The evolution of green-tech SMEs in East and South Africa: scoping emerging business models
This project, funded by the internal SCI small grant scheme, focused on the evolution of green-tech SMEs in East and South Africa.
The rapid development and diffusion of information and communication technologies (Zhou et al 2019) and technology and knowledge sharing across borders has facilitated small and medium enterprises (SMEs) to go-green by consistently improve their ability to respond to environmental changes (Song and Wang 2018).
However, understandings of these green-tech SMEs need to be viewed as a spectrum:
(a) from firms that are green at the get-go, which are referred to as ‘born green SMEs’ including SMEs involved in: renewable energy (wind-power, solar-power, biomass, hydro-power, biofuels), green chemistry, specialising in recycling, and clean web (software, applications and data analytics)
(b) to firms that embed green qualities to adapt to different environmental concerns, or called Retrofitted green SMEs in more traditional sectors, where ‘greening’ is embedded into various processes and products to be more eco-efficient or display environmental stewardship. These include green transportation, green buildings, electric motors, eco-friendly lighting, grey-water, and energy efficient appliances.
However, the growth and expansion of green-tech SMEs is often slow because of high risk and uncertain innovation potential, which impinges on their ability to secure funding, gain credit or form credible networks with larger firms, training institutions, government and other local/international actors.
Relatively limited knowledge exists on the evolutionary dynamics of green-tech SMEs and the emerging related business models required for expansion.
This is particularly relevant for East and South Africa where over 85% of businesses are SMEs and in the informal sector (KNBS 2020). Furthermore, regional groups – East African Community (EAC) and the Southern African Development Community (SADC), and countries within these groups – have their own green economy strategies which focus heavily on inclusion of SMEs in green transitions.
Furthermore, the minimal references to the environment (and links to SMEs) in the recently launched largest regional trading agreement in Africa, the African Continental Free Trade Area (AfCFTA), by the African Union, suggests the need to further unpack how green-tech SMEs can flourish.
This project aimed to answer: What are the evolutionary dynamics that enable the development and expansion of born green and retrofitted green-tech SMEs?
This is broken down into three components:
- Understanding what the various networks green-tech SMEs are embedded in (i.e. ties the SME is connected to). These can be global, regional or local ties.
- What is the content of these ties.
- What are the analogue complements (i.e. existing ecosystem, including policies, regulatory frameworks, bureaucracy for start-ups, technical skills of entrepreneurs etc) necessary for the expansion of green-tech.
The project also aimed to develop a deeper understanding of the emerging green-tech SME business models.
Together this also enables comprehending in a regional context – the possibility of spillover interactions between network actors across green-tech SMEs across EAC and SADC countries, suggesting possible learning opportunities.