement trade to developed economies that are increasingly penalising carbon intensity. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is a case in point.
The NCPC is a world leader in sustainable, efficient energy use in industry, with its international award-winning Industrial Energy Efficiency Project having assisted some 450 companies to save over 6 500 GWh of energy between 2010 and 2022. This amounts to cost savings of R6.4 billion and the mitigation of 6.5 million tonnes of GHG. Connecting with this network is therefore a must for all sustainability-oriented youth entrepreneurs.
The September issue of Green Agenda invites you to engage with these issues and reach out to relevant players, for a more positive and sustainable future for all.
EDITOR Greg Penfold
NEWS PRODUCTS • HAPPENINGS • EVENTS
African governments looking to COP summit for higher climate financing share
By Duncan Miriri
AFRICAN countries want to use this year’s UN COP meetings to secure a much bigger share of global climate financing, their representatives said at a meeting in Kenya on Thursday, to help deal with the increased threats from climate change.
Republic of Rwanda’s Minister of Environment Jeanne d’Arc Mujawamariya, CEO and Special Representative of the UN Secretary-General (UN SRSG) for Sustainable Energy for All Damilola Ogunbiyi, Danish Minister for Development Cooperation and Global Climate Policy Dan Joergensen and Maldives Minister?of Climate Change, Environment and Energy, Thoriq Ibrahim attend the session of discussion on the Global Cooling Pledge aimed at reducing emissions and exploring sustainable cooling solutions, during the United Nations Climate Change Conference (COP28), in Dubai, UAE, 5 December 2023. Reuters/Thaier Al-Sudani/File Photo
African negotiators have drawn up a list of strategies which will be presented to a pre-COP29, or Conference of the Parties, preparatory meeting of African ministers of environment in Ivory Coast next month.
The 54-nation continent has been attracting more funds for climate mitigation and adaptation projects in recent years, but it still gets less than 1% of the global climate financing on an annual basis, government officials said.
“One percent for Africa in terms of financing is a joke,” Alice Wahome, Kenya’s minister for housing and urban development, said at the meeting.
The 1% is of the global climate financing estimated at just over $100bn, while Africa requires investments of up to $1.3tn, officials said, without providing a time frame for by when the amount is needed.
Limited access to external funding is forcing many governments on the continent to allocate parts of their budgets to climate adaptation measures, said Raila Odinga, a Kenyan politician who is vying to become the head of the African Union Commission at an election set for next year.
Such extra expenditure comes at a time when many African economies are already struggling with debt, said Ali Mohamed, the co-chair of the African group of climate negotiators.
One way of increasing Africa’s share of climate cash is to boost access to existing global funds set up for the purpose, Mohamed said, such as the Green Climate Fund and the Global Adaptation Fund.
Kenya has enacted laws to allow for issuance of sovereign green bonds as a way of increasing its share of climate finance, the country’s Finance Minister John Mbadi said at the meeting.
The East African nation is also in talks with development partners on innovative green financing deals to funnel debt payment savings towards projects, Kenyan officials said, without providing further details. n
Pick n Pay e-waste initiative unlocks job creation for
people with disabilities
THE e-waste recycling partnership between EWaste Africa, the E-Waste Recycling Authority (ERA) and Pick n Pay, has evolved into an employment initiative for people with disabilities.
Newly designed bigger e-waste bins are being rolled out in selected Pick n Pay stores, generating meaningful employment as people with disabilities are being specially trained to repair, refurbish, and recycle this waste.
An enterprise development programme facilitated by National Economic Empowerment for the Disabled (NEED) is among the beneficiaries of this initiative, as Pick n Pay rolls out 210 new e-waste bins nationwide. These bins, capable of holding items ranging from cables and kettles to mobile phones and large appliances like washing machines, represent a significant expansion of Pick n Pay’s original e-waste program, launched over 15 years ago with a focus on light bulbs and batteries.
In partnership with EWaste Africa and the E-Waste Recycling Authority (ERA), Pick n Pay has already installed 33 new e-waste bins in stores nationwide, with plans to add 90 more by the end of the year and complete the rollout by mid-2025.
These bins are expected to collect 1,000 tonnes of e-waste annually - equivalent to the weight of a large cargo ship. EWaste Africa collects and delivers e-waste to legally licensed recycling facilities, where it is depolluted and the resulting clean, processed materials are then repurposed into new products, such as housing blocks. Waste is also sent to ERA-affiliated service providers, where valuable materials are extracted if items cannot be repaired.
Creating meaningful employment
Both ERA and EWaste Africa prioritise manual dismantling to maximise job creation. The pilot project with NEED, ERA’s Enterprise Development Programme, is based at the Cape Town Association for the Physically Disabled in Bridgetown. It demonstrates how the e-waste value chain can unlock job opportunities while reducing harmful waste in landfills. Funded by ERA, the programme is increasingly self-sustainable as repaired items are resold, ensuring zero e-waste delivered here is sent to landfills.
To date, 65 individuals have participated in this initiative which largely empowers people with disabilities by training them to dismantle, repair, and refurbish e-waste.
One NEED participant, Faneezwa Kapa, shared: “I use a wheelchair and was homebound before this programme. I’m now learning many things that I never knew before.”
Another participant, Wayne Jansen, added: “I’m 57 and became disabled due to diabetes. Many companies overlook people like me because of age and disability. Here, we’ve learnt that an appliance that is broken doesn’t necessarily mean that it’s broken; it can be fixed. So what we are learning to do here is to dismantle it and fix it again, and it can give us more years’ shelf life.” n
Govt to launch programme to clean cities across SA
DEPUTY President Paul Mashatile has announced that government will soon initiate a programme to clean cities and recognise those that exceed expectations in making their towns sustainable and safe. The country’s secondin-command said that cleaner cities contribute towards attracting investors.
“In this regard, as leaders in our respective towns, we must launch a competition of the cleanest towns,” he said on Tuesday. Deputy President Mashatile, in his capacity as Leader of Government Business in Parliament, was delivering a keynote address during the first Three-Sphere Planning session of the National Council of Provinces (NCOP) of the seventh Parliament in Cape Town.
He said his Office will collaborate with the Cooperative Governance and Traditional Affairs (CoGTA) Minister and South African Local Government Association (Salga) to form a committee that will conduct an annual assessment of the cleanliness of cities and present awards.
“This campaign has the potential of ensuring that the private sector and communities in partnership with the government ensure that our cities are clean and safe. “Honourable Members, in realising the vision of building a developmental, capable, and ethical State, we will vigorously implement the plan to professionalise the public service, and we will do so by investing in the capacity of the National School of Government.”
Modernising the State
Equally, he said, government must continue to invest in the modernisation of the State and government by introducing innovative solutions across government particularly. “The whole world is going digital in many respects and as South Africa, we must not be left behind.”
Over the last 30 years, government has adopted progressive policies that the seventh administration is going to pay special attention to the speed of execution.
