This Annex presents the evidence base underpinning the report. It draws on inputs from key stakeholders to assess current obstacles and opportunities for green micro, small and medium‑sized enterprises (MSMEs) in South Africa, including to unlock access to financing. Evidence was collected through a country‑tailored survey covering four stakeholder groups: small‑scale entrepreneurs and startups, municipalities, business incubators and accelerators as well as financial market institutions. The survey findings are complemented by on‑site stakeholder consultations in Mpumalanga and the Western Cape, as well as numerous virtual consultations. These inputs inform the identification of priority needs and highlight potential pathways to strengthen support for green small‑scale enterprises.
Overcoming Financial and Capacity Barriers to Empower Small‑Scale Enterprises in South Africa
The OECD Secretariat conducted four country‑tailored surveys to capture diverse stakeholder perspectives in Mpumalanga and the Western Cape. All surveys were administered anonymously and structured around four tracks:
Small businesses and startups (112 responses, predominantly from Mpumalanga);
Municipalities (14 responses out of 30 targeted municipalities);
Business incubators, accelerators and support service providers (15 responses);
Financial market institutions (12 responses, complemented with virtual meetings).
To avoid contributing to survey fatigue at community level, the OECD Secretariat did not conduct an additional survey. Instead, it gathered local and community perspectives during a fact‑finding mission to Mpumalanga in September 2026.
Survey responses of micro, small and medium-sized enterprises (MSME) were largely drawn from Mpumalanga, with participation across all three district municipalities. Respondents were mainly small, formally registered enterprises operating in waste management, agriculture and renewable energy. The sample includes both early‑stage and more established firms, with strong representation of Black‑owned, youth‑led and women‑owned businesses, often located in rural and township areas. This profile reflects dissemination through local business support networks and need to be considered when interpreting the findings.
Implemented with support from Indalo Inclusive between December 2025 and mid‑February 2026, the survey relied on local communication and social media channels. As a result, respondents are likely to be more connected to business support ecosystems than the average MSME. In addition, the survey largely captures formally registered firms and therefore does not reflect the perspectives of the informal sector, which constitutes a substantial share of small enterprises in South Africa and often falls outside existing support mechanisms.
The remaining surveys were kept open until end April 2026 to increase the response base. However, these surveys faced notable challenges in attracting participation, reflecting widespread survey fatigue, a fragmented enterprise support landscape in South Africa, and heightened sensitivity among some stakeholders around data sharing and confidentiality.
For the municipality survey, participation was uneven, with around half of responses originating from municipalities in Gert Sibande District in Mpumalanga, while a further significant share came from the City of Cape Town, Central Karoo District and West Coast District in the Western Cape. While the sample does not capture the full diversity of municipal contexts, it nonetheless provides useful indicative insights into institutional readiness, capacity constraints and implementation challenges faced by municipalities in supporting green small‑scale enterprise development.
The survey of business incubators, accelerators and support services captures perspectives from organisations active across both provinces, with a broadly equal institutional presence across municipalities. Participating incubators primarily support startups and micro and small enterprises, with a strong focus on youth‑led, women‑owned and black‑owned businesses, often in rural, urban and township contexts. Findings were complemented by bilateral discussions and stakeholder consultations, together providing a robust evidence base on delivery‑side constraints, enterprise readiness and ecosystem co‑ordination challenges affecting green small‑scale enterprises.
Results from the financial market institutions survey should be interpreted with caution, given the limited number of responses, variable engagement across the sector and confidentiality concerns. To address these limitations and strengthen the evidence base, the OECD Secretariat conducted around a dozen bilateral virtual meetings between March and April 2026 with financial institutions and sector representatives, including commercial banks, impact investors and the South African Banking Association (BASA). These consultations provided qualitative insights, enabled triangulation of survey findings and helped capture the heterogeneous mandates, risk appetites and operating models that shape financial institutions’ perspectives.
Within the framework of this project, South Africa’s Department of Forestry, Fisheries and the Environment facilitated national‑level stakeholder consultations, while local consultations were supported by Indalo Inclusive (local consultant).
The first phase of the project (May 2025-July 2026) has undertaken the following activities and missions:
30 July 2025 (Pretoria): first fact‑finding mission and initial consultations with key stakeholders. The OECD-DFFE team held a breakout session at the Indalo Annual Symposium and initiated a stakeholder mapping in coal‑dependent areas of Mpumalanga.
15-20 September 2025 (Mpumalanga, Cape Town and Pretoria): launch of local consultations in Mpumalanga and the Western Cape and inception meeting in Pretoria. The team engaged with more than 100 stakeholders across 12 meetings in five locations.
14 November 2025: session at the OECD COP30 Virtual Pavilion on Unlocking community‑based financing for renewable energy and green small‑scale enterprises in emerging markets, drawing on examples from Brazil, India and South Africa.
24-26 November 2025 (Cape Town): participation in the Cape Town Conversation, site visit to the Atlantis Special Economic Zone and meetings with provincial authorities.
December 2025-April 2026: launch of four country‑tailored online surveys targeting small‑scale enterprises, municipalities, business incubators and financial institutions.
19-20 February 2026 (Pretoria): thematic roundtables on preliminary findings, action proposals and pathways forward.
February-April 2026: extensive virtual consultations with financial market institutions and business incubators, accelerators and support services.
1-3 July 2026 (Pretoria, eMalahleni, Johannesburg): validation meetings of the draft report and first knowledge-sharing activities.
Municipalities
Dipaleseng Municipality, 15 September 2025, in-person meeting with eight local representatives.
Nkangala District Municipality, 16 September 2025, in-person meeting with twelve local representatives.
Gert Sibande District Municipality meeting, virtual meeting with three local municipalities, 15 October 2026.
South African Local Government Association (SALGA), 12 February 2026 and 9 March 2026, virtual meetings with Babalwa Mbobo, Silas Mulaudzi and Lerato Libate.
Participation of several local representatives at thematic roundtables from Nkangala and Gert Sibande.
Business incubators
Atlantis Special Economic Zone, 26 November 2025, site visit in Atlantis with Selwyn Willoughby;
Boston Consulting Group, 10 October 2025, virtual meeting with Wesley Timm and 21 April 2026, virtual meeting with Bruwer Ackermann.
Impact Amplifier, 21 April 2026, virtual meeting with Sandra Makuchete and Senisha Moonsamy.
Just South Africa, 18 November 2025, virtual meeting with Christina von Heyden, Ruan Fourie and Marian Engelbarts.
Meridiam, 26 March 2026, virtual meeting with Ashwin West.
RES4Africa, 26 February 2026, virtual meeting with Marianna Petrosillo, Lorenzo Vilona and Ntombifuthi Mazibuko.
Financial market institutions and development finance institutions
Virtual meeting with financial market institutions and incubators on Overcoming Financial and Capacity Barriers for Green SMMEs in Mpumalanga, 5 December 2025, ~20 participants.
Absa, 31 March 2026 and 9 April 2027, virtual meetings with Rashveer Manilal.
Acumen, 1 April 2026, virtual meeting with Sarah Bieber.
Banking Association South Africa (BASA), 23 March 2026, virtual meeting with Yaseen Lockhat, and 16 April 2026, meeting with BASA members of the Committee on Sustainable Financing;
FirstRand, 19 January 2026, virtual meeting with Shafee Verachia and Lonwabo Mgoduso.
Industrial Development Co-operation (IDC), 18 March 2026, virtual meeting with Mtuza Mdletshe.
Locally led approaches are widely recognised as essential, as communities closest to the social and economic disruption of energy and industrial change possess the contextual knowledge needed. Co-creation of solutions is increasingly recognised as an essential approach among business incubators, accelerators and other support services, which have observed that externally designed interventions often fail to address local constraints or reflect lived experience. In practice however, many stakeholders most affected by transition processes including informal workers, small enterprises and local civic actors remain excluded from decision-making.
Local consultations in Mpumalanga revealed rising frustration among youth and community members, driven largely by uncertainty about future livelihoods in an economy that remains heavily dependent on coal. Local community members repeatedly highlighted the limited visible progress on the ground, noting that local realities contrast sharply with the scale of international funding announcements associated with the “Just Energy Transition Partnership”. Although awareness is gradually increasing, it is still not a central priority in local policy discussions.
Evidence from South Africa suggests that communities may resist renewable energy projects when clear and direct local benefits are not perceived. In some communities, long‑standing attachments to coal continue to shape local narratives, which can make it more difficult to build consensus around a forward‑looking approach to a future beyond coal.
Consultations also pointed to growing stakeholder fatigue in Mpumalanga, where communities and institutions have experienced an unprecedented volume of national and international attention related to the JET. Repeated rounds of consultations, often initiated by different organisations, have begun to overwhelm local actors and contribute to a sense of disillusionment when engagements fail to produce tangible outcomes. Communities also expressed concern about the absence of clear communication, sustained engagement and meaningful follow up from external actors working on transition related initiatives.
A recurring message during OECD consultations was the need for fewer but better co-ordinated consultations that lead to clear follow-through, preferably through meaningful and tangible project implementation and job creation. For example, the managing director of Eskom’s Komati power station indicated having hosted nearly fifty delegations at the site to discuss transition related projects; yet rarely received updates or evidence of continued engagement. Similarly, representatives from Nkangala District expressed reluctance to support yet another study, citing concerns about weak implementation and the proliferation of assessments that have not translated into visible improvements on the ground. Therefore, the OECD project ensured extensive consultations on the roadmap to support the implementation of tangible activities and to advance the project in a way that avoids duplication.
The role of small‑scale businesses in renewable energy adoption and deployment
Overall, the survey reveals a strong underlying appetite for renewable energy adoption among MSMEs, even among relatively small energy consumers. Unlocking this potential will require a combination of affordable financing instruments, clear information and technical support and delivery models adapted to small‑scale enterprises. With the right enabling conditions, MSMEs can play a meaningful role in accelerating renewable energy adoption while improving their own resilience, productivity and competitiveness (Chapter 2).
Given their small size, surveyed enterprises are generally modest energy consumers. One third report monthly electricity expenditure below ZAR 2 000 (~USD 123), while approximately one quarter spend between ZAR 2 000 and ZAR 4 000 (~USD 246). A further 17% do not have a separate electricity bill, reflecting shared or informal premises. Only 9% report monthly electricity costs above ZAR 4 000. This profile suggests that most surveyed MSMEs have relatively low absolute energy demand but are still exposed to energy costs and reliability challenges.
Despite this, small-scale enterprises perceive themselves as active participants in the energy transition, rather than passive end‑users. A majority of surveyed enterprises identify as innovators or enablers in the transition, highlighting a strong sense of agency and entrepreneurial ambition. Small‑scale businesses thus see opportunities to benefit from the energy transition both as energy users and as emerging contributors to new green value chains.
Note: 112 responses from small-sale enterprises, predominately from Mpumalanga. Question: “How would you describe your business’ role in South Africa’s renewable energy transition?”
Source: OECD (2026). Survey results.
Interest in renewable energy adoption is strong. Two thirds of respondents express interest in renewable energy solutions, and approximately 18% have already invested in renewable energy technologies (Figure 4.2). A further quarter plan to invest in the near term, suggesting a clear pipeline of future demand. However, 30% of small-scale enterprises report that they would like to invest but cannot afford to do so, pointing to persistent financial constraints (Chapter 4). In addition, 22% indicate that they need more information, underscoring ongoing gaps in awareness, technical guidance and market clarity.
