How partnerships help small businesses adapt to climate change– LSE

15 Sep 2020

Micro, small and medium enterprises (SMEs) in developing countries often face major barriers within their business environment to adapting to the impacts of climate change. These barriers include a lack of access to finance, markets, insurance, climate-smart inputs and services, and knowledge about adaptation options.

Many of these barriers can be overcome through the activities, products and services of other private sector actors. There has been a lot of interest in unlocking the resources of the private sector to plug gaps in adaptation finance, at national and international levels. There has, however, generally been limited clarity around how this can be achieved.

Multi-stakeholder partnerships are becoming an increasingly important development paradigm. NGOs hope that supporting private sector actors to develop adaptation goods or services, which they have an ongoing incentive to maintain, will produce longer-term resilience that extends beyond a given programme or project.

Through action and investment from donor-funded and public sectors – in areas such as research, data access, relationship development, business incubation and access to finance – multi-stakeholder partnerships are supporting private sector actors to deliver adaptation resources to small-scale producers.

Market-based partnership strategies envisage that multi-stakeholder partnerships will become self-sustaining. But, private sector provision of goods and services that aid adaptation among SMEs often breaks down following pilot projects, when donor funding and brokering activities are withdrawn.

Dependence on market mechanisms, specifically on low-risk and commercially-viable business opportunities, meanwhile, makes multi-stakeholder partnerships less likely to deliver adaptation support to the poorest, most vulnerable and most geographically remote groups.

To mobilise more inclusive partnerships, identify risks and prepare mitigation measures, sufficient investment from NGOs and other donor-funded development actors into partnership design and strategy at the early stages of developing a multi-stakeholder partnership is required. Yet market systems are dynamic and changing, requiring partners to continually re-evaluate and renegotiate the terms of a partnership. Multi-stakeholder partnerships are therefore likely to require longer-term monitoring, evaluation and assistance than is permissible in short-term development projects.