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Think green, grow competitive!• GEPA, trade centre prepare Ghanaian SMEs

BY: Ebenezer Kumi
The writer
The writer

Speak with many Ghanaian small and medium-sized enterprises (SMEs) about green and circular economy business practices and chances are they would be highly sceptical and believe those practices are for advanced companies elsewhere: luxuries Ghanaian SMEs cannot afford and are not ready for.

They are convinced that while becoming environment-friendly will add cost on one hand, on another hand, Ghanaian consumers are not willing to pay for eco-friendly products.

But the feeling of ‘we are not ready’ is a one-sided view based on an outdated analysis of risks and returns of environmentally friendly businesses in emerging economies.

Around the world, a growing body of evidence from companies of all sizes suggests that the relationship between ecology and economy is not as competitive as many assume.

Research by UN Environment shows that eco-innovative companies of all sizes are growing, on average at a rate of 15 per cent a year, at a time when their respective markets have remained flat; with SMEs particularly responsive to eco-innovation due to their adaptability and flexibility.

The triad of competitiveness

Contrary to what many SMEs believe, when well done, mainstreaming environmentally friendly practices holds the key to unlocking innovation and accessing new markets and finance for forward-thinking SMEs.

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Take the organising principle of sustainability: using and reusing natural resources as efficiently as possible and finding value throughout the life cycles of finished products; this is an inherently innovative process.

Businesses operating sustainably typically conduct in-house auditing and continuously experiment with technologies, raw materials and alternative uses for products that often reveal opportunities in reducing, repairing, reusing and recycling.

This reduces waste, lowers cost and improves profitability.
Second, environmentally friendly companies are increasingly gaining support from investors, banks, municipalities and even crowd-funding contributors.

In Ghana, although the impact investing space is small, there is evidence that is starting to grow.

The Global Impact Investing Network (GIIN) estimates that during the 10-year period between 2005 and 2015, the volume of impact capital deployed in Ghana equalled US$1.69 billion.

Impact investors—unlike traditional banks with ridiculous interest rates and rigid portfolios—are flexible and provide customised and blended “patient capital” that meet the needs of small and growing eco-friendly enterprises.

Third, SMEs are unlocking new market opportunities by implementing credible sustainability standards across their operations.
A recent survey by the World Economic Forum predicts significant growth in demand for sustainable products and services worldwide.

The survey found that only six per cent of consumers in Germany and 10 per cent in South Korea felt that enough sustainable products were available; with economies such as China and India also showing a steep rise in demand for sustainable product offerings. This is good news for SMEs in emerging economies aiming to expand their markets through export.

A circular economy perspective certainly gives companies the edge and embedding sustainable business practices into business models and operations is no longer optional— it is now imperative to remain competitive.

The central question then for SMEs should not be whether to implement sustainable business practices or not, but rather how to implement these practices.

At Trade for Sustainable Development (T4SD) Hubs, a global initiative by the International Trade Centre (ITC), hosted by the Ghana Export Promotion Authority (GEPA) in Ghana, this was the focus.

The T4SD Hub focussed on coaching SMEs to embrace and integrate sustainable business strategies into their daily operations to improve competitiveness and increase their participation in international value chains. Specifically, it will guide SMEs to:

Start with the big picture

Companies that have successfully integrated sustainability practices begin with a shift in perspective from seeing sustainability as a luxury to seeing it as a key to growth and improving competitiveness.

To do this, they must take actionable steps, starting with:

1) Seeing compliance with voluntary sustainability standards as an opportunity
2) Learning to track the environmental impact of their activities and products
3) Scanning for new ways to deliver and capture value.

These steps are not easy for businesses who are used to traditional take, make and dispose business models. But one step makes the next possible.

The writer is the Trade for Sustainable Development (T4SD) Hub Lead in Ghana.

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