Status of investment in renewable energy solutions Preferred renewable energy technologies
Note: 112 responses from small-sale enterprises, predominately from Mpumalanga.
Source: OECD (2026). Survey results.
If adequate financing or technical support were available, investment appetite would increase significantly. More than 80% of surveyed small-scale businesses would invest in solar photovoltaic (PV) systems, whilst about 50% would invest in battery storage and energy‑efficient lighting, and 33% expressed interest in purchasing electric vehicles (Figure A D.2). These preferences reflect both business continuity needs and longer‑term efficiency considerations.
Access to finance for small-scale enterprises
The experience of accessing finance among surveyed MSMEs is mixed. About one third of respondents have applied for financing and were successful, or at least successful in some cases, while a further one third reported unsuccessful applications. The remaining enterprises have not applied for financing, partly because they perceive their chances of success to be low. In terms of financing sources, grant financing overwhelmingly dominates, mainly accessed through business incubators and other grant programmes or subsidies. Only 10% of respondents report having accessed venture capital or equity finance, while bank loans account for just 5% of financing obtained. Microfinance remains limited, representing 7%. This pattern underscores a persistent disconnect between small‑scale enterprises and commercial financing channels, particularly formal bank lending.
If access to finance were improved, two thirds of surveyed small‑scale enterprises indicate that they would expand production capacity, purchase new equipment and seek to enter new markets. In addition, 50% would hire additional staff, suggesting potential employment impacts. Notably, 58% would invest in sustainability‑related activities, pointing to a high level of environmental awareness and commitment among this group of enterprises.
However, stakeholder consultations suggest that this stated demand does not consistently translate into uptake of existing financial instruments. When concrete financing opportunities are presented, enterprises often perceive them as too costly or not sufficiently aligned with their operational realities, risk tolerance and cash‑flow constraints. As a result, many continue to express a preference for fully grant‑based support, pointing to affordability constraints and potential mismatches between available financial products and enterprise needs.
Survey responses highlight multiple, interrelated barriers to accessing finance. Lengthy and complex application processes are the most frequently cited challenges, flagged by more than one third of respondents (Figure A D.3). Other commonly reported barriers include difficulties in building a credit history, limited financial knowledge, lack of information on available financing options, and the fear of repeated rejection, which discourages some enterprises from applying altogether.
Note: 112 responses, from small-sale enterprises, predominately from Mpumalanga. Question: “In your view, what are the biggest challenges you and your business face in accessing finance?”
Source: OECD (2026). Survey results.
Approximately 20% of respondents also cite high interest rates as a constraint, despite the fact that relatively few have accessed loan‑based financing. This apparent paradox reflects the fact that grant‑based funding programmes often involve application processes that are as administratively complex and time‑consuming as loan‑based finance, particularly for small‑scale enterprises with limited administrative capacity. Together, these findings suggest that access challenges are driven not only by the affordability or availability of finance, but also by process complexity, perceived exclusion and limited support in navigating financing mechanisms.
Across all responses, there is a strong consensus that South Africa’s challenge is not shortage of funding, but misalignment between financing systems and enterprise realities. Respondents call for a funding ecosystem that is decentralised, simplified, transparent and supportive, combining flexible renewable energy finance with information, mentorship and local presence.
Institutional support and capacity building for small-scale enterprises
Small‑scale entrepreneurs were asked to rate the institutional support provided by municipalities, district municipalities, provincial government and national government. The responses indicate a high level of dissatisfaction, particularly at local level, with more than half of respondents rating municipal support as weak or very weak. Perceptions of national government support are slightly more positive, approximately half of respondents still rate it as weak or very weak, and around one quarter rate it as strong or very strong.
Importantly, capacity‑building efforts at local government level are currently underway through the South African Local Government Association (SALGA) within the “Just Energy Transition Partnership” (JETP), which will be essential to strengthening municipal delivery capacity and improving MSME access to support on the ground.
Given the profile of the sample, most respondents report having benefitted from the support of a business incubator or accelerator. One third of respondents found this support helpful, while a further quarter indicate that they continue to face challenges despite having received support. At the same time, 30% report that they were unable to access any business support, pointing to uneven coverage and persistent gaps within the support ecosystem.
Networking among small‑scale enterprises appears relatively well developed. Approximately two thirds of respondents indicate that they regularly connect with other businesses to share experience and knowledge, and more than 60% express interest in additional networking opportunities, notably to support investment in renewable energy. This highlights strong demand for peer learning and collective problem‑solving mechanisms.
When asked about the types of support that would facilitate investment in renewable energy or energy‑efficient solutions, respondents emphasise both financial and non‑financial needs (Figure A D.4). Most enterprises express strong interest in improved access to information on available funding sources and practical assistance in assessing financing options. At the same time, non‑financial support is considered equally important, including access to mentors, digital skills development and support related to marketing, sales strategies and business plan development. These findings underline the importance of integrated support models that combine financing with capacity‑building and advisory services to enable effective renewable energy adoption by small‑scale enterprises.
Types of support needed to invest in renewable energy and energy efficiency
Note: 112 responses, from small-sale enterprises, predominately from Mpumalanga. Question: “What kind of support would help you or your business to invest in renewable energy and/or energy efficiency?”
Source: OECD (2026). Survey results.
Trust among stakeholders is essential for effective collaboration. Looking ahead, respondents report the lowest levels of trust in local government to support business development, while trust in national government is perceived as moderate. Perceptions of financial market institutions are mixed, with one third of respondents expressing moderate trust, while 41% reporting strong or very strong trust, despite the high levels of rejection reported earlier. Business incubators and accelerators enjoy the highest levels of trust, with 28% of respondents reporting strong trust and 38% very strong trust, underscoring their role as key trusted intermediaries within the MSME support ecosystem.
Insights on priority actions for the way forward
Small‑scale enterprises were asked to identify the most critical steps South Africa could take to ensure that funding genuinely reaches all small‑scale enterprises, particularly those operating in townships and rural areas. While survey fatigue is often a concern in consultation processes, it was notably not evident among MSME respondents, whose contributions were remarkably rich, detailed and comprehensive. The two open‑ended questions generated 195 individual contributions, amounting to approximately 20 pages of qualitative material. Responses converged around the following key messages.
Decentralisation and place‑based delivery of support
Renewable energy finance would be best delivered where enterprises operate, not where institutions are located. Respondents strongly reiterate that centralised, urban‑based funding systems systematically exclude township and rural enterprises, including many operating in renewable energy, agriculture, waste and circular economy activities. Distance to institutions, transport costs, weak Internet access and lack of face‑to‑face support prevent meaningful engagement with funding opportunities. Local presence is seen as particularly critical for renewable energy adoption, where on‑site assessments are needed to understand energy needs, installation feasibility and business constraints.
To address this, respondents consistently call for:
Local funding access hubs in townships, rural municipalities and community facilities
Physical outreach through community halls, farms, roadshows and workshops
Delivery of finance and support through trusted local intermediaries, including municipalities, cooperatives, incubators, NGOs and agricultural associations
Affordability and suitability of renewable energy finance
Access to renewable energy depends on flexible, low‑risk financing models aligned with real business cash flows, which is often not compatible with traditional bank lending criteria. High upfront costs are among the most frequently cited constraints to adopting renewable energy solutions, even where long‑term cost savings are well understood. Respondents stress that most MSMEs and energy‑using businesses are asset‑light, informal or semi‑formal, with limited collateral and weak credit histories. Respondents also emphasise the need to distinguish between energy for continuity (e.g. backup power to survive load shedding) and energy for scaling (e.g. larger systems to support growth), noting that “one‑size‑fits‑all” programmes consistently fail.
Preferred financing approaches25F1 include:
Blended finance combining grants with low‑interest or concessional loans
Pay‑as‑you‑save or pay‑as‑you‑go models linked to energy savings
Asset‑based finance, where the energy system itself serves as security
Micro‑grants for small investments such as lighting upgrades, batteries or refrigeration
Credit guarantees and risk‑sharing mechanisms to crowd in lenders
Simplification of applications and requirements
Without radical simplification, access to finance will continue to benefit only already‑formalised enterprises. Across responses, application procedures are described as excessively complex, paper‑heavy and exclusionary, particularly for micro‑enterprises and rural businesses. Digital‑only systems, unrealistic turnover thresholds and stringent compliance requirements block access long before financing decisions are made.
Respondents repeatedly propose:
Tiered requirements, proportionate to business size and maturity
Acceptance of alternative proof of activity, such as transaction records, contracts or community verification
Simplified, local‑language application processes
Micro‑financing windows with lighter compliance for early‑stage enterprises
Information gaps, awareness and outreach
Information failures undermine uptake as much as financial constraints. Lack of awareness remains a major barrier. Many respondents report learning about funding opportunities too late or by chance, especially in rural areas. Several respondents also highlight low understanding of how renewable energy can improve productivity and resilience, underlining the need for energy literacy alongside financing.
To close this gap, respondents call for:
Sustained training, awareness and education on renewable energy and financing options
Outreach through social media (e.g. WhatsApp), radio and local networks, not only websites
Better visibility of platforms such as the JET Investment Platform, with regular updates
Education starting earlier, including in schools, TVET colleges and tertiary institutions
Support beyond finance: technical assistance and capacity building
Renewable energy finance can function as a business accelerator, not a standalone loan. Respondents consistently stress that funding without support does not work, particularly for renewable energy investments. Enterprises often lack the technical knowledge to assess technologies, identify credible suppliers or manage installations. This bundled approach is seen as essential to ensure performance, repayment and long‑term impact.
Priority support measures include:
Technical advisory services and support for energy audits
Approved vendor lists, quality assurance and warranties
Maintenance and after‑sales support
Financial literacy, bookkeeping and compliance assistance
Structured mentorship and incubation, with post‑funding follow‑up
Co-ordination, transparency and trust
While funding exists, respondents repeatedly note that access, execution and trust are the real bottlenecks. Perceptions of gatekeeping, intermediaries absorbing funds and opaque decision‑making deter applications. Trust is higher where processes are visible, predictable and locally grounded.
Proposed solutions include:
A single, unified national platform consolidating funding opportunities
Transparent tracking of applications, approvals and disbursements
Audits and monitoring of intermediaries
Faster approvals and direct payments to suppliers
Partial automation of processes to reduce delays and discretion
Inclusion, targeting and social priorities
Respondents repeatedly highlight the need to prioritise women‑ and youth‑owned enterprises, rural businesses and those in coal‑transition and marginalised regions. Many also point to opportunities in circular economy, waste management, agriculture and energy services, including wheeling, energy farming and waste‑to‑energy models.
Targeted measures proposed include:
Ring‑fenced funding for township and rural enterprises
Tailored support for small farmers and women‑led businesses
Training and certification pathways to integrate local labour into renewable energy value chains
Overall, the municipal survey suggests that while awareness of distributional impacts and economic diversification objectives is growing, implementation capacity at local level remains rather weak. Municipalities primarily highlight structural and capacity‑related constraints, underscoring the importance of targeted support, institutional strengthening and improved co‑ordination to enable municipalities to play a more effective role in supporting green small‑scale enterprises.
