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Tuesday, 31 May 2016

Scaling Support for Green Innovations

By Edward Mungai
Sub-Saharan African (SSA) countries urgently require new economic models that integrate green growth in decision-making and development planning. This is because the region is among the most vulnerable to negative impacts of climate change and has limited adaption capacity because of resource constraints and over reliance on natural resources.
The media is always awash with stories of how SSA countries are being affected by intense weather related natural disasters such as droughts, floods, and storms.
Hydroponic system of agriculture. TRF/Climate Innovation Centre
These events have wide ranging consequences, often directly destroying, or limiting the gains from economic growth. Infrastructure is damaged, crops are destroyed, yields are reduced, homes destroyed and sometimes communities are displaced.
Green economy provides an economic case for addressing climate change through promotion of green innovations. The transition to a Green Economy is unlikely to be straightforward. It requires strong leadership particularly from the government and a collaboration of all stakeholders and more so the private sector.
The government will need to take the lead in creating the right enabling environment to support the up-take and diffusion of green technologies. The investment and innovative capabilities of the private sector are crucial for the transition to a green economy.
With climate change as a reality, it poses a threat to resource availability; an innovative private sector that can develop disruptive products, services and technologies to adapt to climate change is required.
Unlike mitigation technologies, which are concentrated in a few sectors such as energy, industry, and transport, adaptation technologies are dispersed across all socio-economic sectors including water, health, agriculture, and infrastructure. In addition, they should be more adaptable to local circumstances, which mean that in addition to being socially acceptable they can be made less capital intensive compared to mitigation technologies.
This makes them more amenable to small-scale interventions and can therefore be easily promoted by small and medium enterprises (SMEs). Some of the green innovations required for adaptation range from water efficient irrigation systems; water recycling and purification; resilient building technologies; water management systems; drought-resilient crops; insurance tools and early warning systems.
The role of SMEs in promoting green innovations for climate change cannot be ignored. In Kenya for instance, SMEs employ up to 80 per cent of the population and accounts for about 45 per cent of the GDP.
This is a common trend in other countries in Africa and hence the SME sector is very important to the economic development. SMEs are closely integrated into their communities allowing them to get products and services to hard-to-reach populations, they have local knowledge of consumer demand and supply, and they can easily upgrade their current products to adapt to their customers’ need and changing climate unlike large corporations.
However, they face multiple challenges when trying to grow their operations including difficulties in accessing finance, lack of specialist knowledge and excessive regulatory burdens. Incubation centers like the Climate Innovation Centres (CICs) have been set up to specifically support entrepreneurs circumvent these challenges.
The CICs, supports enterprises that are developing green innovations to address local climate change challenges. The centers offer a suite of services key among them being access to financing through various stages of the technology growth cycle.
At the early stage, CIC provides proof of concept grants aimed at establishing technical and commercial viability of the idea or business models through moving the technologies and products across the stages with high risk of failure.
After the Proof of Concept the enterprises are assisted to access other forms of financing as the business requires chief among these being seed financing. This is aimed at supporting companies in the next stage of their development where they require financing for further market testing and business model validation, leading to a full market rollout.
The other services that CICs provides SMEs include business advisory services and training; access to technical and office facilities; access to information and policy advice and advocacy.
The Kenya CIC for instance was the first of the CICs to be established and is an initiative supported by the World Bank’s infoDev and funded by Danida and UKaid. It is one of the CICs being launched by infoDev’s Climate Technology Program (CTP). The other CICs are in Ethiopia, Ghana, South Africa, Morocco, Vietnam, and the Caribbean.
The role of developing partners in supporting the development and deployment of green technologies is of utmost importance.
Development agencies can best support countries to make a transition to green economy effectively through supporting SMEs, providing policy advice to design and implement effective green growth policies; building human and institutional capacity; establishing international and regional cooperation; facilitating stakeholder involvement; and, communication to support green economy measures and encourage behavior change; and technical support.
Innovation is key to green growth. It helps separate growth from natural capital depletion and contributes to economic growth and job creation. Business is the driver of innovation, but governments should provide clear and stable market signals, for example through carbon pricing, better standards for green growth as well as providing mechanism for information the citizenry on the various options available to green their consumption and production.
Edward Mungai is the Chief Executive Officer Kenya Climate Innovation Centre (CIC). His E-mail address is emungai@kenyacic.org
Article available in Joto Afrika edition 17. Download a copy of the newsletter here
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