ESG
Why MSMEs Are Key To A Greener Future
By Soyinka Witness
Ha ! You thought this would be an ordinary article with a simple title ? Joke ’ s on you ! It ’ s me again - the Batman fan with yet another piece on sustainability . But don ’ t worry , I ’ ll make this one worth your time .
So , as fate would have it , Kalombo gave me another opportunity to jot down my thoughts on sustainability . Full disclosure : I ’ m still figuring it all out too ! So , what you ’ re about to read are just my opinions - take them or leave them . We ’ re all learning on this journey , and if you ’ re an MSME , you might just find a few nuggets of wisdom to help you embrace the future of green business . Let ’ s dive in , shall we ?
Convincing 44 million MSMEs across Sub-Saharan Africa to embrace sustainability is like asking Bane to play by Gotham ’ s rules - it feels impossible , but the future depends on it . A few weeks ago , I was invited to a panel to speak on why MSMEs need to embrace sustainability , and let me tell you , it ’ s no small feat . Picture this : millions of small businesses , most operating informally , dodging bureaucracy , red tape , and regulations just to keep their doors open . Now imagine trying to convince them to adopt sustainable business practices . It ’ s like bringing Batman and Bane into the same room and hoping for a peaceful outcome . How do you even begin ?
Before we dive in , a quick introduction for those unfamiliar with The Dark Knight Rises - the final instalment of Christopher Nolan ' s Batman trilogy . In this film , Gotham City is thrown into chaos by Bane , a formidable villain who disrupts the city ’ s institutions and unleashes anarchy . His objective ? To tear down the existing order and rebuild it in his image . Much like Bane , the challenges facing MSMEs in Sub-Saharan Africa can seem overwhelming - disruptive forces that prevent businesses from adopting Environmental , Social , and Governance ( ESG ) principles . So , the question remains : can MSMEs rise above the chaos and embrace sustainability ? Or will they , like Gotham ’ s criminals , forever dodge the system ?
The Bane of Informality - Obstacles to MSME Sustainability
Like Bane , the informality of many MSMEs in SSA is a formidable challenge . These businesses often spring from necessity rather than strategy . Take Nigeria , for example - home to over 37 million MSMEs , which account for 96 % of all businesses . Most operate outside formal regulatory frameworks , making ESG adoption seem like a distant luxury rather than a viable option .
In Kenya , over 7 million MSMEs exist , and 90 % of them are micro-enterprises . These businesses don ’ t outrightly reject sustainability ; they just have more pressing issues . When survival is the daily goal , ESG can seem as outlandish as expecting Batman to swoop in and save the day . MSMEs face a constant struggle to balance the demands of running a business with the costs and complexities of adopting sustainable practices .
Why Informality Persists - Survival Over Sustainability
So , why do so many MSMEs remain in the shadows of informality ? The answer is simple : it ’ s easier . In Rwanda , where there are 14.9 MSMEs per 1,000 people , many choose informality to avoid high compliance costs and taxes . In Benin , with 138,000 MSMEs , the informal sector provides a shield from excessive regulation , helping businesses maintain higher margins .
Tanzania ’ s 3 million MSMEs , or 64 per 1,000 people , also operate largely informally to escape the red tape of formalization . Much like Bane sought to control Gotham on his own terms , these MSMEs maintain financial autonomy by sidestepping regulatory oversight . Yet , this informality prevents them from accessing the full benefits of ESG and limits their potential to grow sustainably .
Breaking the Barriers to Sustainability - MSMEs Can Thrive
MSMEs face significant challenges when it comes to implementing sustainability practices . These hurdles aren ’ t just business pressures - they ’ re macroeconomic forces beyond their control . Unlike large corporations , MSMEs often lack the resources to navigate or mitigate these external challenges . However , their sheer numbers , adaptability , and capacity for innovation make them pivotal in advancing sustainability goals .
MSMEs have a unique influence on local communities and supply chains . By prioritizing resource efficiency , driving grassroots initiatives , and building consumer trust , they can act as catalysts for systemic change . Their flexibility and creativity allow them to lead by example , setting the stage for larger businesses to follow . In fact , MSMEs are instrumental in addressing environmental and social issues , helping pave the way for a more sustainable and resilient future for all .
The Turning Point - MSMEs and Sustainability
A recent Ipsos survey among formal
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