article · Cogent Business & Management
Small and medium-sized enterprises in East Africa play a critical role in driving economic growth and employment, making their transition to sustainable practices vital. An investigation using panel data from 150 private venture capital firms assessed how sustainable finance aligns with long-term enterprise sustainability. A multi-regression analysis shows that improved access to sustainable finance, proactive government engagement, and robust policy frameworks collectively account for 14.7 percent of long-term sustainability achievements in these businesses. These factors directly contribute to enhanced productivity and growth across the enterprise sector. The findings highlight the value of combined efforts between policymakers and investors prioritising environmental, social, and governance standards to foster resilient business operations. Expanding access to sustainable capital and strengthening policy support remain essential steps to build lasting economic resilience and advance sustainability goals in the region.
Small and medium-sized enterprises generate vital employment and economic activity, yet securing sustainable capital remains a hurdle. Demonstrating that sustainable finance and supportive government policy directly improve enterprise growth and productivity provides clear evidence for fund managers and regulators. Fostering environmental, social, and governance criteria helps build durable businesses while advancing broader environmental objectives across developing economies.
The research identifies opportunities for private equity, venture capital firms, and impact investors seeking to develop specialised ESG investment instruments for East African enterprises. While the underlying research is empirical rather than a physical technology, its practical models can be applied by fund managers and policymakers designing financial products and targeted regulatory incentives. Practical implementation remains early-stage, driven by the nascent market for sustainable financial tools in the regional enterprise ecosystem.
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In recent times, there has been a global shift towards sustainable finance, aligning financial activities with environmental, social, and governance principles (ESG). This trend is crucial for promoting sustainable businesses and driving positive change, especially in East Africa where small and medium enterprises (SMEs) play a vital role in economic growth and job creation. Sustainable finance adoption within the SME sector is key to long-term economic sustainability and environmental responsibility. A mixed-methods approach was employed, utilizing the multi-regression model in SPSS 29.0 to analyze the outcomes. The multi-regression analysis of panel data from 150 private venture capital (VC) companies indicates that enhanced access to sustainable finance, proactive government engagement, and robust policy frameworks accounted for 14.7% of the observed long-term sustainability successes among SMEs. This translated to enhanced productivity and growth within the SME sector. The study carries significant policy implications. It highlights the importance of policymakers promoting and incentivizing the adoption of sustainable finance practices among SMEs. Additionally, investors who prioritize ESG factors can drive demand for sustainable finance options, supporting SMEs that prioritize sustainability. This collaboration between policymakers and investors can promote sustainable business practices, ensuring the success and resilience of SMEs while advancing overall sustainability goals. However, the study’s limited scope and the nascent stage of the field may constrain the findings’ applicability, underscoring the ongoing necessity to expand sustainable finance access and policy frameworks to support SMEs in their environmentally responsible strategies for enduring success and resilience
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DOI: 10.1080/23311975.2024.2391122
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