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

The document identifies critical gaps in the support system for Local Green Entrepreneurs (LGEs) in South Africa, specifically highlighting that while SMMEs contribute to carbon reduction, they face significant 'green funding gaps'. It argues that current policies, such as the Draft SMME and Cooperative Funding Policy, fail to explicitly recognize LGEs. The brief identifies five 'signature issues', including the limited risk appetite of funders and compliance-driven ESG requirements. To address these, it recommends the development of a Green Economy Framework, the use of credit guarantee schemes like the sefa Innovation Fund, and the reduction of bureaucratic 'red tape' in certification processes to foster a more inclusive green recovery.

• Local Green Entrepreneurs (LGEs) and SMMEs in South Africa face a 'green funding gap', which is additional to the general MSME financing gap (estimated globally between 5% and 20% of GDP). This gap hinders their ability to transition to sustainable business models and build resilience against climate impacts such as droughts or rising sea levels.
• The document identifies five 'signature issues' hindering LGEs in South Africa: funders' limited risk appetite and lack of understanding of LGE needs; ESG requirements that are compliance-driven rather than investment-aligned; sectoral complexities in certification processes; insufficient targeted business development support; and a lack of coordination among green economy ecosystem programmes.
• Current South African policy frameworks lack specific recognition of LGEs. Specifically, the Draft SMME and Cooperative Funding Policy does not make reference to Local Green Entrepreneurs, which the brief argues should be corrected to address sectoral challenges and design innovative finance mechanisms.
• LGEs are frequently perceived as high-risk by financiers because they are often in early growth stages, lack necessary collateral, and have limited credit histories. This is compounded by the fact that financiers often lack the specific knowledge required to navigate various green industries.
• The Small Enterprise Finance Agency (sefa) Innovation Fund's Green Economy Window provides a model for inclusive finance by acting as a Credit Guarantee Scheme for Fund Intermediaries. It offers lower interest loans starting from R200,000 specifically for SMMEs owned by women, youth, and/or black entrepreneurs in green industries.
• The brief recommends that the Department of Small Business Development and Parliament's Portfolio Committee on Small Business Development create a Green Economy Framework. This framework should address the financing of the 2050 net-zero transition, support for existing SMMEs transitioning to green industries, and COVID-19 recovery for LGEs.

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} }