The Deputy President announced plans to strengthen coordination by refocusing the Presidency as the centre of government, bringing together critical government departments such as CoGTA and the National Treasury.
“We intend to align planning and budgeting as part of implementing the District Development Model (DDM) premised on One Plan-One Vision and this we will do to achieve maximum results in building a better life for all.”
The planning session is being held under the theme ‘Establishing an Oversight Agenda for the Seventh Parliament: Defining Key Oversight Priorities for the NCOP in the Seventh Parliament’.
Parliament‘s strategic innovation emphasises joint and integrated planning, encouraging collaborative work in program planning and implementation across government.
The session is aimed at ensuring that the NCOP institutionalises and implements a comprehensive ThreeSphere Planning oversight framework and mechanism, in line with the constitutional mandate of promoting the principles of cooperative governance coordination.
Government believes this will enhance the effective implementation of key transformation priorities, in line with National Development Plan Vision 2030. –SAnews.gov.za n
Empowering Female Youth: Empowering Female Youth:
Entrepreneurship as a Key to Women’s
By Nobesuthu Ndlovu, Director SME, Old Mutual Corporate
AS South Africa commemorates 30 years of National Women’s Day the focus on entrepreneurship for young women aged 18-35 is more crucial than ever. Empowering female youth through entrepreneurial pursuits can significantly reduce unemployment, fostering long-term economic stability in families and communities.
Education is pivotal in this journey. The South African educational landscape has seen notable advancements, with secondary school completion rates rising from 16.8% in 1996 to 37.3% in 2022, and the percentage of diploma and certificate graduates nearly tripling from 1.4% to 3.5% in the same period, according to Stats SA June 2024 Survey. Emphasizing skills development in education can instil essential traits like leadership, decision-making, and financial acumen, foundational to both personal and professional growth in entrepreneurship.
Tapping into high-growth sectors offers viable pathways. Promoting inclusion at the secondary school level and integrating these efforts through Technical and Vocational Education and Training (TVET) Colleges, can create a pipeline of female youth entrepreneurs. These entrepreneurs have the potential to deliver sustainable, innovative, and technical solutions, reducing societal issues and unemployment.
The participation of young women in high-growth sectors such as IT, agriculture, mining, manufacturing, and tourism is vital for economic expansion and diversity. Women’s involvement in these sectors stimulates dynamic growth and positions them as key players in both formal and informal employment creation. This sector participation can harness the innovative approaches necessary to drive industrial diversification and economic progress.
At a governmental level, the newly appointed cabinet’s emphasis on innovative approaches and the reorganization of the Government of National Unity (GNU) presents an opportunity to prioritize female youth entrepreneurship. Although this transitional phase brings complexity and market volatility, it also opens avenues for innovative entrepreneurs to capitalize on publicprivate partnerships (PPPs) and market their services and products effectively.
During Women’s Month, collaborative leadership between government departments and the business sector should spotlight Female Youth Preneurs. This collaboration must aim at equipping young women to access funding and markets within target sectors, thus reinforcing their market readiness. Partnerships that encourage trade and investment while focusing on building female-led businesses are essential.
The United Nations’ Agenda 2063 and Sustainable Development Goals (SDG) data showed that women comprised nearly 40% of total employment in 2023. A legislative environment supportive of Small and Medium Enterprises (SMEs) is crucial. Regulations from the Department of Trade and Industry and Small Business Development can help promote Female Youth Preneurs, enabling sustained participation in both domestic and international markets, including the regional opportunities provided by Africa’s free trade agreement.
Target 8.3 of the SDGs emphasizes promoting policies that support job creation and enterprise growth. Encouraging female youth entrepreneurship aligns with this target, particularly the aspect of informal employment, which is significant for women. Access to business promotion platforms, incubation programs, and skills development is essential to guide young women towards successful entrepreneurship.
Old Mutual SMEgo is playing a pivotal role in this transformative journey by providing a comprehensive suite of services aimed at the holistic growth of women-owned businesses. SMEgo’s offerings are tailored to support female entrepreneurs from inception through maturity, providing critical access to both financial and non-financial resources. These include, market access initiatives, and networking opportunities that foster growth and resilience among female youth entrepreneurs.
Highlighting role models and dispelling myths about entrepreneurship can inspire more young women to consider it a viable career. Financial independence gained through entrepreneurship can have profound societal impacts, such as reducing child marriages and early pregnancies. SDG 5’s focus on achieving gender equality underscores the importance of education, mentorship, and vocational training programs to nurture entrepreneurs with robust business acumen.
Economic growth and development hinge on easy access to funding. Financial constraints are a primary deterrent to the expansion of startups. To address this, female youth entrepreneurs should leverage potential funding from commercial banks, development banks, and big enterprises’ incubation programs. Creating an enabling environment for Female Youth Preneurs can drive economic transformation, and Old Mutual SMEgo is at the forefront as a critical enabler.
Investing in the entrepreneurial efforts of young women promotes broad economic empowerment and fosters resilient, inclusive communities. As we celebrate Women’s Month, it is time to double down on initiatives that support young women in entrepreneurship, thus contributing to a more equitable and prosperous South Africa. Old Mutual SMEgo’s role in facilitating access to fundamental resources ensures these initiatives effectively translate into tangible economic successes. Go to www.smego.co.za. Also available on Android and ios n
By Didi Onwu, Managing Editor at the Anzisha Prize
The essential role of small businesses
in South Africa’s economy
SMALL and Medium-sized Enterprises (SMEs) are the backbone of South Africa’s economy, playing an important role in job creation, economic growth, and innovation. The contribution of SMEs extends far beyond their size, making them indispensable to the nation’s economic health. According to the International Council for Small Business, SMEs constitute nearly 90 percent of all businesses, generate over two-thirds of employment opportunities and are becoming hubs of innovation across the African continent.
SMEs offer significant present value to the South African economy. The Small Business Institute of South Africa reports that 90% of businesses in the country are classified as SMEs, highlighting the sector’s significant role in the economy due to its substantial contribution to the GDP and employment of millions. The institute says that SMEs in South Africa employ between 50% and 60% of the workforce and contribute approximately 34% to the GDP, underscoring their critical function in fostering job creation, innovation, and economic growth.
SMEs serve as catalysts for innovation, introducing new products and services that can disrupt markets and drive economic growth. Their agility and adaptability allow them to respond quickly to changing market conditions, fostering a dynamic and competitive business environment. These enterprises are the driving force behind South Africa’s economic growth. Their ability to create jobs and contribute to poverty reduction is unparalleled.
More importantly, SMEs can be jobs generative on an effective rate, particularly in sectors such as manufacturing, retail, and services. Their growth and expansion often lead to the creation of new employment and economic opportunities, contributing to poverty and inequality reduction, and social upliftment. Furthermore, SMEs serve as incubators for future entrepreneurs, providing valuable experience and skills that can be used to start new businesses. This enterprising spirit fuels economic growth and job creation on a sustainable basis.
Despite their significant contributions, SMEs face numerous challenges, including limited access to finance, a complex regulatory environment, and infrastructure constraints. Addressing these challenges is essential to unlocking the full potential of SMEs and ensuring their continued growth. It is important to support SMEs for the benefit of South Africa’s economic development. The country needs to commit to creating an enabling environment that fosters their growth and provide them with the necessary tools and resources.
However, opportunities also abound. The rise of digital technologies and e-commerce has created new avenues for SMEs to reach broader markets and reduce costs. Government initiatives aimed at supporting SMEs, such as access to funding and training programs, can also play a vital role in fostering their growth and development. There is also an interesting conversation to be had about the growing need to teach entrepreneurship. Young people can be taught entrepreneurship to prepare them for enterprising careers, instead of being job seekers themselves.
They should be encouraged to pursue entrepreneurship in the same way as traditionally inspired careers such as engineering, medicine or accounting. Investing in this population group through entrepreneurship education can set them up for entrepreneurial success which should make a significant contribution to the country’s economy and confronting the plight of unemployment.
There are many examples of notable young people who are doing incredibly well in their enterprising journeys and deserving of support. Twenty-year-old Lebone Applegreen from Alexandra township in Gauteng set up Lumos Coffee Café offer a unique social experience in her neighbourhood. The coffee shop defies the ordinary and brightens up the township. Unlike common businesses such as bars and bottle stores, the establishment offers a cozy place for people to relax and socialise. The menu includes hot and cold drinks, and non-coffee options paired with tasty pastries.
Research shows a clear correlation between youth-led businesses and job creation. This is because when young people are faced with difficult economic conditions, they can produce solutions. Twenty-two-year-old Ntobeko Mafu’s Madame Clucks A Lot was born out of necessity. Madame Clucks A Lot is a sustainable farm specialising in non-GMO broiler chickens and organic crops. The farming enterprise sells between 250 and 600 chickens a month and specialise in the farming and sale of kale, spinach, mustard, cherry tomatoes and other leafy greens. The company has a training and development program that teaches and trains people on sustainable and eco-friendly agricultural practices.
The Anzisha Prize has a keen interest in young entrepreneurs transforming and disrupting industries through green initiatives. Another such example is a farming business founded by 26-year-old Mahlatse Matlakana from Limpopo. Her business, Wozilex is an agribusiness that produces and sells vegetables (e.g. cabbage, peppers, spinach and tomatoes). It has been running since 2017 and supplies large quantities of pre-packaged vegetables to wholesalers. The business currently provides most of their products to South African customers, but exports tomatoes to Mozambique. Currently, Wozilex provides over ten vendors and wholesalers with over 300 units of produce monthly.
It is these feats that prove that investing in the SME sector is, in fact, investing in the future of South Africa. By addressing their challenges and leveraging the opportunities presented by the digital age, we can ensure a more inclusive and prosperous future for all. SMEs are indispensable to the South African economy, providing present value through innovation and supply chain integration, and driving job creation through their growth and development. By addressing the challenges faced by SMEs and using the opportunities presented by the digital age, South Africa can further strengthen the role of these vital economic actors and ensure a more inclusive and prosperous future for all. n
Keabetswe Mabe, MTN, SA
MTN and WWF Launch PachiPanda Challenge to Inspire Youth-Led Environmental Solutions
General Manager
Sustainability and Shared Value
MTN South Africa, in partnership with the WWF South Africa, is calling on young innovators to tackle South Africa’s environmental challenges through the PachiPanda Challenge. This initiative, set to run from 26 August until 21 October 2024, seeks to mobilise and increase the number of climate entrepreneurs and technology solutions to support the country’s ‘Just Transition’ objectives and ambition of unlocking sustainable economic growth.
South Africa faces significant environmental threats due to the impact of climate change, which jeopardises sustainable development and the livelihoods of millions. By engaging the youth, the PachiPanda Challenge aims to find innovative solutions to these pressing issues.
The challenge is open to youth-led SMEs, developers, students, or anyone between the ages of 16 and 35 who has a solution for South Africa’s environmental challenges. Participants will work in teams of up to three members. Shortlisted candidates will participate in a fiveday transformative sprint process, culminating in a pitch session to industry experts. The most innovative teams will advance to represent South Africa on the Africa stage against other sub-Saharan countries.
“MTN fundamentally believes that the challenges posed by climate change can act as a catalyst to unlock green entrepreneurs, green jobs and green industrialisation. We recognise the crucial role South Africa’s youth will play in future environmental stewardship,” says Keabetswe Mabe, General Manager: Sustainability and Shared Value, MTN SA. “Technology is powerful enabler to creating sustainable solutions to today’s environmental challenges.”
A study by Boston Consulting Group estimates that South Africa has the potential to create between 85 000 to 275 000 green jobs in the next five years. “In collaboration with MTN, we aim to amplify the voices of African youth to safeguard the environment for future generations,” says Justin Smith,
Head of Business Development Unit of WWF South Africa. “Promoting renewable energy, climate-resilient agriculture, and community adaptation to environmental changes are core components of this initiative.”
This programme will be executed by the Empire Partner Foundation as the selected implementation partner. The purpose of the Foundation being “to empower the youth in building a better South Africa and African continent through technology” is well aligned to the objectives of the PachiPanda Programme.
Youth entrepreneurship in South Africa remains a concern, with only 6% of the total youth population engaged in entrepreneurial activities. Through initiatives like the PachiPanda Challenge, MTN and WWF aim to boost this figure by providing platforms for young entrepreneurs to thrive.
Mabe explains that MTN and its partners will be ensuring that winning teams receive business incubation support to ensure the sustainability and acceleration of their business concepts. The challenge addresses barriers such as the lack of investable climate initiatives and inadequate access to scalable climate adaptation solutions.
PachiPanda Challenge is not just a competition; it’s a movement. A movement that galvanises participants to think unconventionally, craft solutions that address immediate environmental challenges, and play an active role in ensuring the long-term sustainability of their communities. n
For more details and to embark on the exciting PachiPanda journey, interested participants can visit www.mtn.co.za
Justin Smith, Head of Business Development Unit of WWF South Africa
How Sustainability And Digital Transformation Can Make SMEs More Resilient
By Jennifer L. Schenker
AUROPOL GROUP, a 60-person manufacturer of specialty chemicals for the rubber and plastic industries based in Kolkata, India, has more than doubled its growth in the past three years thanks to a green circular economy strategy, the use of digital platforms, the upskilling of its work force and continuous focus on research and development of green and digital strategies, which ended up reducing waste and energy use and improving efficiency.
The company’s strategy is an example of how going green and digital can help small and medium sized businesses (SMEs) become more resilient.
Pairing digital with sustainability practices can be an effective way for SMEs, which make up the backbone of the global economy, to not only absorb shocks but to thrive, according to new research from the World Economic Forum and the National University of Singapore Business School. That’s important because the report, Future Readiness of SMEs and Mid-Sized Companies: A Year On, indicates that 67% of executives from SMEs say they are struggling to keep their doors from closing.
