Small and medium-sized enterprises (SMEs) are a major driver of economic development and job creation, particularly in the developing countries. In comparison to other business sectors, jobs in the clean technology sector are relatively safer, better paid and involve higher skills. Governments as well as private business organizations must turn a strategic focus on the cleantech sector to realize its full growth potential.
A new World Bank report titled, “Building Competitive Green Industries: the Climate and Clean Technology Opportunity for Developing Countries,” points out that a vast market opportunity to the tune of $1.6 trillion is waiting to be seized in clean technology in the developing countries. According to the report, China with a potential market size of $415 billion, Latin America with $349 billion, and Africa with $235 billion are the largest markets for SMEs in clean technology.
Cleantech has emerged as a major global market in recent years. Over the next decade, the total investment in cleantech in developing countries will be about $6.4 trillion, out of which $1.6 trillion will be accessible to SMEs. According to the World Bank, these investments will go in sectors such as solar panels, onshore wind, waste water treatment, bio-energy, electric vehicles, and small hydro. This can build a sustainable and wealth-producing sector of the economy in the developing world.
The report recommends that strategic actions by public and private sector companies can support green entrepreneurship in this growing market for SMEs in the cleantech business. Cleantech SMEs face serious hurdles in the developing world, particularly with regard to accessing early and growth stage financing. The report outlines a range of practical instruments that policymakers can use to extend greater support to SMEs in this sector. These instruments relate to key areas such as innovative finance, entrepreneurship and business acceleration, market development, technology development, and the legal and regulatory framework.
A focus on the clean technology market opportunities in the developing countries can produce a strong social impact. The report cites the example of Kenya, where about 80 percent of the population is not served by the power grid. SMEs and local entrepreneurs in this market are addressing the need for power through innovative solutions in solar and biogas technologies. This not only creates jobs, but also provides climate-friendly off-grid power to the economically weakest 40 percent of the population.