A green economy is becoming more necessary for a nation’s financial health. A sound understanding of factors such as climate change, environmental degradation, limited energy and water resources as well as food security are crucial to ensuring a robust economy.
Consequently, the public and private sectors as well as civil society have taken various initiatives to help manage and address these concerns before they begin to impact negatively on the health of a country’s economy.
To this end, the development and utilisation of intellectual capital and a greater focus on sustainable development while also reducing the environmental impact will be key drivers in turning the wheels of economic activity in the knowledge and green economies.
Examples of initiatives already in place include innovative recycling; the development of more green spaces; the construction of green buildings; creating renewable energy; and sustainable agricultural practices which are complemented by environmental and social programmes.
South Africa has a growing interest in both the knowledge and green sectors, which are growing exponentially worldwide and have a larger influence on the livelihood of a nation than ever before.
Environmental opportunity
Research by the Department of Environmental Affairs that provided insight on the employer categories shows that 64 percent of workers are in small, medium and micro-sized enterprises (SMMEs) and industry, 21 percent are in the public sector, 14 percent with environmental non-profit organisations (NPOs) and 1 percent in environmental research and development.
The figures indicate that there are jobs available in the knowledge and green sectors in South Africa that have a pivotal role to play in advancing the provincial and national economies.
It thus stands to reason that although employing significantly less than SMMEs, the environmental sector is important and could be one of the building blocks that is needed to spur the economic growth rate, reduce unemployment, increase average household incomes, reduce the poverty gap and increase the tax base.
A recent study under the UN Development Programme shows the current growth rate is too slow to reduce unemployment, which continues to reproduce both economic and social inequalities. The growth rate needs to increase as well as be inclusive, sustainable and equitable.
Whilst SMMEs are at the centre of this, the environmental sector too can play a vital role based on the significant percentage it holds in the economy.
The knowledge sector is also an important focus for KwaZulu-Natal. Organisations such as the Moses Kotane Institute, an entity of the KwaZulu-Natal Department of Economic Development and Tourism, is driving the agenda of skills development through programmes that focus on science, technology, engineering and mathematics and which attract employees to high level government officials.
Similar strategically focused programmes that are aligned with the government’s national objective to become a developmental state must be implemented if we are to achieve a thriving economy.
Sustainability is without doubt a long-term investment. Some of the barriers to promoting a green and knowledge economy include the employment legislation and policy, technology and business infrastructure, absence of vehicles for skills development and capacity building, socio-economic factors, HIV/Aids, poverty, poor access to financial assistance, lack of access to information and a shortage of effective support institutions.
Furthermore, poor access to wider markets implies that businesses looking to invest in these sectors may be limited with what they can do and assistance may not be as readily available as it should be.
Decreased awareness among business leaders of the business imperative to be sustainable is a significant barrier.
The way that different people interpret the word “sustainability” is also important. If they view it as being continuous incremental improvement of environmental impacts on top of philanthropy, as many bosses think of sustainability, then the business imperative is widely understood.
But if it is a business that compromises the ability of future generations to meet their own needs (moving to a green economy) then the low awareness of the business imperative is a significant barrier.
If executives truly understood the risks and opportunities of such issues, including the complexities that human rights, climate change and water scarcity present to their businesses, the level of resource commitment and in turn the pace of change would be significantly higher than it is.
Sustainability
Business leaders worldwide, and in KwaZulu-Natal in particular, understand that today’s society cannot continue indefinitely on the consumption path that it is currently on.
However, many do feel constrained by the expectations of shareholders and regulations that take away the incentives of taking the steps towards a green economy.
The key is to pursue the long- and short-term measures, the tactical and the strategic, the definites and the big bets. While this transformation may occur incrementally, it will not happen at all without seeing and believing in a future economy in KwaZulu-Natal that is sustainable.
In December 2011, GlobeScan and SustainAbility, in collaboration with the UN Environment Programme, queried about 650 sustainability experts and practitioners from around the world to get intelligence on the barriers that were impeding progress to sustainability.
Nearly two-thirds of the survey respondents believed that inappropriate regulation, standards that inhibit, or insufficient rules to encourage more sustainable practices and behaviours constituted a significant barrier to sustainability. Some examples include perverse subsidies, or externalising the cost of pollution and other environmental impacts.
This is a challenge that cannot be fixed by the business community in KwaZulu-Natal alone. Political posturing, deeply held beliefs and philosophies about the role of government, national competitiveness, and numerous other dynamics factor into the development of regulations.
The development and enhancement of the knowledge economy is one of the key strategic goals of the KwaZulu-Natal provincial government, while the growth of the green economy is in line with the government’s agenda to encourage and support the youth to come up with innovative ideas within this economic sector.
It is reassuring to be part of an organisation whose commitment to economic development extends far beyond the products and services it offers and places people at the forefront of its business operations.
Businesses must be seen to be championing projects that are positively impacting on the local and ultimately, national economy, be it in the form of stimulating an entrepreneurial province; providing unemployed youth with an opportunity to sustain themselves on their journey to becoming entrepreneurs; growing and rewarding women in small business; empowering people with the necessary skills, knowledge and opportunities to enable their dreams; encouraging financial inclusion through access to information; enhancing the customer experience or educating people about the importance of financial literacy.
Ithala Development Finance Corporation’s Inkunz’isematholeni Youth in Business programme is one such initiative that focuses on the knowledge and green economies where youths with innovative and sustainable business concepts are targeted for incubation and assistance in starting up in their journey to becoming seasoned entrepreneurs.
Fostering entrepreneurs
Assistance is provided to enable aspiring entrepreneurs to turn their creative concepts into fully operational businesses by providing start-up capital and the necessary business support to help them launch, manage and run businesses successfully.
Exposure to entrepreneurship education, starting from a young age and continuing through adulthood into higher education, as well as reaching out to those who are economically or socially excluded is imperative if we are to create an entrepreneurial province.
We must create an environment that is conducive to growth by promoting the knowledge and green economies and securing commitment to this from businesses in KwaZulu-Natal with sustainability and growth driving the economy to enable us to move forward as a nation.
Mano Muthusamy is the acting business finance executive at Ithala Development Finance Corporation.