“We can’t have close to 70% of employment and GDP driven by companies fighting for survival,“ says Olivier Woeffray, the moderator of the event and the Forum’s Practice Lead, Strategic Intelligence. The Forum’s New Champions community gathers “forward looking and purpose-driven mid-sized companies” to demonstrate
what can happen when smaller businesses shift from survival mode to long-term future readiness. “We believe building future readiness should be viewed as a core business fundamental rather than a nice to have,” he says. “Our research explores some of the key opportunity areas for this shift to happen.”
The December report, which was compiled with the aid of expert contributions from UnternehmerTUM, Aston Business School, TBS Education, the Aspen Institute, Asia Global Institute and the International Chamber of Commerce, builds on analysis of over 200 peer-reviewed articles and the quantitative and qualitative surveying of about 800 leaders and executives from SMEs and midsized companies to see how they are faring with the current energy crisis, supply chain disruptions, climate change, and hyperinflation.
Leaders of SMEs mention low margins, the challenge of scaling the business and expanding to new markets, and clients/consumers as main pressure points. They also cite talent acquisition and retention (48%), culture and values (34%), funding and access to capital (24%), as well as nonfavourable business policy environments (22%) as their biggest obstacles.
The report found that executives at SMEs are so busy trying to survive that they tend to overlook or downplay the importance of digital transformation and sustainability.
“Despite the importance of sustainability from the views of different stakeholders like the government, investors, and customers alike, only 7% of the decision makers whom we surveyed mentioned factors related to sustainability as a top priority,” says Rashimah Rajah, co-lead author of the report and a researcher at the National University of Singapore.
The report provides practical recommendations on how companies can embark on their digital transformation and sustainability journey. “We highlight how with the right leadership and talent fit, digital transformation and sustainability can go hand in hand in this twin transformation,” she says.
Achieving Efficiency And Growth
India’s Auropol is an example of how companies can achieve real productivity gains by pairing their digital transformation and sustainability strategies, says Soumyadeb Chowdhury, Associate Professor of Sustainability Management and Digital Analytics, TBS Education and Prasanta Dey, Professor Operations and Supply Chain Management, Aston Business School, contributors to the Forum report. Auropol’s annualized growth rates for financial years 2019-20 was 11.53% and it dipped to 9.20% in 2020-2021 but the growth rate for financial year 2021-2022 is estimated to be 25.82%, he says.
To achieve this growth Auropol adopted a circular economy approach, reusing chemical waste from one production process as input in another production process, requiring less raw materials and reducing waste. It also used effluent treatment plants to remove toxic and non-toxic elements so that water can be reused in production processes and disposed of with minimal harm to the environment. It obtained ISO 14000 certification for environmental impact management and completes periodic audits. And, Auropol has focused on using regenerative materials in its production processes by continuously innovating products and processes.
The Indian company found that it could only reap the benefits of some green strategies after deploying digital technologies such as Cloud-based ERP systems and databases which helped it do preventative maintenance and understand its environmental impact, says Chowdhury.
CREATING NEW VALUE
While its natural for company leaders to cut back in times of crisis it would be a mistake for SMEs to curtail spending on innovation, says Christian Mohr, managing director of UnternehmerTUM, the Technical University of Munich’s Center for Innovation and Business Creation.
Dey and Chowdhury say SMEs can learn five things from Auropol’s journey:
• Strategies must be in sync because a company may not reap the full benefits of green technology if it doesn’t first use digital technologies to make data-driven green and lean decisions to achieve efficiency.
• Even if a company does not have digital skills or the right data it can still leverage technology to move forward by using synthetic data and Cloud services.
• Obtaining ISO certification helps companies understand where they are and what they need to do to become greener and more productive.
• Continuous research and development of innovations is necessary to test out what works and what doesn’t and stay ahead of the curve.
• There are no quick fixes. While Auropol has become greener and grew its business, like many businesses of all sizes, it is still trying to deal with hard-to-abate Scope 3 emissions.
Research shows that companies focusing on innovation and technology outperform competitors by an average of 30%, he says.
The journey of Germany’s Dorfner illustrates how digitization can not only support sustainability goals through more efficiencies, but also free up more resources and capabilities for a company to engage in other sustainability and value-creating projects that differentiate them from competitors, says Mohr.
Like many of Europe’s SMEs, Dorfner, a family-owned Bavarian business that mines and refines industrial minerals, found there was very little room for growth in its core businesses. Rather than just focusing on new products the company started building entirely new business models or process innovations with the help of a program at UnternehmerTUM, explains Mohr.
While Dorfner was engaged in this process its big customers started approaching the company because hundreds of the raw chemicals they need to make their products were not available due to supply chain issues. Customers wanted to know if Dorfner could create alternative formulations. The idea surfaced in an UnternehmerTum workshop that data about chemical formulations could be gathered and organized in a database and AI applied to that data to help with reformulations that would serve as alternatives or be more sustainable.
Dorfner thought it would have to build its own AI software platform, but it found a Silicon Valley company that had already built an AI platform for the materials and chemicals industry.
It took about six months for the company to get the right data sets in place. In coatings alone Dorfner has 30,000 data points on materials. “When a request for a filler formulation is received Dorfner will use the AI to run a simulation. By bringing it into a platform and applying AI we can now offer a new formulation service to all our clients around the globe,” CEO Mirko Mondan said in an interview with The Innovator. If a client uses a small fraction of a material in its formulations and that material is no longer available Dorfner can run a simulation, come up with the five best hits, test them in its lab and propose a solution within a matter of days, he says. “We are experts in functional fillers. AI helps speed up our R &D and promises to give us category leadership 5-10 years from now.”
The new strategy is also expected to allow Dorfner and its clients’ products to become greener. “We are currently shipping materials all over the globe,” says Mondan. “My dream is to tell customers that we can sell them a new formula for the functional filler field and point out the three local materials they can use. This way we stay in the game by offering the best formula, with the best quality, at the lowest cost, with the lowest environmental footprint.”
Dorfner’s journey is a good example of how traditional businesses can build effective innovation strategies, leapfrog into the digital age, and make climate-friendly innovative products, says Mohr, who contributed to the Forum’s report.
FINDING THE RIGHT TALENT
To succeed with both digital transformation and sustainability companies also need to put the right teams in place. Like large corporates, SMEs are hard pressed to find employees with the right skill sets. With the massive growth in industry and new innovative technologies requiring specialized knowledge, the demand for talent is quickly outpacing the availability of those
with the right skills and experience. A report by Korn Ferry estimates a talent deficit of 85.2 million workers worldwide by 2030, which could result in over $8 trillion in unrealized annual revenue.
However, the Forum report outlines how SMEs can make the most of their size, flexibility, and informality to their advantage when competing with large firms.
