ARE PRIVATE SUSTAINABILITY STANDARDS OBSTACLES TO, OR ENABLERS OF, SME PARTICIPATION IN VALUE CHAINS? INSIGHTS FROM SOUTH AFRICA AND KENYA

The paper examines the role of South Africa and Kenya as regional economic gateways and the impact of private sustainability standards on SME participation in value chains. It identifies significant barriers for SMEs, including high certification costs, lack of awareness, and limited technical capacity, while highlighting the potential for multinational corporations to support supplier development. The authors provide recommendations for the G20 to facilitate open markets, improve SME financing, and harmonise sustainability standards to prevent them from becoming non-tariff barriers.

• South Africa and Kenya serve as regional economic gateways, acting as nodal points for multinational corporations (MNCs) to direct investments and develop regional value chains (RVCs) in Southern and East Africa.
• Voluntary sustainability standards (VSS) can function as non-tariff barriers (NTBs) that exclude SMEs from global value chains due to their complexity and burdensome requirements.
• SMEs face a critical lack of awareness regarding the value proposition of sustainability standards, often failing to understand how adoption can facilitate growth and access to MNC value chains.
• High fixed costs for implementation and certification are significant barriers, as these costs are often borne by the producers with minimal support from standards bodies.
• SMEs struggle to access necessary financing for upskilling and certification because banks often view them as high-risk and require certified offtake agreements, which MNCs rarely provide.
• The nature of the MNC's business strategy influences the level of support provided to SMEs; manufacturing firms like Siemens and Nestlé tend to offer more extensive supplier development than retail companies like Pick n Pay.
• A fragmented VSS landscape leads to duplicate testing and unnecessary costs for SMEs, necessitating harmonisation initiatives to coordinate local and international standards.
• Case studies show that targeted MNC interventions, such as Siemens' 'graduation process' for ISO certification and SC Johnson's technical assistance to the Pyrethrum Board of Kenya, can successfully enable SME integration.

APA

Ngarachu, A., Draper, P., & Owino, K. (2017). ARE PRIVATE SUSTAINABILITY STANDARDS OBSTACLES TO, OR ENABLERS OF, SME PARTICIPATION IN VALUE CHAINS? INSIGHTS FROM SOUTH AFRICA AND KENYA. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2017/09/GA_Th2_DP.pdf

Chicago

Ngarachu, Anna, Peter Draper, and Kwame Owino. ARE PRIVATE SUSTAINABILITY STANDARDS OBSTACLES TO, OR ENABLERS OF, SME PARTICIPATION IN VALUE CHAINS? INSIGHTS FROM SOUTH AFRICA AND KENYA. South African Institute of International Affairs, 2017. https://saiia.org.za/wp-content/uploads/2017/09/GA_Th2_DP.pdf.

Wikipedia

{{cite report |last1=Ngarachu |first1=Anna |last2=Draper |first2=Peter |last3=Owino |first3=Kwame |title=ARE PRIVATE SUSTAINABILITY STANDARDS OBSTACLES TO, OR ENABLERS OF, SME PARTICIPATION IN VALUE CHAINS? INSIGHTS FROM SOUTH AFRICA AND KENYA |publisher=South African Institute of International Affairs |date=September 2017 |url=https://saiia.org.za/wp-content/uploads/2017/09/GA_Th2_DP.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ngarachu2017are, author = {Ngarachu, Anna and Draper, Peter and Owino, Kwame}, title = {{ARE PRIVATE SUSTAINABILITY STANDARDS OBSTACLES TO, OR ENABLERS OF, SME PARTICIPATION IN VALUE CHAINS? INSIGHTS FROM SOUTH AFRICA AND KENYA}}, institution = {South African Institute of International Affairs}, year = {2017}, month = sep, url = {https://saiia.org.za/wp-content/uploads/2017/09/GA_Th2_DP.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }