Growing up, I had the unique opportunity to learn on the job, a seemingly humorous situation considering I was still in school. Yet, in life, we have two avenues for learning: the business perspective calls it learning on the job, while the street dubs it the school of life. Today, I choose the path of learning on the job.
My father possessed an entrepreneurial mindset, and in the ‘90s, he authored an article titled “Banking on the Un-bankable,” a model later adopted by one of Kenya’s top banks. But let’s not digress. I actively participated in managing my father’s business, and I can assert that when you inquire about sustainability from an SME, the primary concern is the ability of the business to open its doors to customers the next day. A simplistic perspective, perhaps, but the reality for most Micro and Small Enterprises.
Contrary to the notion that acquiring clients and increasing sales guarantees the longevity of a business, the mismanagement of cash flows often leads to substantial closures. Sustainability enthusiasts have propagated the idea that discussing profitability is wrong. Yet, the fundamental business principle asserts that businesses aim to make profits; hence, they are not referred to as non-profit organisations. However, businesses must strike a balance between profitability and their impact on the environment and the community, a principle now encompassed by ESG.
Presently, there’s a heightened focus on Environmental, Social, and Corporate Governance (ESG), with the Nairobi Securities Exchange actively encouraging listed companies to include sustainability reports in their annual filings. This year alone, I’ve attended numerous sustainability report launches by KEPSA members; kudos to them! Yet, the lingering question remains: how can we support SMEs to adopt these best practices? Fortunately, larger corporations are integrating sustainability into their value chains, supporting suppliers in understanding and improving their processes. Did you know that innovation can be as simple as enhancing an internal process?
I perceive a substantial opportunity for businesses to integrate best practices, particularly with the increasing emphasis on ESG. Furthermore, I observe investment opportunities in transitioning to a circular economy, a concept that, while familiar to many Africans, is gaining recognition in academic circles. This approach involves resource utilization and waste redesign. Imagine a rural farm using what’s considered waste as a resource to generate value—a simple principle, now perhaps sounding too complex. Assessing key sectors in the economy, I’ve identified three with significant potential for benefit: agriculture, the waste sector, and energy.
However, the discussion on sustainability cannot conclude without addressing two critical issues: the ease of doing business and competitiveness. We’ve read repeatedly about businesses closing their doors within the first five years or even less. To foster a country’s growth, thriving businesses are imperative for increased employment opportunities.
In recent discussions with experts, there’s a consensus that focusing on the quality of goods supports a country’s transition to an export-growth economy. However, a pivotal question arises: Have we built the capacity for value addition? If not, why not focus on reducing the cost of doing business to enhance competitiveness compared to our neighbours? As you contemplate solutions, you’re in a great place to start. Let’s continue this thought-provoking discussion in my next article!
Written by Ebenezer Amadi.
Amadi is a Sustainability Champion, Finance Expert, and Conference Moderator Extraordinaire. He currently serves as the Program Manager at the Kenya Private Sector Alliance (KEPSA).
