In 2026, small business owners in Nigeria still face challenges such as frequent power outages, high inflation, currency instability, limited access to affordable financing, and poor infrastructure.
These issues make it difficult to adopt and maintain sustainability initiatives. Targeted sustainable initiatives can reduce costs and improve access to emerging financing opportunities.
Small and medium enterprises (SMEs), businesses with smaller staff numbers and lower revenue, make up about 50% of Nigeria’s GDP and provide roughly 80% of jobs.
Although Environmental, Social, and Governance (ESG) principles are getting recognition globally, adoption among Nigerian SMEs is still low. Surveys show only about 28% of Nigerian SMEs have formal ESG frameworks, despite 73% of lenders now factoring ESG criteria into funding decisions.
The Bank of Industry’s 2025 ESG Adoption by Nigerian MSMEs report identified gaps in awareness, funding, and technical capacity as key limitations.
Meanwhile, the Financial Reporting Council of Nigeria has outlined a roadmap for voluntary sustainability disclosure starting in 2024, becoming mandatory for public interest entities in 2028 and for SMEs by 2030.
This article outlines practical, evidence-based sustainability initiatives targeting Nigerian businesses, focusing on steps that reduce costs and align with national climate and economic objectives.
1. Integrate Basic Sustainability Thinking Into Daily Operations
Sustainability can start with simple documentation. Many SMEs in Nigeria operate informally. Documenting energy use, diesel consumption, waste output, and local supplier usage helps create a baseline at minimal cost.
Setting modest targets, like reducing annual energy expenses by 10-15%, is realistic for businesses with tight margins.
Early documentation also supports eligibility for climate-linked financing under the Bank of Industry’s Sustainability Finance Framework.
2. Shift Toward Energy Efficiency And Solar Alternatives
Nigeria’s national power grid is unreliable and prone to frequent failures. In 2025, there were multiple complete grid collapses, and expensive diesel prices were challenges for businesses.
In the first half of 2025, Nigeria imported solar panels worth N242.68 billion, up 17.3% from the previous year.
Many businesses have installed solar or hybrid systems for lighting, fans, machinery, and cold storage, with payback periods usually between 2 and 4 years due to saved diesel expenditure.
Off-grid solar solutions have been widely adopted in urban, rural and semi-urban areas, supporting retail, food processing, agriculture, and small manufacturing.
Bloomberg reported in early 2026 that solar energy is gradually replacing diesel generators, improving operational hours and reducing downtime.
Investing in energy-efficient equipment, like LED lights, inverters, and well-maintained appliances, further lowers costs over time.
3. Implement Waste Minimization And Circular Practices
Waste management is a low-cost way to generate savings. In food businesses, better inventory and portion control reduce spoilage.
Traders and manufacturers can segregate plastics, metals, and organic waste for resale, reuse, or composting. Circular approaches, such as repurposing packaging or agricultural residues, reduce disposal fees and sometimes create extra income.
Initiatives like the RecycleUp Nigeria Innovation Program 2026 aim to support 1,000 innovators working on waste-to-value solutions in plastics, electronics, textiles, and agriculture.
These also help businesses comply with environmental regulations and appeal to consumers who value ethical practices.
These steps also help businesses comply with environmental regulations and build stronger supplier-customer relationships in markets where ethical practices are valued.
4. Strengthen Local And Sustainable Sourcing
Dependence on imports makes businesses vulnerable to forex fluctuations and supply disruptions.
Using local raw materials, such as cassava for processors, recycled packaging inputs, or organic fertilizers, stabilises costs, shortens supply chains, and supports local jobs.
Auditing suppliers for basic ethical standards, including fair labor and environmental compliance, reduces risks. Aligning local sourcing with African Continental Free Trade Area (AfCFTA) opportunities supports broader economic goals.
5. Monitor And Reduce Environmental Footprint
Full carbon accounting may be impractical for most SMEs, but tracking fuel consumption, electricity usage, and transport emissions using basic spreadsheets is feasible.
Reducing direct emissions through efficiency gains and solar adoption delivers immediate savings. Larger SMEs can explore voluntary carbon markets or alternative fuels as awareness grows.
These efforts enhance credibility when applying for grants, loans, or partnerships from institutions prioritising climate resilience.
6. Engage Employees And Local Communities
In labour-intensive sectors, involving staff in conservation measures, energy-saving routines, waste sorting, or safety training improves productivity and retention.
Offering small incentives for green commuting or skill development in renewable technologies supports workforce stability.
Contributing to community-based needs like sanitation exercises, skills workshops, or access to portable water builds trust and customer loyalty in markets where social responsibility influences purchasing decisions.
These Corporate Social Responsibilities help to endear the entrepreneur to his or her immediate business communities, thereby improving patronage and making them see the business operations as their own.
7. Adopt Affordable Digital Tools For Efficiency
Low-cost mobile applications track inventory to prevent overstocking and waste, forecast demand, and monitor energy use.
Purchasing solar-powered Point-of-Sale (PoS) systems would transactions downtime that could have occurred due to power failure, a common challenge facing the Nigerian SMEs.
Digital tools help optimise resources in an environment of constrained cash flow.
8. Prepare For Transparent Reporting And Compliance
Maintaining records of energy savings, waste diversion, or community contributions prepares businesses for future requirements. SMEs that demonstrate measurable impacts in their business operations improve eligibility for better financing terms and more collaborative partnerships.
In Nigeria’s current economic reality, the aforementioned systematic practices focus on cost control, risk mitigation, and incremental resilience rather than large-scale transformation.
Nigerian SMEs that begin with practical steps like energy efficiency, waste reduction, and local sourcing would position themselves for durability, improved access to finance, and alignment with evolving and regulatory and market expectations.
