How do African SMEs respond to climate risks? Evidence from Kenya and Senegal

Abstract

a b s t r a c tThis paper investigates to what extent and how micro, small and medium-sized enterprises (SMEs) in developing countries are adapting to climate risks. We use a questionnaire survey to collect data from 325 SMEs in the semi-arid regions of Kenya and Senegal and analyze this information to estimate the quality of current adaptation measures, distinguishing between sustainable and unsustainable adaptation. We then study the link between these current adaptation practices and adaptation planning for future climate change. We find that financial barriers are a key reason why firms resort to unsustainable adaptation, while general business support, access to information technology and adaptation assistance encourages sustainable adaptation responses. Engaging in adaptation today also increases the likelihood that a firm is preparing for future climate change. The finding lends support to the strategy of many development agencies who use adaptation to current climate variability as a way of building resilience to future climate change. There is a clear role for public policy in facilitating good adaptation. The ability of firms to respond to climate risks depends in no small measure on factors such as business environment that can be shaped through policy intervention.

The need for bottom-up assessments of climate risks and adaptation in climate-sensitive regions

“…Adaptation options are diverse in delta environments: these regions are accessible, productive and are frequently sites of major populations and urban economic growth poles 60 How delta resources are used are the outcome of myriads of individual decisions: hence a need for observational studies on agency and choice. Rice farming practices in deltas, for example, are highly exposed to both periodic floods and to creeping salinization, affecting food security and health outcomes 51,52 . In depth methods including semi-structured interviews and focus groups with farming communities in the Mahanadi delta in India, show that insecure land tenure and uneven access to credit drives the spatial patterns of vulnerability to environmental hazards 51 .…”

“…SMEs which were currently engaging in adaptation practices were more likely to plan for future climate change and the likelihood of future planning was higher for those adopting sustainable practices. The authors note that their analysis was based on cross-sectional evidence making it difficult to determine conclusively the causality of some of the correlations obtainedcollection of panel data would strengthen the evidence base 52 .…”

“…Within the CARIAA programme a survey of Small and Medium Enterprises (SMEs) in Kenya and Senegal was designed to collect extensive information on firms' adaptation behaviour to both current climate variability and future climate change 52 (Table 1). Using an ordered probit model, the link between current adaptation behaviour and the likelihood of planning for future climate change was examined 43 .…”

Risk Attitude, Risk Perception and Risk Management Strategies Adoption in Zimbabwean Small and Medium Enterprises

“…The challenges facing small and medium enterprises (SMEs) in Africa's business environment are well documented and include poor infrastructure services and limited access to financing (Page &Söderbom, 2015;Crick, Eskander, Fankhauser & Diop, 2018). However, there is still limited empirical literature on risk management in the SMEs context.…”

Sme Approach to Road Transportation Risk Management: Evidence From Nigeria

“…Others that focused on road transportation risk management concentrated on express logistics providers [5] and Hazardous materials transportation [6]. On the other hand, most of the SME studies that looked in to risk management didn't not examine road transport risk management [3], [7]- [11]. Underlining the gap in the literature and potentials to gain valuable insight, this study aims to investigate how SMEs manage road transportation risk in their inbound and outbound transport operations.…”