Strengthening access to inclusive finance for local green entrepreneurs in South Africa

This policy brief examines the barriers Local Green Entrepreneurs (LGEs) face in South Africa, specifically focusing on the lack of inclusive finance. It argues that while small, medium, and micro enterprises (SMMEs) are critical for decarbonisation and climate adaptation, they are hindered by limited risk appetite from funders, compliance-driven ESG requirements, and regulatory red tape. The document recommends the development of a Green Economy Framework and the adoption of innovative finance mechanisms to support black-, youth-, and female-owned green enterprises.

• Local Green Entrepreneurs (LGEs) and SMMEs in South Africa contribute to carbon emission reduction through energy efficiency, renewable energy adoption, responsible waste management, and reduced water usage, yet they face significant barriers including financial constraints, market obstacles, and inadequate governmental support.
• There is a significant 'green funding gap' for micro, small and medium enterprises (MSMEs) who require additional finance to transition to sustainable business models and build resilience against climate impacts. In the Global South, this is compounded by the fact that African countries have received only 10% of the necessary adaptation funding for infrastructure resilience.
• Financial institutions often lack the risk appetite to fund LGEs because these businesses are typically in early growth stages, lack credit records, and lack collateral. Additionally, funders often lack the specific industry knowledge required to navigate green sectors.
• The document identifies five 'signature issues' hindering LGEs: funders' limited risk appetite and lack of understanding of finance needs; ESG requirements that are compliance-driven rather than investment-aligned; sectoral barriers and certification delays that increase operational costs; insufficient targeted business development support; and a lack of coordination among green economy ecosystem programmes.
• The Draft SMME and Cooperative Funding Policy from the Department of Small Business Development (DSBD) fails to make any reference to Local Green Entrepreneurs, suggesting a need to integrate green industry considerations into this policy.
• To improve financial flows, the document recommends a dedicated green MSMEs master plan focusing on bridging the trust gap (e.g., allowing movable assets as collateral), bridging information gaps (e.g., simplifying ESG information), and bridging the finance ecosystem gap (e.g., unleashing the potential of Development Finance Institutions).
• The Small Enterprise Finance Agency (sefa) Innovation Fund's Green Economy Window provides an example of inclusive finance, offering lower interest loans starting from R200,000 specifically for black-, youth-, and female-owned SMMEs in green industries via a Credit Guarantee Scheme.

APA

Hattingh, E., & Appies, E. (2022). Strengthening access to inclusive finance for local green entrepreneurs in South Africa. Green Economy Coalition. https://www.greeneconomycoalition.org/assets/reports/TIPS_Policy_Brief_Strengthening_access_to_inclusive_finance_for_local_green_entrepreneurs_in_South_Africa.pdf

Chicago

Hattingh, Elize, and Ebenaezer Appies. Strengthening access to inclusive finance for local green entrepreneurs in South Africa. Green Economy Coalition, 2022. https://www.greeneconomycoalition.org/assets/reports/TIPS_Policy_Brief_Strengthening_access_to_inclusive_finance_for_local_green_entrepreneurs_in_South_Africa.pdf.

Wikipedia

{{cite report |last1=Hattingh |first1=Elize |last2=Appies |first2=Ebenaezer |title=Strengthening access to inclusive finance for local green entrepreneurs in South Africa |publisher=Green Economy Coalition |date=November 2022 |url=https://www.greeneconomycoalition.org/assets/reports/TIPS_Policy_Brief_Strengthening_access_to_inclusive_finance_for_local_green_entrepreneurs_in_South_Africa.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hattingh2022strengthening, author = {Hattingh, Elize and Appies, Ebenaezer}, title = {{Strengthening access to inclusive finance for local green entrepreneurs in South Africa}}, institution = {Green Economy Coalition}, year = {2022}, month = nov, url = {https://www.greeneconomycoalition.org/assets/reports/TIPS_Policy_Brief_Strengthening_access_to_inclusive_finance_for_local_green_entrepreneurs_in_South_Africa.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }