The Business of Sustainability: Africa’s Path to a Circular and Inclusive Economy

Sustainability is not just a corporate buzzword. It is a thriving economic model that is reshaping Africa’s entrepreneurial landscape. African communities have long practiced sustainability through land stewardship, water conservation, and resource-sharing traditions.

Concepts like Ubuntu—“I am because we are”—reflect sustainability at a social level, while agroecological farming, rotational grazing, and rainwater harvesting showcase environmental sustainability. From informal waste reclaimers to high-tech agri-businesses, small enterprises are demonstrating that environmental responsibility and economic growth can go hand in hand. These entrepreneurs are not only tackling pressing environmental challenges but also driving job creation, community empowerment, and resource efficiency.

Whether it’s turning waste into valuable products, promoting ethical sourcing, or leveraging digital innovations for sustainable agriculture, these businesses prove that Africa’s future lies in circular economies and socially conscious enterprise. However, for this movement to reach its full potential, key stakeholders must step up collectively to create an environment that enables these businesses to scale and thrive.

Entrepreneurs in the informal recycling sector are integral to Africa’s sustainability efforts. Often overlooked yet indispensable, they collect, sort, and repurpose waste materials while playing a crucial role in waste management and resource recovery. Think of individuals pushing large trolleys filled with recyclables through city streets during your early drive to work.

In South Africa alone, according to the Council of Scientific and Industrial Research (CSIR), there are an estimated 200 000 waste pickers, or reclaimers, who recover up to 90% of plastic and packaging waste, significantly reducing landfill costs and contributing to resource efficiency. This highlights the critical role of informal waste reclaimers in reducing landfill waste and supporting the country’s recycling economy, saving municipalities up to R750 million in landfill costs annually.

However, many waste pickers work long hours, pulling trolleys weighing up to 200 kilograms across cities, yet they remain outside formal labour protections. Some of the more structured informal waste reclaimers employ community-based models, paying members in low-income areas for waste collection before sorting and delivering materials to recycling centres.

This, funny enough, reminds me of a time my mother, sister, and I attempted to start an informal side hustle of waste collection some years ago using this model. Because it was during the COVID-19 era, making the model work was challenging. However, this was also when I gained insight into the inner workings of this transformational industry. While largely unrecognised, these activities form the backbone of Africa’s recycling economy, significantly contributing to resource efficiency and environmental conservation.

The waste-to-wealth model is gaining traction, with businesses turning plastic waste into furniture, bricks, and textiles and organic waste into biogas. Registered small businesses are finding innovative ways to preserve our natural environment. One such enterprise, Madame Waste, promotes circular economy principles through tailored system design organic waste valorisation. In one of their recent projects, they compiled a Best Practice Manual for Biogas Market Development in Southern Africa, aimed at equipping biogas project developers with best practices. These initiatives prove that sustainability is not just an environmental concern but a driver of inclusive economic growth, demonstrating how waste can be a resource rather than a burden.

Beyond waste management and recycling, sustainability-driven enterprises are also reshaping supply chains by prioritizing ethical sourcing and community-driven economic models. A good place to start would be looking at businesses such as Local Village Foods, who source uniquely African raw materials farmed in rural communities and create food product offerings for health-focused and socially conscious consumers.

By integrating community socio-economic development into their supply chain strategy, they have adopted a “Village Model” to support community-based supplier enterprises. This model fosters both economic resilience and environmental sustainability. Similarly, Goed Life promotes ethical and locally sourced food, ensuring fair trade practices that empower farmers while reducing the environmental footprint of food production. These enterprises illustrate how social sustainability is becoming a core business strategy that fosters economic resilience and community upliftment.

As Africa advances toward sustainable development, digital transformation is accelerating the progress. According to the World Economic Forum, digital technologies can reduce global emissions by up to 20% by optimising energy use, improving supply chain transparency, and automating sustainability reporting. Blockchain and IoT are increasingly being adopted for traceability, particularly in agriculture, with approximately 25–30% of African small and medium-sized businesses utilising these technologies to enhance supply chain transparency and compliance with environmental standards.

