In 2024 and 2025, small and medium‑sized enterprises (SMEs) accounted for more than 50% of Africa’s GDP and roughly 70–80% of employment across the continent.
Though important to the economy, most still lack adequate financing, and many operate on thin margins with limited power access.
These same businesses are now facing two major changes at the same time, the need to operate sustainably and the spread of green technology.
Green technology, clean energy, efficient processes, waste innovation and climate‑smart leverage, are changing markets worldwide. My argument is for African SMEs, sustainability need not be a cost centre or an aspirational label.
With the right mix of policy, finance and adoption, green tech can be a profit engine, making SMEs stronger, more resilient and more competitive.
Top Policies to Watch: 2026 as Year of Institutional Discipline
SMEs: The Backbone of Africa’s Economy
Across the continent, SMEs make up the majority of businesses, informal and formal, and are vital to jobs and growth. They generate over half of Africa’s economic output. In low‑income economies, their share is usually over 50%.
Meanwhile, less than a fifth of them have access to formal credit, leaving a massive investment gap.
They are agile. They innovate. But they also feel immediate pressures such as high energy costs, unreliable electricity, and limited access to modern tools. That’s where green tech steps in.
What Green Tech Means for SMEs
Green tech is usually described at a national or multinational scale, but for SMEs, it’s far more concrete:
- Clean Energy: Solar panels and mini‑grids are now more affordable than ever. They replace expensive diesel generators and provide more reliable power.
- Climate‑Smart Agriculture: Irrigation tech, soil health systems and drought‑resistant methods help farms produce more with less risk.
- Circular Economy Innovation: Recycling and waste‑to‑value models turn disposal costs into revenue streams.
- Efficiency Tools: Software and sensors help track and reduce energy, water and fuel use.
These technologies directly relieve cost pressures that have long throttled small businesses.
Turning Sustainability into Profit
The common misconception is that sustainability means higher costs. That’s really not the case:
1. Lower Operating Costs
Energy is a top expense for many SMEs. Solar power and energy‑efficient equipment cut utility bills and stabilise cash flow. Diesel generators are expensive and unreliable; solar kits paired with batteries provide a predictable cost base and reduce downtime.
Recently, many African nations doubled imports of solar panels, showing expanded adoption of off‑grid clean energy solutions.
2. New Revenue Streams
Green tech opens revenue paths that didn’t exist before:
- Excess energy sales: Micro solar and wind installations can feed local grids in some markets.
- Green services and products: Eco‑certified goods attract premium buyers domestically and internationally.
- Carbon and sustainability financing: As investors move to climate‑aligned assets, businesses with measurable sustainability credentials gain access to new capital pools.
In Nigeria, for example, SME sector frameworks now channel climate finance toward climate‑smart business practices, providing tax incentives and credit support for firms adopting environmental, social and governance (ESG) criteria.
3. Competitive Advantage
Consumers are paying attention. In urban markets especially, buyers value brands that reduce waste or support local sustainability. This trend influences buying decisions, pricing power and marketing stories.
Limitations and Solutions
Of course, the transition isn’t automatic. SMEs face some limitations:
- Financing gaps: The IFC estimates a funding shortfall in sub‑Saharan Africa exceeding $300 billion for SMEs.
- Infrastructure deficits: Reliable transmission, storage and connectivity are still uneven, meaning some green tech can’t reach scale without support.
- Skills and capacity: Even affordable tech requires basic training and maintenance skills.
But solutions are emerging. Blended finance, where development finance, private capital and risk guarantees come together, is gaining ground.
African financial institutions have pledged more than $100 billion for green growth initiatives, aiming to support renewable adoption and sustainable trade.
There are also targeted funds focused on SMEs. For example, a $150 million solar green bond was launched to support rooftop installations and other productive uses for small businesses.
Policy and Finance: A Macro View
A supportive policy environment is important. Governments that extend tax incentives, import duty breaks on clean tech and clear sustainability standards make it easier for SMEs to adopt innovations.
National climate strategies that link SME development with energy transition targets align private and public objectives.
At the same time, climate finance flows into Africa are increasing but still far below needs. Recent data show funding grew nearly 50% in a short period, yet meets only about a quarter of the amounts required to fulfil climate commitments by 2030.
Sound policy can bridge that gap, combining international funds with domestic private sector mobilisation.
Across the continent, green tech is already changing business trajectories:
- In rural villages of Mali and beyond, solar mini‑grids are enhancing local commerce, reducing daily energy costs and enabling businesses like welding shops and bakeries to thrive.
- In South Africa, programmes that open the energy market to private producers are expanding renewable capacity and encouraging SMEs to invest in their own energy solutions.
These are templates, scalable, replicable and profitable.
With Africa’s population projected to approach 2.5 billion by 2050 and energy demand set to surge, green tech adoption is indispensable.
The renewable transition is a chance to leapfrog legacy infrastructure and unlock prosperity aligned with climate resilience.
SMEs are nimble, they touch communities and can lead this change. They can scale change faster than large firms burdened by legacy systems. So long as financing, policy and capacity building advance together, green tech can be an engine of both sustainability and profit.
What SMEs Should Do Now
- Get the basics right: Audit energy and resource use to identify quick savings.
- Explore blended finance: Seek partnerships that de‑risk green investments.
- Build competencies: Train staff on energy management and digital tools.
- Tell your story: Document sustainability metrics to unlock premium markets and capital.
SMEs in Africa have long been engines of growth and now they are at the brink of another chapter, 2026, where sustainability is a driver of profitability, not a burden.
Green tech isn’t just an add‑on but a strategy, and those who leverage it early will thrive well.
