How can Africa’s SMEs become more resilient to climatic disruption?

The powerful El Niño event of 2015-16 was declared  to have finished in May of this year. As the dust settles, there is now a small chance that a La Niña extends climatic disruptions by introducing extreme conditions opposite to those experienced under El Niño.

If a strong La Niña does develop, sub-Saharan Africa could experience droughts in places that have recently received heavy rainfall. And heavy rainfall is likely in areas that had previously suffered from failed rains.

The impact of severe changes to rainfall patterns on agriculture has been reported in the academic literature and the media . But the impacts on many other sectors, which also suffer from extreme weather associated with strong El Niño and La Niña events, have received less attention. This is why a new Grantham Research Institute project is looking to focus on the impact of El Niño and La Niña events on small-and medium-sized enterprises (SMEs). The project is led by Declan Conway and funded by the UK’s Department for International Development (DFID) and the Natural Environment Research Council NERC.

Why SMEs?

Support for SMEs is seen as crucial for GDP growth and prosperity in Africa because small and growing businesses make a significant contribution to employment and fuel demand for new goods and services.

Extreme climate events, such as the 2015-16 El Niño, can have a major impact on the business activities of these SMEs. For example, disruption to electricity (from hydroelectric dams) and water supplies due to drought in southern Africa and excessive flooding in East Africa hindered many businesses.

By understanding these challenges, as well as asking SMEs about how they can cope with climatic disruption more effectively, we expect that they will become better prepared for future events. And Africa’s future prosperity depends to a large extent on the ability to create climate-resilient economies.

Fieldwork

In the coming months, we will begin fieldwork with partners in Botswana, Kenya and Zambia. We will examine how the El Niño and La Niña events unfolded and investigate the role and effectiveness of early warnings, preparedness levels and the impacts of climatic disruption.

Our focus will be on SMEs in Gaborone (Botswana), Nairobi (Kenya) and Lusaka (Zambia) – the capital cities of our three countries of study. These three countries provide contrasting case studies.

In Botswana, extreme droughts reduced dam capacity to 1.2% of normal capacity, causing acute water shortages in the capitol, Gaborone.

In Kenya, heavy rainfall led to floods in and around Nairobi, contributing to the displacement of more than 100,000 people.

In Zambia, lake levels plummeted by more than 5 metres. This prompted ZESCO, the state-owned electricity company, to warn that national power supplies would be cut by one-third. The Finance Minister responded by reducing the economic growth forecast by almost 2%.

The real impact of the 2015-16 El Niño on the economy of these countries has yet to be assessed.

Fieldwork we have already carried out for the Umfula project confirms the importance of weather impacts on businesses from El Niño.  Both small and large agribusinesses in Tanzania and Malawi are feeling its effects. Business managers told us that, although they received warnings of El Niño, they found it difficult to anticipate and prepare for specific impacts because of a lack of certainty about exactly how extreme conditions would unfold.

Takeaway messages for decision-makers

Through continued collaboration and fieldwork in the region, we will get a better idea of exactly how El Niño and La Niña affect business activities. The research will yield advice on better climate services to businesses and highlight successful approaches for coping with extreme weather events. In doing so, we hope this will help increase climate resilience and support the achievement of the Sustainable Development Goals  in sub-Saharan Africa.

 

Christian Siderius is a Research Officer at the Grantham Research Institute. He studies people’s adaptation strategies to climate variability and uncertainty, applying economic concepts like flexibility and diversification. He works with Declan Conway and Joanna Pardoe on the El Nino project, and on the UMFULA project which focuses on decision making under uncertainty in Central and Southern Africa.