Climate finance presents opportunity for SMEs to scale – Prof Ahenkan

A climate finance expert and Head-Department of Public Administration and Health at the University of Ghana Business School (UGBS), Professor Albert Ahenkan, has said climate finance presents an opportunity for Ghanaian small and medium enterprises (SMEs) to scale and grow beyond the country’s borders.

Even though Ghana has a dedicated climate fund reportedly worth US$100million, he noted SMEs are ill-equipped to draw down this climate funding due to lack of awareness and bankable projects.

In an exclusive interview with Business and Financial Times (B&FT) in Accra, Prof. Ahenkan stressed there is a growing pool of concessional funds and grants from multilateral institutions earmarked for businesses that can demonstrate “climate smartness”.

However, Ghanaian SMEs are failing to position themselves to absorb these inflows. Prof. Ahenkan therefore urged SMEs to re-engineer their business models and become “climate smart” by incorporating climate change mitigation and adaptation practices into their operations.

This, he explained, will open the gateway for cheaper, patient capital to scale – surmounting the high interest, heavy collateral demands from banks. “Once our businesses are climate smart, then we’ll be heading toward attracting climate-related financing options. There are a lot of funds around that thing,” he said.

The climate finance expert emphasised that while traditional lending remains prohibitively expensive, green finance presents an unprecedented opportunity for local businesses – calling for awareness campaigns to sensitise the business community they are enabled to utilise these funds.

“If we have the information and don’t collaborate with the private sector, if we don’t move information down to the private sector, it becomes very difficult for them to understand,” he said.

Prof. Ahenkan further urged the Ministry of Finance – custodian of the climate fund – to educate and sensitise businesses on available opportunities; warning that if this is not done, efforts to catalyse climate-related enterprises will not yield results.

“We have incentives at the national level and then at the sub-national level where the private sector actors are playing… and they have no idea of these opportunities. They will miss the opportunity,” he said.

He further encouraged SMEs to study the climate change landscape to find opportunities, asking: “Within the broader climate, climate change mitigation and climate change adaptation, where can we cash in as a country? And if we want to cash in, where can we get support?”

However, Prof. Ahenkan cautioned climate funds are not just disbursed anyhow, explaining that access hinges on the ability to present bankable projects that demonstrate measurable climate impact.

“Sometimes, also, the funds come and then we find it very difficult for people to access them because they lack capacity. The monies are not just for sharing. No, they are not for sharing. We need to be able to present bankable proposals, climate-related proposals, so that they can receive funding,” he explained.

He therefore stressed that there must be deliberate training and support to equip entrepreneurs with the technical knowledge required for accessing climate finance.

The academic called on government to deepen engagement with the business community, stressing that the disconnect between policy and reality is costing the economy.

“We expect the ministry level to show intensified engagement with the private sector, so that at least you can be aware of: one, the climate finance investment opportunities; two,climate finance funds which are available; and three, how can they can be accessed,” he said.

He also called for a stronger collaboration with academia in order to translate research into actionable enterprise support and ensure climate finance becomes a lever for economic growth.