Institutional landscape and strategic planning
The municipal survey points to a heterogeneous and still evolving institutional landscape for supporting green small‑scale enterprise development at local level. While some municipalities have begun to establish energy‑ or enterprise‑related functions, institutionalisation remains uneven. Only a minority report dedicated focal points or departments for renewable energy, and a considerable share indicate uncertainty around mandates and responsibilities. By contrast, MSME development units are more widely established, although these typically lack an explicit green focus.
Strategic planning frameworks are similarly uneven. Some municipalities report having weather-related strategies, though many remain under development or are not publicly available. In line with new requirements under the Climate Change Act of 2024, most municipalities have started work on an adaptation plan. However, capacity constraints remain significant. City‑level renewable energy plans are less common, with respondents often indicating that such plans are still in progress or that their status is unclear. Awareness of, and engagement with, national support initiatives, including the “Municipal Just Energy Transition Support Programme”, is mixed, with only a small number of municipalities reporting tangible benefits to date. This underscores the importance of embedding energy considerations more systematically within Integrated Development Plans (IDPs), sectoral strategies and municipal budgeting processes, rather than relying primarily on standalone plans or specialised units.
At the national and inter‑municipal level, SALGA has played a co-ordinating role in advancing municipal readiness. This includes convening a dedicated municipal Just Energy Transition conference in 2024 and establishing a Just Energy Transition Municipal Council and Secretariat, structured around three core workstreams focused on capacity development, financing and energy access. Most municipalities indicate that they participate in SALGA’s Environment, Planning and Resilience Working Group.
SALGA has also advanced co‑operation through a series of strategic memoranda of understanding and partnerships, including collaboration with the South African Cities Network and the Just South Africa Consortium led by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on an e‑Learning course, with the first cohort launched in August 2024 enrolling 19 municipalities and a second cohort opened in April 2025, as well as collaboration with Trade and Industrial Policy Strategies (TIPS) on a e‑Learning course reaching more than 50 municipalities. A memorandum of understanding with Eskom is underway to advance technical training, alongside co‑operation with the Energy and Water Sector Education and Training Authority and the Local Government Sector Education and Training Authority.
Overall, these initiatives provide an important starting point for embedding energy issues at municipal level, particularly in terms of capacity building and knowledge development. To date, however, much of the momentum has been driven by external partners, highlighting both their value and the opportunity to further institutionalise efforts through stronger engagement by Eskom and relevant national departments. Clearer leadership assignments within existing municipal structures, combined with deeper intergovernmental support, could help ensure greater scale, continuity and alignment with national priorities, particularly for municipalities facing the most acute transition pressures.
Energy governance, infrastructure and investment capacity
In terms of energy governance and infrastructure, municipalities display differing levels of responsibility and capacity. Not all responding municipalities are responsible for electricity distribution, and in several cases responsibilities are shared with Eskom or lie largely outside municipal control. This limits the scope for direct municipal action, particularly in municipalities where distribution assets and investment decisions are centralised. While some municipalities report that renewable energy generation is reflected in their Integrated Development Plans, many indicate that coverage remains partial or that renewable energy has not yet been prioritised amid competing service delivery pressures. This points to the need to more systematically mainstream renewable energy sources across all local planning instruments, ensuring that energy security objectives are embedded consistently alongside broader development, infrastructure and service delivery priorities.
Financial constraints emerge as a recurrent challenge, with limited fiscal space restricting the ability of municipalities to invest directly in renewable energy or energy efficiency initiatives, even where there is clear strategic intent. In this context, the capacity to structure bankable projects, manage procurement processes and engage effectively with private investors varies significantly across municipalities. One potential response would be the establishment of a dedicated project preparation facility, potentially led by SALGA, to support due diligence, standardise project development processes and enhance the bankability of municipal project pipelines.
Initiatives to crowd in private sector investment are more advanced in the Western Cape, reflecting not only local ambition but also differences in municipal size, mandates and institutional capacity. The presence of specialised entities focused on green investment and market development (e.g. GreenCape, Wesgro, the Western Cape Energy Council and the Atlantis Special Economic Zone) has helped create an enabling environment for sustained public and private engagement. Smaller municipalities, including those in Mpumalanga, operate under more constrained conditions.
Engagement with small‑scale enterprises and investment facilitation
Municipal engagement with small‑scale enterprises and the local investment environment remains limited. Few municipalities report having a dedicated or regularly updated database of green or sustainable enterprises, and only a minority indicate active use of green public procurement to stimulate demand for sustainable goods and services. Processing times for Small‑Scale Embedded Generation (SSEG) approvals remain lengthy and uneven, suggesting scope for further streamlining and standardisation. Moreover, most municipalities in Mpumalanga do not yet have SSEG frameworks in place (Chapter 2). While some municipalities offer incentives for households or businesses to invest in renewable energy or energy efficiency, such measures remain far from widespread. Improving transparency in decision-making is widely seen as a key priority for strengthening the investment environment for sustainable businesses.
Capacity building, co-ordination and peer-learning opportunities
Across responses, municipalities consistently identify capacity constraints as a central challenge. Limited financial resources are most frequently cited as the main barrier to building an ecosystem for sustainable enterprise development, followed by human resource shortages and administrative requirements. Many municipalities similarly point to insufficient funding, limited technical skills and weak co‑ordination as areas requiring improvement.
Respondents note that these constraints persist despite ongoing efforts, alongside administrative complexity and skills gaps. Some municipalities have benefited from the active support of business accelerators and other capacity‑building initiatives. However, only a few report tangible improvements, while many indicate that core capacity constraints remain largely unaddressed.
These limitations are compounded by weak co‑ordination across municipal departments, as well as between local government and external actors, including business support organisations and private sector stakeholders. Such co‑ordination challenges constrain the development of a coherent local ecosystem for green enterprise development.
While some municipalities report participation in national and international platforms, engagement remains uneven and often programme‑driven. Municipalities rate the current offer of knowledge exchange and experience sharing as poor to fair, particularly on renewable energy development. This points to unmet demand for more structured, practice‑oriented and municipal‑level learning opportunities. Against this backdrop, promising initiatives are emerging, including partnership‑based efforts supported by the Economic Development Partnership in the Western Cape to strengthen a network of municipalities for peer learning.
During the OECD thematic roundtables held in February 2026, local leaders from Mpumalanga and the Western Cape were able to exchange experiences and connect with relevant national initiatives. Such exchanges were widely viewed as valuable, yet they remain relatively infrequent and could benefit from greater institutionalisation or more regular scheduling. Expanding these platforms could also support stronger vertical co‑operation between national and local levels of government, where existing communication channels are not always fully utilised. In this context, there may be scope for the Presidential Climate Commission (PCC) and other relevant national bodies to further support and incentivise local government participation in national consultation processes. Across the OECD consultations, a strong need for sustained and constructive policy dialogue was consistently expressed.
Additional information provided by respondents emphasised the need for adequate training, stronger technical skills and improved knowledge sharing for both local municipalities and businesses. Respondents also highlighted that interventions combining affordable financing with capacity building, reduced administrative burdens, risk‑sharing mechanisms and partnerships with local financial support institutions could significantly improve access to renewable energy funding opportunities.
Business incubators’ perspectives underscore that effective support for environmentally friendly MSMEs depends on integrated delivery models rather than isolated financing or training initiatives. Incubators identify the need to strengthen project preparation, aggregation, co-ordination and trust while maintaining close engagement with local contexts. Their position at the interface between enterprises, financiers and public programmes makes them critical actors in translating green ambitions into practical outcomes for small scale enterprises.
Overall, the quality of MSME support has improved over the past decade, driven by learning by doing approaches and sustained trust building with local actors. A wealth of practical experience and promising ideas now exists across the ecosystem. The next step is to build on this foundation by consolidating what works and identifying opportunities for scaling up rather than responding to ad hoc requests that may attract funding but do not necessarily lead to meaningful or sustained improvements in MSME development. Notably, business incubators themselves emphasised the importance of investing in existing institutions rather than creating new ones.
A fragmented business support landscape
Despite this central role, incubator support remains fragmented, uneven in quality and based on varying methodologies. More than 90% of respondents indicated that current support for small-scale businesses is fragmented and lacks co-ordination.
Business incubators perception of current support provided to green small-scale enterprise development, 2026
Note: 15 responses from business incubators and support services. Question: How would you describe the support provided to green small-scale enterprise development in South Africa?
Source: OECD (2026). Survey results.
Support initiatives often prioritise counting incubated enterprises to justify resource allocation rather than assessing whether startups or MSMEs actually acquire the capabilities needed to grow, compete or secure capital. The contribution of MSMEs to the energy objectives is not always used as a performance metric, and the green dimension of support programmes is often poorly specified or loosely defined, despite being a high priority for most incubators. Success is typically measured in terms of job creation, business scalability and the financial performance of incubated small‑scale enterprises. Only just over 50% of respondents consider positive environmental outcomes when assessing success.
Greater information sharing among incubators could help draw lessons from ongoing initiatives and build a clearer understanding of what constitutes effective practice, including how environmental outcomes can be better measured and incentivised.
At the same time, the absolute number of MSMEs reached through existing programmes remains far too low to generate meaningful impact. Across incubator and accelerator programmes, initiatives typically support fewer than 50 MSMEs per cycle, which is insufficient relative to the scale of need, particularly in coal‑dependent regions. Support is usually delivered over extended periods, with nearly two thirds of assistance lasting more than one year and one third provided as punctual support. This underscores the importance of sustained accompaniment to build foundational skills.
Note: 112 responses from small-sale enterprises, predominately from Mpumalanga.
Source: OECD (2026). Survey results.
Funding is often tied to time‑bound projects that provide little or no long‑term support once programmes end. As initiatives are delivered by multiple service providers, there is also a risk of double counting beneficiaries.
Recent engagement with business incubators, accelerators and enterprise support organisations facilitated by the “Just Energy Transition Project Management Unit” (JET PMU) highlights both the breadth of ongoing activities and strong alignment around JET priorities. All participating actors expressed a clear willingness to contribute to a strategic, JET‑aligned enterprise support ecosystem, with a shared emphasis on improving co‑ordination, pipeline visibility and referral‑based collaboration across the support landscape. A key insight is that stakeholders view the JET Funding Platform primarily as a co‑ordination and signalling mechanism, rather than solely as a financing channel, underscoring its potential to reduce duplication, clarify entry points for enterprises and strengthen system‑level coherence in support of JET.
Improving information sharing across a fragmented business support landscape remains a key challenge. A promising example is the Green Business Support Services Directory an open‑source digital portal that maps green business support services across South Africa. The directory aims to support job‑creating green economic growth. However, such initiatives may not always be widely known or systematically used at provincial level, suggesting scope for better dissemination and integration into existing support and co‑ordination efforts.
Developing a consolidated database and systematically tracking the support received by individual entrepreneurs would help reduce duplication, address the risk of serial incubation and provide a stronger evidence base for policymaking. Such a tool would also improve visibility for provincial authorities on the landscape of support actors in the MSME space, strengthening co‑ordination and strategic oversight. The province could lead these co‑ordination efforts within the framework of existing institutions that have a mandate to facilitate collaboration, such as the Mpumalanga Green Cluster Agency.
Progress in this area is nevertheless constrained by data protection requirements under POPIA26F2, limited willingness among organisations to share beneficiary‑level information and the continued use of fragmented contact databases across service providers. Greater transparency among support organisations on who is being supported, how and for how long would be essential to build trust and enable more effective co‑ordination across the ecosystem. This has also been explicitly requested by MSMEs themselves, which report that gatekeeper approaches can limit access to information and opportunities.
Strong emphasis on non-financial and bundled support
Survey responses indicate that incubators predominantly provide non‑financial support, including mentorship, coaching, technical assistance, business development services, market access support and networking. While some organisations also provide or facilitate access to small grants or seed funding, financial support remains limited in scale, typically around ZAR 50 000 (~USD 3 060).
Respondents consistently stress that finance alone is insufficient for environmentally friendly MSMEs. Incubators therefore emphasise the importance of bundled support models that combine funding with mentoring, technical advice, business planning and compliance assistance. Enterprises that are able to access both financial and non‑financial support are reported to demonstrate higher survival rates, stronger scalability and improved environmental outcomes. This is particularly relevant for informal sector actors and early‑stage startups, which often require comprehensive and prolonged support in business planning, financial management and market access simply to meet basic funding requirements.
In terms of training needs for environmentally friendly MSMEs, respondents identify market access support as an area requiring further attention. Matchmaking between investors and projects, as well as technical training for entrepreneurs, also rank high among priority needs. Gaps identified in current training programmes include limited knowledge of financial and business planning, tailored mentoring and pitching support. Performance‑based funding could help improve and standardise the training offer, alongside stronger collaboration with Technical and Vocational Education and Training (TVET) colleges, universities and industry associations (Chapter 3). To scale up technical assistance, respondents see themselves playing a central role through partnerships with incubators and accelerators to deliver distributed mentorship. They also point to the potential of decentralised regional hubs in priority provinces to provide more place‑based and targeted support. Stakeholder consultations further indicate that many training opportunities for MSMEs are not localised within the coal belt, making physical access a significant barrier for enterprises. Decentralised hubs could therefore play an important role in improving accessibility to training and support services. These could help build a cohesive and strategic set of support services, funders and businesses clustered around physical hubs in key locations.
Measures to most effectively scale up technical assistance for green small-scale enterprises
Note: 15 responses from business incubators and support services. Participants were asked to choose up to three options. Question: “In your view, which measures could most effectively support the scaling up of technical assistance for green SMEs in South Africa?”
Source: OECD (2026). Survey results.
Persistent barriers and access to finance challenges
From the perspective of incubators, limited access to finance is the most frequently cited challenge faced by green startups and small‑scale enterprises, followed by gaps in technical skills and weak market demand. Respondents also overwhelmingly identify insufficient support for early‑stage businesses as the most significant constraint. Limited assistance in preparing funding proposals and the insufficient availability of funding are likewise highlighted as common challenges.
Common challenges faced by green startups or small-scale enterprises in accessing finance
Note: 15 responses from business incubators and support services. Participants were asked to choose up to three options. Question: “In your view, what are the most common challenges faced by the green start-ups or small-scale enterprises you support in accessing finance in South Africa?”
Source: OECD (2026). Survey results.
Incubators consistently stress the importance of aggregation mechanisms to address small project sizes and high transaction costs (Chapter 4). Pooled financing platforms, intermediary‑managed funds, credit guarantees and aggregated green procurement are seen as promising tools to improve access to finance at scale. The Green SME Fund, managed by the Development Bank of Southern Africa (DBSA), could also further help aggregate financial support for green small‑scale enterprises.
Digital financing platforms are likewise seen as having potential to play a stronger role by enabling alternative credit‑scoring approaches based on mobile and transaction data rather than traditional collateral, thereby improving access to finance for informal firms in townships and rural areas.
At the same time, respondents also support the idea of localised, decentralised funding facilities through trusted and vetted local intermediaries or with physical presence in rural and township areas to ease access to information on funding opportunities.
Collaboration and trust within the ecosystem
Business incubators report relatively high levels of collaboration with municipalities, other support organisations and community stakeholders. Many engage in co‑creation through workshops, pilot projects and community‑led initiatives that capitalise on local knowledge. Survey results indicate that trust from financial market institutions is perceived to be significantly higher for MSMEs supported by incubators than for stand‑alone startups, reinforcing the role of incubators as risk‑reducing intermediaries that improve information flows and support investment preparation. This is consistent with the observation that small‑scale enterprises with a proven track record naturally enjoy higher levels of trust from financial market institutions. Stronger feedback loops are also seen as essential tools for learning what has worked and identifying areas for improvement.
Insights from financial market institutions suggest that constraints lie less in the availability of capital than in risk perception, transaction costs and pipeline readiness. Rather than proposing detailed standalone solutions, respondents emphasise the need for stronger project preparation, aggregation mechanisms, risk‑sharing instruments and more effective local delivery ecosystems to enable deeper and more sustained engagement with MSMEs.
A diverse financial sector, not yet aligned with MSME needs
The financial market institutions survey and virtual consultations point to a highly diverse and well‑developed financial sector that is not yet well geared towards financing environmentally friendly MSMEs. Financial market institutions report operating across multiple geographic scales, with most active at national level and some operating at provincial, continental or international levels. While many institutions indicate some exposure to MSME finance, dedicated programmes tailored specifically to micro or early‑stage enterprises remain limited. Where support exists, it is often partial or indirect and frequently channelled through intermediaries or government‑linked mechanisms.
Bilateral discussions with financial market institutions confirm a persistent disconnect between banks’ sustainability strategies and the financing needs of green small-scale entrepreneurs. In most institutions, sustainable finance teams focus primarily on corporate‑level instruments, such as sustainability‑linked loans or sustainability bonds. As a result, these teams seldom engage with small green businesses, which generally fall outside the scope of sustainability portfolios.
Smaller‑scale green financial products, such as green mortgages, residential solar loans or small business solar finance, are typically managed by retail, home loan or asset finance divisions, rather than by sustainability units. Consequently, environmentally friendly MSMEs are usually treated as standard MSMEs, subject to conventional credit risk assessments and receiving limited benefit from banks’ sustainability strategies, taxonomies or ESG frameworks, which remain largely built around the needs, transaction sizes and reporting structures of large corporate clients.