AI-driven analytics are also improving emissions tracking, reducing manual reporting errors, and cutting costs associated with sustainability audits. In South Africa, regulatory frameworks are tightening around greenwashing, driving businesses to adopt automated ESG compliance platforms to ensure accurate sustainability claims. The country has also seen a 200% increase in businesses obtaining sustainability certifications since 2020, reflecting growing demand for verified eco-friendly practices in domestic and international markets. These developments demonstrate how technology is playing a pivotal role in ensuring authentic sustainability efforts, reducing environmental impact, and improving corporate accountability across Africa.

Challenges

While these entrepreneurs are making a difference, they often lack funding, policy incentives, and market access. Many sustainable startups struggle to scale due to high production costs, limited consumer awareness, inconsistent government support, and access to essential capital. Traditional funding avenues often overlook these businesses due to perceived risks and long-term payoffs. Patient capital, which is designed to support the long-term growth of these companies, is especially crucial for entrepreneurs working on sustainable projects, as these often require time to see returns. Many such businesses are also seasonal, depending on agricultural cycles or fluctuating market demand, further complicating their cash flow management. For instance, businesses that source raw materials from rural communities might face production lulls during off-seasons, affecting their ability to pay employees.

This directly impacts the communities they support. When mothers lose work, they might struggle to pay their children’s school fees, creating a ripple effect of socio-economic hardship. While organisations like Impact Investors, Green Bonds, and Development Finance Institutions have increasingly been interested in funding sustainable businesses, the amount of funding remains insufficient to support scalability. Addressing this funding gap requires greater collaboration between governments, private sector players, and financial institutions to create investment-friendly environments and de-risk sustainable ventures.

Policy incentives

The government’s pivotal role would be supporting sustainable entrepreneurship through policy incentives like tax breaks, grants, and easier access to funding. However, many African countries have yet to establish policies that prioritise green, social, or circular economy models. Inconsistent or non-existent policies can result in an unpredictable operating environment, which makes it difficult for entrepreneurs to plan long-term.

For example, Twiga Foods in Kenya has successfully scaled its model by using technology to reduce food waste, but its long-term sustainability depends on continuous government support in the form of agriculture-focused innovation hubs, market access policies, and fair-trade regulations. Without these in place, even successful companies can struggle to grow beyond their initial stages.

There are, however, case studies where government has begun to develop progressive policy interventions for this sector. In Ghana, for instance, the government has recognised the potential of social entrepreneurship in contributing to both economic development and social well-being. Through policies like the Social Enterprise Ghana (SE Ghana) initiative, the government is actively promoting sectors such as agriculture, sustainable energy, health, and education. These sectors are viewed as key drivers of social impact, and by encouraging businesses to balance financial returns with societal benefits, this policy framework sets a precedent for other nations looking to integrate sustainability into their economic strategies.

Africa’s sustainable entrepreneurs are building more than just businesses. They are shaping a future where economic resilience and environmental stewardship coexist. Their innovative models illustrate that sustainability is not a limitation but an opportunity for growth, inclusion, and prosperity. Additionally, they are continuing to demonstrate that sustainability is not reserved for corporate sustainability and CSR initiatives, but a viable economic model for local entrepreneurs, fostering innovation while addressing environmental challenges.

However, to unlock the full potential of the circular economy, governments, investors, and industry leaders must actively create an enabling environment. This means implementing supportive policies, increasing patient capital investment, and fostering market access for sustainable businesses. By doing so, Africa can harness its entrepreneurial ingenuity to build a thriving, sustainable economy that benefits both people and the planet.

#development

IDC launches R2bn sustainability bond amid strong investor demand

G20: How the Cape Town Declaration aims to transform Africa's debt landscape

DBSA and IFAD forge partnership to boost rural economic development in Africa

From waste to wealth: how African entrepreneurs are building a sustainable future