By Ayanda Agrippa Mamba
As the global economy shifts towards sustainability, small businesses in Africa face a growing need to respond to the green transition. While climate regulations and environmental accountability frameworks are expanding, most African small and micro-enterprises lack the tools, knowledge, and resources to measure their environmental impact.
However, mobile fintech offers a powerful, scalable, and affordable solution to help these businesses track their carbon emissions and unlock access to emerging green finance opportunities.
The Need for Small Business Participation in the Green Transition
According to the International Finance Corporation (IFC), small and medium enterprises (SMEs) contribute up to 90% of employment and over 50% of GDP in sub-Saharan Africa.
Despite their economic importance, these businesses often operate informally and outside traditional sustainability reporting structures. As global supply chains and financial markets increasingly demand ESG (Environmental, Social, and Governance) compliance, African SMEs risk exclusion if they do not adapt.
At the same time, the African continent is one of the most vulnerable to climate change impacts. By adopting greener practices and demonstrating their efforts through measurable data, African businesses can not only reduce their environmental footprint but also position themselves for climate resilience and economic competitiveness.
Why Carbon Tracking Matters for Green Finance
Green finance, including sustainability-linked loans, carbon credits, and climate-focused investment, relies heavily on data. Financial institutions and investors need to see verifiable metrics showing a company’s environmental performance and progress.
For small businesses, this has traditionally been a barrier: the cost and complexity of emissions tracking tools, consultancy services, or certification schemes have made them inaccessible.
This is where mobile fintech can play a transformative role. By leveraging mobile-based platforms and digital wallets, fintech applications can integrate simple carbon tracking features that align with a business’s spending, inventory, and operational data.
For example, a small shop using a mobile payment platform can receive automatic insights on the carbon intensity of the products they buy or sell, or estimate emissions from fuel and energy usage based on mobile transactions.
Adapting Fintech for Environmental Impact
Many existing financial technologies in Africa were designed to address financial inclusion or to enable peer-to-peer transactions and microloans. While these are vital services, there is a growing need to extend the functionality of such tools to include environmental impact tracking.
Fintech startups and mobile money providers can innovate by incorporating carbon accounting frameworks tailored to small businesses.
These can be built on simplified emissions calculators, industry benchmarks, and AI-powered estimations. Integration with existing mobile POS systems or digital bookkeeping tools would allow for seamless, real-time data capture.
For example, fintech apps could offer:
- Emissions estimates linked to transaction categories
- Tips and alerts on how to reduce carbon usage
- Access to green loan products based on sustainability scores
As grant funding, climate-linked development finance, and carbon markets grow, small businesses that can report and verify emissions will become eligible for incentives and support.
The Digital Divide and the Call for Adaptation
Despite progress in digital adoption, over 40% of businesses in Africa still operate without any digital tools, according to a 2022 GSMA report. This digital divide makes it even more urgent for technology to be mobile-first, user-friendly, and accessible even in low-connectivity areas.
SMS-based solutions, voice interfaces, and offline data entry options can ensure inclusivity while encouraging environmental reporting.
As regulators across Africa begin to integrate climate disclosures into national policy and financial systems, there is an urgent opportunity for fintech companies to position themselves as enablers of compliance.
The African Union, national development banks, and global institutions are increasingly pushing for green transition funding tied to measurable outcomes. Tech providers that offer plug-and-play emissions reporting for SMEs will find themselves in high demand.
The Business Opportunity for Fintech and Tech Companies
The convergence of climate regulations, impact investing, and SME digitalization presents a massive opportunity. Tech companies that adapt their platforms to include sustainability metrics can attract new business from governments, NGOs, and green finance institutions.
As grant funding, climate-linked development finance, and carbon markets grow, small businesses that can report and verify emissions will become eligible for incentives and support.
Yet most carbon accounting platforms remain costly and built for large corporations. There is a gap in the market for fintech-driven, mobile-accessible, lightweight tools designed specifically for small and micro-enterprises. This is the sweet spot where fintech can create both economic and environmental value.
An outlook on key african economies and their carbon reduction targets
South Africa
- Carbon Reduction Ambitions: South Africa has committed to achieving net-zero emissions by 2050. The country aims to reduce emissions to 350–420 million tonnes annually by 2030, down from the current 442 million tonnes. However, delays in decommissioning coal-fired power plants pose challenges to meeting these targets.
