Utilizing Financial Technology in Africa for Carbon Tracking in Small Businesses and Green Financial Access
In recent years, several African countries have set ambitious targets to reduce greenhouse gas emissions. Ghana, for instance, has pledged to reduce emissions by 64 million metric tons of CO2 equivalent by 2030, while Kenya aims to cut emissions by 32%. Morocco and South Africa have even more ambitious goals, with Morocco targeting a 42% reduction and South Africa aiming to achieve net-zero emissions by 2050 [1].
To support these climate goals, mobile fintech solutions are playing a crucial role in helping small African businesses measure and reduce their carbon emissions. These solutions provide accessible digital tools and platforms that integrate carbon tracking, reporting, and green financing services.
One key feature of these platforms is carbon tracking and measurement. Mobile fintech apps and platforms can automatically track carbon emissions linked to business activities, often using APIs that integrate local carbon offset projects. For example, startups like Msitu Africa Carbon Alliance offer Climate Smart APIs that allow businesses to quantify and offset their emissions through local initiatives [3].
Another significant advantage of these platforms is access to green finance. By incorporating Environmental, Social, and Governance (ESG) principles, fintech platforms can provide green loans, finance sustainable assets, or enable revenue-based financing models for businesses adopting eco-friendly practices [1][5]. This helps small businesses invest in greener technologies that reduce emissions.
Mobile fintech also offers incentives and rewards for sustainable behaviour, encouraging businesses to adopt greener practices and thus improving their creditworthiness for green finance products [1]. Furthermore, mobile fintech increases accessibility to financial products for underbanked small businesses, enabling them to participate in the green economy more easily [1][5].
However, there is a gap in the market for fintech-driven, mobile-accessible, lightweight tools designed specifically for small and micro-enterprises for carbon accounting. Fintech companies have an opportunity to adapt their platforms to include sustainability metrics and attract new business from governments, NGOs, and green finance institutions due to the growth of grant funding, climate-linked development finance, and carbon markets [2].
As these markets grow, small businesses that can report and verify emissions will become eligible for incentives and support. For instance, Egypt aims to reduce emissions by 33% in the electricity sector, 65% in the oil and gas sector, and 7% in the transport sector by 2030 [4]. Nigeria, with its 163.3 million mobile internet subscriptions as of December 2023, also aims to reduce emissions, although a significant usage gap remains [5].
In conclusion, mobile fintech acts as an integrative platform that catalyzes environmental progress alongside financial inclusion, supporting small African businesses to measure, track, and reduce carbon emissions efficiently, making them eligible for green finance and contributing to climate goals [1][3][5]. The potential for mobile fintech in driving sustainable development in Africa is vast, and the opportunity for fintech companies to lead this charge is immense.
References:
[1] GSMA (2022). The Mobile Economy: Sub-Saharan Africa 2022. Retrieved from https://www.gsma.com/mobileeconomy/sub-saharan-africa/
[2] UNCTAD (2021). Fintech and Sustainable Development: Opportunities and Challenges for Developing Countries. Retrieved from https://unctad.org/system/files/official-document/dco_tdd_2021d4_en.pdf
[3] Msitu Africa Carbon Alliance. (2021). Climate Smart APIs. Retrieved from https://msitu.africa/climate-smart-apis/
[4] Egypt Today (2021). Egypt's New Climate Change Strategy: Reducing Emissions and Adapting to Climate Change. Retrieved from https://www.egypttoday.com/Article/3/111987/Egypt-s-new-climate-change-strategy-Reducing-emissions-and-adapting-to-climate-change
[5] Statista (2023). Number of mobile internet subscriptions in Nigeria from 2015 to 2023. Retrieved from https://www.statista.com/statistics/1074664/number-of-mobile-internet-subscriptions-in-nigeria/
[6] Statista (2024). Internet penetration rate in South Africa from 2013 to 2024. Retrieved from https://www.statista.com/statistics/265250/internet-user-penetration-in-south-africa/
- The integration of carbon tracking and measurement in mobile fintech platforms helps small African businesses automatically quantify their carbon emissions, often using APIs that partner with local carbon offset projects, as seen with startups like Msitu Africa Carbon Alliance.
- By incorporating Environmental, Social, and Governance (ESG) principles, fintech platforms offer green loans, finance sustainable assets, and enable revenue-based financing models for businesses adopting eco-friendly practices, promoting investments in greener technologies that reduce emissions.
- Mobile fintech provides incentives and rewards for sustainable behavior, encouraging businesses to adopt greener practices and thus improving their eligibility for green finance products, while also increasing accessibility to financial products for underbanked small businesses.
- The growth of grant funding, climate-linked development finance, and carbon markets offers an opportunity for fintech companies to adapt their platforms to include sustainability metrics and attract new business from governments, NGOs, and green finance institutions.
- With the growing emphasis on climate goals in countries like Egypt and Nigeria, small businesses that can report and verify emissions will become eligible for incentives and support, making it crucial for fintech companies to develop fintech-driven, mobile-accessible, lightweight tools for carbon accounting and to lead the charge in driving sustainable development in Africa.
