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TIPS research initiative to identify stumbling blocks to local green entrepreneurship

15th February 2021

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

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A research initiative launched by independent nonprofit economic research institution Trade & Industrial Policy Strategies (TIPS) aims to support sustainable finance reforms in favour of local green enterprises (LGEs) and identify and unlock barriers that green and social entrepreneurs face.

The aim is to promote small and social enterprises, and the initiative aims to gain a deeper understanding of the business challenges facing green and social entrepreneurs in South Africa in order to develop policy options for greater financial inclusion.

The research programme is a partnership between TIPS and the Green Economy Coalition (GEC) and is funded by the European Commission.

The initiative draws on international research on the role of green and social enterprises, which points to their potential to hasten national transitions to create low-carbon, inclusive and sustainable economies, explains TIPS researcher Elize Hattingh.

“LGEs are viewed as key adopters of radical environmental innovations, which are often neglected by established firms, in the production and manufacturing of environmental goods, services and technologies. Given their role as testing-grounds for green innovations, which many established firms view as high-risk, LGEs have the agility to accelerate access to new markets and play a catalytic role in the diffusion and uptake of green innovations."

Therefore, LGEs can play a substantial role in developing inclusive pathways to sustainability and are at the forefront of climate responses and innovations, including adaptation and mitigation, as well as environmental sustainability.

"Data obtained so far highlights that funders do not fully grasp access to finance needs and have a limited risk appetite to offer finance solutions to local green entrepreneurs. Further, environmental, social and corporate governance is compliance-driven and, thus, not fully aligned with the intentions to support green investments.

Meanwhile, sectoral barriers play a role that further contributes to layers of complexity navigating certification processes and unnecessary application delays add to extended implementation timeframes, resulting in increased operational costs.

Additionally, greater transparency from government departments is needed to communicate and speed up certification approvals, which requires fast-tracking green business growth, the research indicates.

Small, medium-sized and microenterprises (SMMEs) are not only viewed as being critical for economic development and job creation but also have the potential to be vital economic players to drive inclusive and sustainable development in low- and middle-income countries, says Hattingh.

"Given the challenges that SMMEs face, such as access to finance, the success of growing green businesses in South Africa is even more challenging. The public and private sectors can do more to support local green entrepreneurs for they offer much-needed green products and services that create positive environmental and social impact.”

As part of the research initiative, TIPS and the GEC are conducting an online survey. Green and social entrepreneurs are invited to provide feedback regarding their business challenges.

The deadline for submissions is February 20.

The information obtained will improve the understanding of the types of challenges faced by small businesses, particularly in terms of financial inclusion. The identification of signature issues will help formulate policy recommendations in line with entrepreneurs’ needs.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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