Small and Medium Enterprises (SMEs) are the backbone of the renewable energy sector in Africa and Asia, driving innovation and providing crucial solutions to energy access challenges. However, these enterprises often struggle to scale their operations due to a lack of access to financing. This challenge is particularly acute for SMEs in renewable energy, which require tailored financial products to thrive.
One of the biggest challenges facing these SMEs is the lack of funds to get their ideas off the ground or to operationalize them. This problem is exacerbated by the unique needs of renewable energy SMEs when it comes to financial products. Mrs. Titilayo Oshodi, the Special Advisor to the Governor of Lagos State, Nigeria, on Climate Change and Circular Economy, emphasized this during a forum on private sector-led sustainable funding for youth entrepreneurship. She pointed out that the issue is not that SMEs are not bankable—because they are—but rather that they have not been able to present themselves as such. This underscores the importance of business development for SMEs, which not only equips them with the necessary knowledge but also builds their confidence to seek funding from investors.
The Energy Enterprise Coach (EEC) and its role
The Energy Enterprise Coach (EEC) is a flagship program that offers Business Development Services (BDS) to SMEs in the clean energy sector across Africa and Asia. Its mission is to support the professionalization of these SMEs, fostering their growth and development. The EEC begins its process by conducting a diagnostic assessment carried out by a qualified business development specialist. This assessment determines the SME’s growth stage and their specific business development needs.
Identifying the SME’s growth stage is crucial, particularly when it comes to sourcing funding. Understanding the stage at which the SME currently stands allows them to target the appropriate investors based on their development level. Once the diagnosis is complete, the EEC deploys a suite of BDS tools tailored to the enterprise’s needs. These tools include:
– Remote learning through the EEC E-learning Platform: This platform offers courses specifically designed for enterprises in the clean energy sector and includes e-mentorship support.
– Group-based physical and digital cohort trainings: These sessions provide a platform for learning, collaboration, and a customized learning experience.
– Individual mentoring: Experienced mentors offer one-on-one guidance, helping SMEs navigate the complexities of scaling their operations and securing investment.
Creating synergies with potential investors
Business Development Services provide an incredible opportunity to create synergies between SMEs and potential investors. This can be achieved through several key strategies many of which are being deployed by the EEC programme to enhance the opportunities for its SMEs to become investment ready:
- Aligning objectives: Ensuring that the goals of the BDS providers align with investor expectations is crucial. The EEC’s mentorship focuses on investor readiness, which includes training SMEs in high-level business planning, developing compelling pitch decks, and improving financial reporting – a prime example of this alignment.
- Coordinated support: Integrating business development support with investment readiness activities maximizes the effectiveness of the support provided. When these two components are coordinated, businesses not only grow operationally but are also prepared to secure the funding needed to scale. This integrated approach provides holistic guidance that covers both immediate operational needs and longer-term financial goals. The EEC is currently preparing selected SMEs from its mentorship program in Kenya and Uganda for a B2B match-making event with investors in November 2024. This is a culmination of the dedicated and tailored support provided to these SMEs to enable them to present themselves to potential financiers.
- Establishing regular communication channels: BDS providers can establish committed investor pools to facilitate ongoing communication between SMEs, BDS providers, and investors. This ensures that all parties are aligned and that the SMEs receive timely feedback and support.
- Joint training: Organizing investment-readiness workshops and training sessions that include BDS providers, investors, and financiers is another effective strategy. For instance, EEC has organised joint training workshops with prominent industry players such as GetInvest and Bettervest. These workshops offer SMEs the opportunity to interact with investors and gain insights into what investors look for when considering investments in SMEs. Given that many investors lack the time and resources to organize such sessions, a more coordinated approach is needed. BDS providers can take the lead in organizing these sessions, leveraging their networks to bring investors on board. Additionally, adopting flexible formats such as virtual sessions, asynchronous learning, or ongoing mentorship programs can help overcome the time and resource constraints faced by investors.
- Monitoring: Continuous monitoring and evaluation are essential to ensure that SMEs stay on track for growth and investment. A monthly monitoring schedule, as implemented by the EEC’s regional relationship managers, has proven to be very effective in keeping SMEs aligned with their growth objectives.
The path to growth and sustainability for SMEs in the renewable energy sector is paved with the right support systems. Business Development Services, such as those provided by the Energy Enterprise Coach (EEC), play an indispensable role in equipping these enterprises with the tools they need to attract investment and scale their operations. By aligning their objectives with investor expectations, coordinating support efforts, and fostering ongoing communication, the EEC ensures that SMEs are not just operationally sound but also financially prepared to take on the challenges of a rapidly evolving energy landscape.