- Digital Penetration: As of 2024, South Africa’s internet penetration rate stands at 74.7%, reflecting significant progress in digital infrastructure development.
Ghana
- Carbon Reduction Ambitions: Ghana has pledged to reduce greenhouse gas emissions by 64 million metric tons of CO₂ equivalent by 2030. This commitment includes 9 unconditional and 25 conditional mitigation measures, contingent on international support.
- Digital Penetration: In 2022, Ghana’s internet penetration rate was approximately 53%, indicating a growing digital landscape.
Morocco
- Carbon Reduction Ambitions: Morocco has set an ambitious target to reduce greenhouse gas emissions by 42% by 2030 compared to business-as-usual scenarios. The country has invested heavily in renewable energy, aiming for 52% of installed electricity capacity from renewables by 2030.
- Digital Penetration: As of 2024, Morocco boasts an internet penetration rate of approximately 91%, making it one of the most digitally connected countries in Africa.
Egypt
- Carbon Reduction Ambitions: Egypt aims to reduce greenhouse gas emissions by 33% in the electricity sector, 65% in the oil and gas sector, and 7% in the transport sector by 2030, relative to business-as-usual levels. (Mukherjee, 2023)
- Digital Penetration: As of January 2024, Egypt’s internet penetration rate reached 72.2%, with approximately 82 million internet users.
Kenya
- Carbon Reduction Ambitions: Kenya has committed to reducing greenhouse gas emissions by 32% by 2030 relative to the business-as-usual scenario. The country focuses on renewable energy, with over 70% of its electricity generated from renewable sources.
- Digital Penetration: In 2023, Kenya had an internet penetration rate of 32.7%, with 17.86 million internet users.
Nigeria
- Carbon Reduction Ambitions: Nigeria aims to reduce greenhouse gas emissions by 20% unconditionally and 47% conditionally by 2030 compared to business-as-usual levels. The country focuses on sectors like energy, agriculture, and transportation.
- Digital Penetration: As of December 2023, Nigeria had 163.3 million mobile internet subscriptions. However, a significant usage gap remains, with many people living within mobile broadband coverage areas not using the internet.
Mobile Fintechs as a Bridge to a Greener Economy
Mobile fintechs are uniquely positioned to help African small businesses become part of the green transition. By embedding emissions tracking into mobile financial services, they can empower businesses with the data needed to attract green finance, meet regulatory expectations, and operate more sustainably.
As traditional sustainability systems remain unaffordable or inaccessible to most small enterprises, the fintech sector has the potential and the responsibility to bridge the gap. In doing so, they can not only unlock new business models and partnerships but also accelerate Africa’s path to a climate-smart, inclusive economy.
References
- Africa Business Insider. (2022). 10 African countries that have the most number of internet users in 2022. https://africa.businessinsider.com/local/markets/10-african-countries-that-have-the-most-number-of-internet-users-in-2022/cy3p01v
- African Union. (2022). Green recovery action plan: 2021–2027. https://au.int/en/documents/20220615/green-recovery-action-plan-2021-2027
- Business Day Nigeria. (2023, December 7). Nigeria tops other African countries with most internet usage gap. https://businessday.ng/news/article/nigeria-tops-other-african-countries-with-most-internet-usage-gap/
- GSMA. (2022). State of mobile internet connectivity 2022. https://www.gsma.com/r/mobilefordevelopment/wp-content/uploads/2022/09/GSMA-State-of-Mobile-Internet-Connectivity-Report-2022.pdf
- International Finance Corporation. (n.d.). SMEs and jobs. https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/smes-and-jobs
- Life in Humanity. (2024). Africa’s digital transformation: Bridging the gap between potential and progress. https://lifeinhumanity.com/africas-digital-transformation-bridging-the-gap-between-potential-and-progress
- Reuters. (2024, February 27). South Africa says climate targets on track if coal switch not delayed again. https://www.reuters.com/business/environment/south-africa-says-climate-targets-track-if-coal-switch-not-delayed-again-2024-02-27/
- UNDP Africa. (2023). Financing climate adaptation and mitigation in Africa. https://www.undp.org/africa/publications/financing-climate-adaptation-and-mitigation-africa
- World Bank. (2023). Digital economy for Africa initiative. https://www.worldbank.org/en/programs/all-africa-digital-transformation