“To succeed a company needs people who believe in the organizational mission and are resourceful and resilient,” says Rajah. Smaller companies are better positioned to start their digital transformation and sustainability journeys because “people at smaller companies tend to be closer to leadership and there are quicker communication channels so when there is a change or pivot this can be communicated clearly,” she says, “and people working for SMEs are more likely to believe in the mission, so they are onboard and motivated.”
It is understandable that SMES are focusing on survival and might not want to make investments that might only pay off in the longer term, says Rajah, “ but we hope, through our research, that we have shown that if they can make a pivot to digital transformation and sustainability, start small and find the right employees to move this transformation along, it can help secure their long-term future readiness.”
THE OPPORTUNITY
“Imagine what would happen if we could manage to shift SMEs from a focus on fighting for survival to building future-readiness?” asks the Forum’s Woeffray. “These companies would be driving positive change across our local, national and global economies.”
The Forum hopes to spark this change through the New Champions community. Currently about 100 companies serve as “lighthouses” leading the way for other SMEs to transform their businesses. The Forum plans to expand the community and make its future-readiness self-assessement and benchmarking tool open to any SME, says Woeffray. It also plans to soon open a digital community for smaller businesses to connect and exchange best practices with their peers and experts. n
At the
Brink:
South Africa’s Urgent Battle Against Water Scarcity
By Dean Muruven, Associate Director, Boston Consulting Group
South Africa is no stranger to crisis, and over the last few months the water crisis has emerged as the next big one.
History is still a factor
While we would like to believe that we have left the apartheid era far behind, it is still a significant factor in how water is supplied and distributed in different parts of the country. For example, from a governance perspective, municipalities in the Western Cape outperform those in most other provinces. Without detracting from their excellent performance, it must be remembered that the Western Cape has no history of homelands. Homelands were areas established by the apartheid government to which most of the black population was moved, with little in the way of economic development. After 1994, people living in homelands, who had received minimal municipal services, had to be brought into the system.
The point is that building a resilient water system in South Africa must be accompanied by creating social resilience. If we do not consider this perspective, we risk continuing to design systems for people instead of with them, which will not yield the desired results.
Water must become a strategic priority for the public and private sectors
Around the world, fresh water has always been used, valued, and governed as if it were an inexhaustible commodity. This must change.
One of the myths we need to debunk is that governments alone are responsible for providing resilient water supplies. Governments play a critical role in providing leadership and regulations to ensure the adequate, equitable, and sustainable management of water resources. Yet effective water management requires the involvement of diverse stakeholders, including the private sector, local communities, and civil society. The private sector depends on water to transport goods over rivers, as a key ingredient for beverages, or as an input for agriculture, but it is doing very little to help in tackling supply. The UN Water Conference last year-the first in almost 50 years-attracted few (9% of the total) new commitments from companies.
Another myth is that water should be free to everyone. The South African Constitution recognizes access to adequate water as a fundamental human right-one that is critical to health, dignity, and prosperity. However, that should not imply that water is free or that access should be limitless. To realise blended finance to attract private investment into the water sector, governments need to send effective market signals by pricing water correctly. Water pricing calls for a complex balance between equity and efficiency. Given that water is a human right, it should be inexpensive, but people should also have an incentive to conserve it.
A meaningful debate must take place on socially equitable water pricing. Market-based mechanisms, adaptive pricing, and other policies can promote conservation and stimulate sufficient financing while meeting the needs of vulnerable populations.
Commission (WRC) in Pretoria has, over the years, developed several solutions that could be deployed and scaled to address some of our most pressing water issues. The South African Sanitation Technology Enterprise Programme has tested innovative sanitation technology that can be deployed across the country. All that is needed is to accelerate the innovation cycle and create an enabling environment for implementation and scale.
A critical application for technology is to help governments plan for an uncertain future in a changing climate. As floods and droughts become more intense, AI can help governments to model the costs of different adaptation and resilience measures. This allows for strategic infrastructure planning, data-driven decision making around water allocation, socially equitable pricing and data integration across government institutions.
We have seen how when successfully implementing the above, significant and positive change can be made. An example of this is the Umzimvubu Catchment Partnership (UCP) programme, founded in 2013, which aims to address the severe land degradation and invasive alien plant infestation in the Mzimvubu catchment. The public-private partnership is an example of a Biodiversity Partnership Area, through the sustainable restoration and maintenance of the catchment area in a manner that supports economic development and job creation for local people and enhances flow of benefits from ecosystem goods and services to people and nature. Through the partnership, restoration of the catchment area is showing benefits for the rural communities that rely on the land for sustenance, as well as protecting the important biodiversity of the area. The river is a primary water source for the Eastern Cape which is critically significant as a strategic water source area.
A water resilient South Africa
South Africa’s water crisis cannot be solved through purely a financial or engineered approach. Water depends on natural ecosystems. As we plan for the future, we must factor interconnected freshwater environments and nature-based solutions into development to ensure water system resilience. Water management needs to become a strategic priority. Unless we acknowledge that water resilience and social resilience are two sides of the same coin, we will continue a vicious cycle of water insecurity and the water crisis will appear unsolvable.
Above all, we need to work collaboratively: governments, financial institutions, non-profit organizations, and corporations must work together in supportive, inclusive conditions to build resilient water systems that deliver water as a human right, facilitate economic growth, and overcome the challenges of climate change. n
Practical industrial water efficiency tools freely available online from NCPC
WATER preservation and management are increasingly important in today’s industrial landscape. By implementing efficient water balance practices, industries can reduce their water usage and associated costs, while contributing to environmental sustainability. Water management tools are being made freely available for industry by national industry support programme, the National Cleaner Production Centre South Africa.
South Africa is ranked among the 30 driest countries in the world, with about 40% less than the annual world average rainfall. This is further exacerbated by the impact of climate change, resulting in increased pressure on water resources and the need for innovative solutions to ensure sustainable water practices in industry.
Agriculture is the largest user of water in South Africa at 61% of water use in 2018, followed by municipal clients at 27%. Industry drawing water directly from dams or reservoirs, in other words are not municipal clients, account for only 3% of water use, but much of the municipal water footprint is made by industry and commercial users (National Water and Sanitation Master Plan Volume 2: Plan to Action, DWS 2018)
According to NCPC senior project manager for water and resource efficiency, Lindani Ncwane, industry has the potential to significantly reduce its consumption by implementing resource efficient and cleaner production interventions. Furthermore, water used in industrial processes can often be reused later in the production process, or even in irrigation purposes.
“The NCPC-SA has developed tools and guidelines that have been applied to enhance industry water efficiency, leading to reductions in water consumption and effluent discharge,” says Ncwane.
Recent roadshows co-hosted by the NCPC in partnership with the DWS and the Danish Embassy also introduced new initiatives and tools to promote cost-efficient water consumption measures for industry.
“It is clear from these interactions that water management is not often a high priority for companies. We would encourage production and operations teams to take advantage of the free online tools, and also to invite the NCPC to assess their water processes or provide training to staff.”
The NCPC is a programme funded by the department of Trade, industry and Competition (the dtic), making the programmes support and services to industry highly subsidised.
“It is our aim to capacitate industry to drive these improvements in their own plants,” concludes the NCPC manager.
Industrial efficiency conference –September 2024
The most recently published water resource guide, the Resource Efficiency for the Cheese and Yoghurt Dairy Sector in South Africa will be demonstrated at their 6th Biennial Industrial Efficiency Conference on 11 and 12 September 2024.
The conference will host a session to equip industry with practical solutions to address water challenges, promoting knowledge sharing on water initiatives with partners such as the International Finance Corporation (IFC), who co-authored the latest guide.
The conference is a platform to showcase these and other tools for water-intensive sectors such as agro-processing, and for companies to share case studies on how they have implemented these to improve their water efficiency.
Companies interested in attending the conference can register on the conference website. Although space in the room is limited, the sessions will be live streamed on MS Teams. Links will be shared on https://www. industrialefficiency.co.za/conference/ each day.
Enquiries can be directed to ncpc@csir.co.za
Join us at the International Eco-Industrial Parks & Areas Conference, South Africa
11 and 12 September 2024
CSIR International Convention Centre, Pretoria
The event will serve as a global forum for sharing information on sustainable industrial development in industrial zones across the world. It will focus on improving the performance of these places by considering economic, social, and environmental factors.
The conference will address the four pillars of the International EIP Framework that was jointly developed by UNIDO, GIZ and the World Bank: governance, environment, economic, social and address topics such as:
• Energy and water
• Materials/ resources (RECP, IS, LCA/LCM, etc.)
• Decarbonisation and emissions reduction in industry
• Green industrial policy
• EIP/ SIA operations
• Green finance
• Skills development
• Green hydrogen
International Eco-Industrial Parks & Areas Conference, South Africa is proudly brought to you by the Global Eco-Industrial Parks Programme South Africa and supported by the NCPC, UNIDO and SECO, and partnered with the GIZ Sustainable Industrial Areas Programme.
A Women’s Month Spotlight Women in Utility Management:
THE global utility management industry is undergoing a significant transformation. Organisations need creativity, agility, and resilience to thrive during radical transformation. Research indicates that a company’s ability to embrace diversity is one of the success indicators in times like this.
Today, diversity in the dynamic utility management industry is more critical than ever.
Remote Metering Solutions (RMS), a leading supplier of utility management, cost recovery, and technology and sustainability solutions, is dedicated to attracting and retaining a diverse talent pool.
In celebration of Women’s Month, RMS spotlights a group of trailblazing women in leadership roles at the company.
Historical underrepresentation
Women have historically been underrepresented in boardrooms worldwide. This also rings true for the energy and associated sectors. Data published by the International Energy Agency (IEA) in 2022 revealed that women hold less than 14% of senior management roles across nearly 2,500 global energy firms. Although utility sectors lead with 17% representation, over 25% of firms still have no women in senior roles.
While much work remains to achieve equal representation in the energy sector, progress has been made by pioneering women and forward-thinking organisations such as RMS, who lead by example.
The utility industry owes a collective debt of gratitude to these women who have persevered to achieve the senior roles they now hold. We recognise a few of these trailblazers as they share their experiences as leaders in the utility management industry.
Challenging outdated perceptions
During conversations with women in leadership positions at RMS, there is no shortage of anecdotes from bygone years when the utility management industry was entirely male-dominated.
Ronel le Roux, Utility Management Team Lead at RMS, recalls: “One of the biggest challenges early in my career was not being taken seriously because of my gender. I once had a client request a man for electricity and reticulation changes, implying that women don’t belong in this industry. Overcoming such challenges requires resilience, strong relationships, technical competence, and leveraging achievements to change outdated perceptions.”
Acknowledging the support she received in the utility industry, Daniela de Oliviera, Western Cape Regional Head at RMS, reflects on her early career: “My biggest challenge was mastering technical knowledge and understanding complex bylaws. I learned the most from dealing with many scenarios, with the valued support of mentors and colleagues.”
Tajrish Herbst, ismrt! Prepayment System Team Lead at RMS also remembers: “Five years ago, I faced a lack of trust as a young professional among more experienced colleagues. I learned to respect and learn from them, even when they seemed dismissive. I now consider myself an expert because I grasped every learning opportunity.”
Adding another dimension to the conversation, Claudia Hedley, Sustainability Specialist at RMS, emphasises the importance of women supporting each other: “Seek mentors for guidance and support, advocate for yourself, and open doors for other women within your organisation.”
Ilse Swanepoel, Chief Operating Officer at RMS, advises women considering careers in utilities or other traditionally male-dominated industries: “Always be authentic. Stand confidently without feeling pressured to conform or act like ‘one of them.’ It’s important to remember that we all have biases. Recognising these biases can help us address the blind spots they create in ourselves and others. You can gradually change hearts and minds by embracing open and authentic conversations. With time, you grow and contribute to the organisation’s transformation.”
The value of experience in an enabling culture Gaining experience across different parts of the company is critical for preparing women for senior management roles, and access to these opportunities often depends on the company culture.
Nikki Coventry, Corporate Accounts Team Lead in Bulk Supply Management at RMS, agrees: “Women have proven their capability in every facet of our company, from meter readers and technicians to utility administrators and in fields such as IT systems development and supply management. Finding an employer like RMS that values and supports successful women can significantly boost your career.”
A corporate culture that values diversity offers a strategic advantage. Ronel notes: “Career prospects for women in utility management are promising and continuously evolving. As the industry changes, the value of diversity is increasingly recognised. Today, many successful utility managers are women, demonstrating their capability and leadership.”
The qualities women bring Women contribute traits that enhance engagement, client satisfaction, and team productivity. Empowering women in leadership improves organisational performance and fosters inclusive and innovative workplace cultures.
Anneri Morland, HR Team Lead at RMS, explains: “Decades of research show that empowering women in leadership leads to transformative effects. Women’s listening skills improve communication and empathy, their analytical decision-making is thorough, and their nurturing spirit boosts morale and productivity. Their resilience and adaptability bring stability and confidence, guiding organisations through change and driving sustainable growth.”
Tajrish advises women exploring careers in utility management: “Never forget that you are a woman. Your feminine touch is sometimes the unique quality that sets you apart. There is a notion that successful women need to act more like men, but this is not true. Maintain a balance between strength and compassion, and you will succeed in the utility management industry.”
Ilse believes that women bring a unique blend of intuition, empathy, and analytical thinking to the table, qualities that are essential in driving the next wave of innovation in utility management. Ilse reminds women that although they play a crucial part in the industry’s transformation, “it is vital to work with your male counterparts to strike the perfect balance in unlocking value in any organisation.”
Defining success
When asked how they measure success, Client Excellence Lead at RMS, Charlie Grobbelaar, says: “I recently walked into a meeting where the client started by complimenting my team for their exemplary service. That is how I define success!”
Claudia echoes this sentiment, emphasising excellence as a driving force: “Always strive to exceed expectations, make your presence felt, and never settle for mediocrity.”
Daniela views perseverance as key: “Always aim to be better than those around you, not to outshine them, but to learn, adapt, and push the limits of your comfort zone continuously. This mindset fosters growth and resilience; with perseverance, you can achieve anything.”
Ilse adds that success should not only be measured by representation, but also by the progress and output of an organisation or industry. “Just because I am a woman, I am not going easy on myself. My ultimate goal is to enhance the organisation’s achievements and the advancement of the industry.”
The power of failure
In traditionally male-dominated environments, the pressure to avoid failure can be intense, particularly for women who often invest emotionally and professionally in their careers. Failure is, however, a crucial part of reaching success, especially in constantly evolving industries. Women should be encouraged to lead by example in establishing a culture of failing fast, where failing fast and learning from mistakes is accepted and valued.
Tajrish believes embracing failure is about learning, not dwelling on mistakes: “I encourage my team to share their failures. Learning from mistakes and allowing others to do the same fosters a supportive team culture where colleagues feel comfortable making and learning from errors.”
Nailing work-life balance
“The COVID-19 pandemic redefined our understanding of work-life balance, and a part of being a leader at RMS means shedding outdated impressions of prioritising career over family,” says Anneri.
Reflecting on her achievements, she offers advice to women seeking to retain this delicate balance: “Balancing milestones like completing the Ironman Triathlon and Comrades Marathon with my roles as a full-time employee, mother, wife, and friend has shown me that women can achieve anything with determination. Believe in yourself and embrace your strengths. This mindset has transformed my life and can empower other women to pursue their goals with confidence and determination.”
Looking to the future
The global utility management industry’s ongoing transformation underscores the need to attract and retain more female talent to ensure the sector’s long-term sustainability.
As we celebrate Women’s Month, Anneri envisions the next generation of women in utility management: “I hope to see young women supporting each other, standing in solidarity, and fostering a culture of kindness, empathy, and mutual respect. By building a supportive community where everyone feels valued, we can empower young women to pursue their dreams without fear of judgment or competition.”
Ilse adds, “As women in leadership, we have the opportunity, and frankly the responsibility, to create a legacy of inclusivity. By paving the way for the next generation, we ensure our progress continues and accelerates, benefiting the entire industry.” n
Is Going Green Good Business
Environmentally Sustainable Manufacturing Boosts the Bottom Line
By Deborah Talbot
ENVIRONMENTAL sustainability and business success are often seen as being at odds with each other—businesses must choose between being profitable and being green.
But growing numbers of businesses are proving that business success goes hand in hand with upholding ecological principles. Sustainability, as company practice and supported by a robust regulatory framework, can pay off in multiple ways.
What are the key components of sustainable manufacturing?
What do these practices look like?
How can it be profitable?
What Is Sustainable Manufacturing?
The US Environmental Protection Agency says sustainable manufacturing uses “economically sound processes that minimize negative environmental impacts while conserving energy and natural resources.” This type of manufacturing also “enhances employee, community, and product safety.” When companies use ecological principles to produce commodities, the design of the commodities themselves, the manufacturing process, and the overall organization of the business are all affected.
As Kresse Wesling, CBE, co-founder of the successful Elvis & Kresse clothing brand, says, “Sustainability is best defined by what it isn’t.”
“The definition of unsustainable is either ‘unable to be maintained in the long term’ or ‘indefensible,’” she says in an interview for The Earth & I. “Something that is sustainable needs to be able to continue to be produced in perpetuity (so think socially, environmentally, and financially viable given climate change, biodiversity loss and rising inequality) and defensible.”
Concern For ‘Sustainability’ Growing
Sustainable manufacturing is no longer a minority concern. Research by KPMG of the top 100 companies out of 5,200 sampled companies in 52 countries found that 80% now report on sustainability and a growing number—around 40%—acknowledge the financial risks of climate change in their reporting.
This finding shows sustainability reporting is more than “greenwashing” or the practice of purporting to be environmentally conscious for marketing purposes. In 2015, the Task Force on Climate-Related Financial Disclosures (TCFD) was created to assist companies to disclose information related to climate change for investors and others.
Free market proponents argue that environmental regulations hinder economic growth and profitability. In the UK, for instance, the government has promised to water down environmental protections and ramp up fossil fuel exploitation to kickstart growth. However, a letter by 100 large companies—including Amazon and Siemens— urged the government not to abandon net zero goals.
A survey of 700 CEOs and business leaders across seven major world economies found that 80% believe net zero regulation is needed for their companies and the economy. Seventy percent already had plans, and 80% had earmarked funding to implement net-zero practices.
Sustainability has positive impacts on business practice, employees, and product manufacture.
But it’s not just a question of risk mitigation. Sustainability has positive impacts on business practice, employees, and product manufacture. A conference paper by Jawahir and Dillon (2007) identified six elements of sustainable manufacturing: manufacturing cost, energy consumption, waste management, operational safety, personnel health, and environmental impact. All these diverse elements of a business operation contribute to sustainability. n
These companies also observe the UN’s Sustainable Development Goals, which address climate change, loss of biodiversity, social inequality, and more (see left).
Africa Climate Finance Investment in Green Sectors in Africa: Addressing the Climate Finance Gap
INVESTMENTS in green sectors in Africa have experienced significant growth in the period 2017 to 2022, despite ongoing volatility and macroeconomic risks. A substantial gap in climate financing however remains which must be addressed to speed up the growth of these sectors. Crucially, Africa despite contributing the least to the climate crisis, will be the most negatively affected by climate change repercussions.
According to a report by Boston Consulting Group (BCG), More Money, Fewer Problems: Closing Africa’s Climate Finance Gap, to meet Africa’s climate needs by 2030, an investment of $2.4 trillion is needed. The report indicates that only 12% of this funding has been met or committed thus far, posing a significant challenge that must be overcome to ensure a sustainable future for the continent.
Key obstacles hindering investment flow into green sectors are macroeconomic uncertainty, opportunity cost of capital, and investor risk assessment, all of which result in financing costs that are 5 to 6% higher than those in comparable emerging markets. The cost of debt for climate projects in South Africa is 20% compared with
Paraguay’s 15%, although their sovereign ratings are the same (BB ratings). Investors see Africa as riskier than reflected by the global credit ratings agencies.
The persistent gap in climate financing for Africa presents an opportunity to accelerate growth, however de-risking capital in the region to facilitate financing for private companies is critical to achieve this.
Factors that impede the growth of Africa’s green sectors
Most companies within the green industry in the region rely on foreign investment to grow their footprint and impact, but capital inflows have been volatile. Green sectors are capital intensive and have long investment horizons (10+ years).
