Due to the energy deficit, businesses in Nigeria are not maximizing their potential in terms of productivity and income generation. According to The National Centre for Energy Efficiency and Conservation, electricity consumes about 50% of the profits of MSMEs in Nigeria. The World Bank Enterprise Survey also reported that 35.5% of the small and medium scale firms in Nigerians indicated electricity outages as worrisome to business operations, and over 70% of survey respondents in a research study cited generators as their main source of power. Nigerians as a whole spend about ₦5 trillion annually to power Generators, so it is not surprising that MSMEs spend much more on their generators than they do on the grid energy source.
Nigeria’s electricity mix continues to be dominated by fossil fuel-based self-generation and natural gas generation, both of which are expensive and harmful to humans and the environment. Not only do these MSMES lose income, they are also highly and constantly exposed to various health dangers associated with inhaling the fumes from the generators. This is not to mention how the carbon from this fossil fuel contributes to global warming and the changing climate.
MSMEs have the potential for becoming more energy efficient. While individual small businesses have low environmental footprints, their combined impact can exceed that of large businesses. MSMEs may produce more pollution than big businesses because of their informal nature and the resulting lack of regulations and supervision. Studies have estimated
that these businesses can contribute up to 60-70 percent of pollution levels in developing economies like Nigeria. It is therefore imperative for MSMEs to adopt stable and environmentally friendly means of generating power.
PROBLEM STATEMENT 1: How might we leverage technology to move to more sustainable methods of energy generation for MSMEs?
FOCUS AREA 2: TRANSPORTATION AND LOGISTICS (SDG 9 & 11)
Without efficient transportation and logistics systems, it will be grueling to conduct business as an MSME anywhere in the world. MSMEs rely on transport systems to get raw materials and transport finished products to their customers. However, the Nigerian transportation system is plagued with bad roads, inadequate fleets, congested ports and rising insecurity challenges. In a country of over 200 million people, there are only a few functioning railway routes and seaports in addition to the roads. The inbound transportation of raw materials, services or bulk goods and outbound movement of finished products to the consumer, has become an albatross for many MSMEs.
In this post-covid world, MSMEs also need to consider on-time last-mile deliveries, widely considered to be the most important and costliest link in the supply chain, as their consumers order more things online, expecting more control and faster deliveries. In fact, a study on customer retention showed that 69% of shoppers are unlikely to patronize the same company or brand if their orders were not delivered within two days of the promised delivery date.
This necessity for quick, on-demand delivery also has a downside:With the proliferation of delivery vehicles, their emissions, and second-lane parking, cities are experiencing traffic congestion and air pollution. The future of inner-city traffic is predicted to be seriously disrupted over the next three years if no action is taken.
Generally, the transportation sector is a major culprit in global carbon emissions, producing 27% of total emissions and emerging as the second highest contributor by sector. The same is reflected in Nigeria as the transportation sector is second only to the agricultural sector in terms of total CO2 emission.
MSMEs need comprehensive end-to-end logistics solutions (including supplier management, customs clearance, warehousing, inventory control, order processing, customer service, transportation, and packaging) that are both environmentally-friendly and cost-effective.
PROBLEM STATEMENT 2: How might we leverage technology to make logistics and transportation more cost-effective and environmentally-friendly?
FOCUS AREA 3: WASTE GENERATION AND MANAGEMENT (SDG 6, 12, 13)
As MSMEs play their part in advancing the Nigerian economy, they inevitably discharge a variety of end products and byproducts into the environment that can negatively impact air, water, and soil. Consequently, water bodies have become eutrophicated, and soil and groundwater have become contaminated.
Changing consumer trends also contribute to the increase in waste generation. There is an increased use of plastic packaging, and shelf lives of products continue to shrink. All these have the obvious effect of a corresponding increase in the amount of solid waste generated in the region. The most prevalent waste management method in the country is the gathering of various waste items without separation, which is then disposed of at designated dumpsites, and less than 20% of solid waste generated is collected through a formal system.
Cleaner production strategies can improve MSMEs' overall profitability, competitiveness, and environmental performance by resulting in higher profit margins, a competitive edge in international markets, and a higher level of competitive advantage on the international market. MSMEs can participate in the circular economy, which is driven by the need to reduce the enormous amount of waste by keeping materials in the supply chain for longer. There is evidence of recycled products being used in the construction, architecture and design industries.
Among others, opportunities exist in the e-waste, plastic waste, and biowaste value chains as these waste streams generate substantial amounts, and the gaps in their supply chains provide opportunities to innovate. Additionally, large (international) companies are involved in the waste value chain and can either purchase recycled material or supply waste to the system, improving the projects’ bankability.
How might we make operations of MSMEs more circular? What collaborations could we be looking at? How might they use less materials in production and still retain quality? How might we increase awareness of the problem and influence consumer behavior?
PROBLEM STATEMENT 3: How Might We Leverage Technology to Make Operations of MSMEs more circular, thereby reducing waste generated and creating more jobs in the waste management sector?
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