Events such as the 2008 economic crisis and the 2016 US Fed rate hikes drove significant retraction of capital (-10% and -20%, respectively) into safer havens. Overall foreign investment in Africa has been flat or slightly declining in the past 10to 15 years. At the same time, domestic private
credit in Africa has experienced slow growth, so ebbing foreign investment has not been materially replaced by domestic capital.
Solutions to unlock financing
Katie Hill, Partner and Associate Director, Climate, at BCG, Nairobi, says that over and above the need to improve macroeconomic conditions, various solutions exist to unlock financing that can be implemented by investors, development finance institutions (DFIs), multilateral organisations, and philanthropic funders. “A major
step investors and DFIs can take is to increase Portfolio Value Creation (PVC) (currently half of global levels) to accelerate growth and derisk green companies, which will ultimately bring down the cost of capital.”
“Regarding debt, fortunately, a spectrum of financial instruments are available, ranging from traditional to novel, that can effectively de-risk and mobilise debt into green sectors in Africa. By using these instruments, the availability and affordability of capital can be enhanced, further supporting the growth of green sectors,” added Hill.
Warren Chetty, Managing Director and Partner at BCG, Johannesburg, recommends bolstering policy: “Sufficient resourcing and policies must be appropriately developed in these areas so that structured financing instruments can be scaled to increase availability of capital and reduce costs. Private debt is particularly important for green sectors, which are more infrastructure and working capital intensive.”
Different stakeholders can, and do, play a critical role in scaling these mechanisms and effectively de-risking capital:
• Governments can enable favourable regulatory environments, strengthen institutions, ease the issuance of green bonds, and offer sovereign guarantees (if their own credit rating is sound).
• DFIs can lead on blended finance instruments, providing first-loss capital and loan guarantees to absorb initial losses and execute Contracts for Difference (CfDs) and capped return investments that can mobilise more private investment.
• Multilaterals can aid by scaling loan guarantee mechanisms, insurance products, and green bonds to
improve availability of capital while de-risking markets to crowd in capital.
• Philanthropic investors can support and help the use of instruments such as investment readiness support, capped return investments, or debt for climate swaps.
These instruments will be most effective when paired with improved information for private investors. Foreign investors need to better understand baseline asset class performance, as well as the diversity and opportunities in African markets. “Realising this potential requires effective scaling, structuring, and use of these instruments that will bolster much-needed climate finance and support the vital growth of green sectors in Africa,” added Warren.
Putting efforts into improving macroeconomic conditions is crucial to address a range of challenges faced by private companies in green sectors. This includes strengthening institutions, developing local talent and capabilities, and professionalising sectors to ensure investments can secure a return on capital and crowd in more funds from international and local investors. n
Fibre Circle Pioneers Development
of a localised recyclability standard for South African paper products
By Dumisani Khumalo
FIBRE CIRCLE, South Africa’s producer responsibility organisation for paper and packaging, has launched a multi-stakeholder initiative to develop a recyclability standard and labeling system tailored for the local industry.
In a groundbreaking move, Fibre Circle, the producer responsibility organisation for paper and paper packaging in South Africa, has initiated a multistakeholder engagement initiative focused on developing a recyclability standard and labelling system tailored specifically for the local paper and paper packaging industry.
The current recyclability standards applied in South Africa are mostly based on European methodologies, which do not adequately account for the unique social and physical infrastructure challenges faced by the local recycling industry. The South African EPR (extended producer responsibility) regulations require environmental labelling to be implemented, however, this labelling must be based on a sound definition of the recyclability of paper and paper packaging locally. This Fibre Circle-led initiative, therefore, aims to establish a more relevant, contextual
framework that will enhance the sustainability and efficiency of recycling efforts within the industry.
The resulting standard will define the minimum criteria for the recyclability of paper and paper packaging in South Africa, allowing the establishment of an environmental labelling system to inform the public about paper recycling and ultimately the creation of a design for recyclability guidelines to assist the development of new packaging solutions. Fibre Circle has kicked off the first cycle of stakeholder engagements, providing a comprehensive overview of the cumulative process, the formation of different working groups, and the specific roles that stakeholders can play at various levels throughout the engagements.
“As the paper and paper packaging industry in South Africa continues to evolve, ensuring the recyclability of our products is paramount,” said Edith Leeuta, CEO of Fibre Circle. “In line with our commitment to meeting the obligations of the Extended Producer Responsibility Regulations, we are initiating the development of a comprehensive recyclability standard that will set benchmarks and guidelines for the industry.”
JOIN FIBRE CIRCLE - YOUR PAPER & PACKAGING PRO
Are you a business that produces, imports or uses paper and paper-based packaging? Choose Fibre Circle as your Producer Responsibility Organization (PRO).
As the recognized PRO for the paper and paper packaging industry in South Africa, Fibre Circle can work with you to:
• Fulfill your EPR obligations
• Promote sustainability
• Increase recycling rates
The industry working groups will be a collaborative platform for industry stakeholders, including manufacturers, recyclers, environmental experts, and government representatives, to come together and collectively define the South African recyclability standard for paper and paper packaging. These working groups will determine the definition of repulpability and reusability of paper fibre, and the collectability of the packaging in South Africa, and inform the requirements that paper and paper packaging must meet to compete with other packaging materials.
Fibre Circle has created methodologies to guide the process and ensure all aspects are taken into consideration during the defining of the standard. These methodologies will be addressed by the relevant working groups proposed. As part of the process and to facilitate the testing of products, Fibre Circle has already completed setting up the CEPI Harmonised testing facility for low consistency repulping which included PTS (Papiertechnische Stiftung) benchmarking at Mpact Springs Mill. The Kadant-sourced pilot scale hydra pulper has been made available for structured research on difficult-to-recycle materials, offering recyclability testing as a service from Fibre Circle.
These initiatives mark a significant step forward in the South African paper and paper packaging industry’s commitment to sustainable recycling practices. By establishing a contextual recyclability standard and labelling system, Fibre Circle aims to drive innovation, enhance recycling efficiency, and ultimately contribute to a greener future for our nation.
The key objectives of this initiative include:
• Defining recyclability and the recyclability criteria: Collaboratively establishing clear criteria for assessing the recyclability of paper and paper packaging products for the South African context.
• Incorporating industry perspectives: Integrating diverse stakeholder perspectives across the value chain to ensure a comprehensive and inclusive standard.
• Aligning with global best practices: Using the 4evergreen CEPI (Confederation of European Paper Industries) harmonised methodology, benchmarking our infrastructure realities against the method to ensure alignment with international sustainability goals.
• Facilitating information exchange: Fostering a platform for exchanging knowledge, research findings, and insights relevant to recyclability in the paper industry.
For more information please contact: 011 593 3144 info@fibrecircle.co.za www.fibrecircle.co.za
AGENDA GREEN THE
Leading the movement to a more sustainable future.
Transitioning Toward A More Sustainable Economy AGENDA GREEN THE