Sectoral focus, ticket size and structural lending constraints
In terms of sectoral engagement, respondents report financing a range of renewable energy technologies, particularly solar photovoltaic systems, battery storage and wind projects. By contrast, energy efficiency and electric mobility financing remains more limited and uneven.
Financing activity tends to concentrate on larger ticket sizes, and many institutions indicate that small transaction volumes, high perceived risk, limited collateral and weak credit histories constrain engagement with micro and early‑stage enterprises (Chapter 4). These constraints are particularly binding for environmentally friendly MSMEs, whose business models often rely on distributed assets, incremental investments and longer payback periods, which are less compatible with traditional lending frameworks.
Consultations revealed several structural features of commercial lending practices that further limit banks’ ability and willingness to finance small‑scale businesses operating in the renewable energy sector.
First, zoning constraints present a significant obstacle. Many smaller renewable energy MSMEs, particularly installers, service providers and early‑stage enterprises, operate from premises located in residentially zoned areas, rather than formally designated commercial or industrial zones. Commercial asset finance products are typically restricted to assets located on commercially zoned property, as residential zoning is assessed by banks as posing higher regulatory, reputational and resale risks in the event of default. As a result, otherwise viable businesses are often excluded from asset‑based finance solely due to land‑use classification, even where the underlying activity is commercial in nature.
Second, collateral requirements remain misaligned with the realities of small business ownership. Debt financing for MSMEs in South Africa typically requires borrowers to pledge immovable property, either business premises or residential property, as collateral. However, most small and micro enterprises in the renewable energy value chain do not own property and operate from rented premises. This effectively excludes them from traditional debt instruments and shifts financing towards shareholder loans or equity, which are seldom accessible to early‑stage or informal firms and are not commonly offered by commercial banks. The constraint is therefore primarily one of debt finance, with collateral requirements forming a binding limitation.
Third, loan tenors are often too short to be commercially viable for smaller firms. MSMEs are typically offered repayment periods of five to seven years, which do not align well with cash‑flow cycles, market volatility or the payback period of renewable energy investments, particularly for enterprises still building a client base. Larger and more established companies are often able to secure tenors of up to ten years, significantly improving affordability and reducing default risk. For smaller businesses, shorter tenors result in higher monthly repayments, reduced resilience to shocks and ultimately restricted access to finance.
Risk perception, pipeline readiness and transaction costs
Risk considerations feature prominently in institutional decision‑making. Financial market institutions consistently identify high perceived risk, lack of collateral, limited data on cash flows and project performance, as well as regulatory and policy uncertainty, as central barriers to expanding finance for environmentally friendly MSMEs. As a result, approval rates for small‑scale enterprise applications are often low or uncertain, even where capital is available. Financing is predominantly provided in South African Rand and is typically linked to compliance‑heavy due diligence processes, which raise transaction costs for small projects.
Commercial banks interviewed report that they undertake a significant share of due diligence internally for solar home system projects, a sector in which they have built substantial expertise and are able to provide valuable technical advice to clients. However, this internal capacity generally does not extend to other green sectors, such as agrivoltaics or waste‑related activities, indicating clear opportunities to expand risk‑assessment capabilities and financing activities into these emerging areas (Chapter 2).
Across interviews and survey responses, institutions point to an insufficient pipeline of investible projects, highlighting a structural gap between enterprise development support, risk‑averse funding models and investment readiness. This gap reflects misalignment between the needs of MSMEs and the financial products currently on offer, as well as the limited visibility of the MSME financing landscape.
Interest in de‑risking instruments and intermediated delivery models
Respondents express strong interest in risk‑mitigation and de‑risking instruments. Credit guarantees, first‑loss capital, concessional co‑financing, technical assistance and pooled investment vehicles are consistently cited as mechanisms that would increase commercial banks’ willingness to finance MSMEs. At the same time, use of digital finance solutions remains limited, with only a small number of institutions currently deploying or actively planning to adopt fintech‑enabled or pay‑as‑you‑go models.
Financial market institutions show a clear preference for intermediated and aggregated delivery approaches, frequently highlighting the role of business incubators, accelerators and other support organisations in sourcing bankable project pipelines and reducing information asymmetries. Trust levels are notably higher for enterprises supported by incubators than for standalone startups, reinforcing the role of intermediaries as critical bridges between financiers and MSMEs.
This Annex provides a comprehensive, bottom‑up assessment of the opportunities and constraints shaping the development of green small-scale enterprises in South Africa. Drawing on survey evidence and extensive stakeholder consultations, it highlights a strong underlying demand for renewable energy solutions among small‑scale enterprises, alongside persistent structural barriers that prevent this potential from being realised at scale.
Across all stakeholder groups, different perspectives converge around several core observations. There is broad agreement that funding is not the primary constraint, that current support systems are fragmented, and that greater emphasis is needed on project preparation, aggregation and sustained accompaniment. There is also a shared recognition that local intermediaries play a critical role in bridging gaps between enterprises, public programmes and financial market institutions.
At the same time, the evidence clearly shows that stakeholders do not operate with a shared language or understanding of key concepts. Terms such as investment readiness, pipeline development and bankability mean different things depending on the position within the ecosystem. For small‑scale enterprises, investment readiness is often understood as having a promising business idea and needing finance to operationalise it, alongside basic access to information, coaching and simplified application processes. For business incubators, it relates to enterprise capability building, compliance and mentoring over time. For financial market institutions, it refers to fully documented, risk‑assessed and aggregated projects that meet internal credit and due‑diligence requirements. These differences contribute to misalignment across the ecosystem and help explain why capital availability does not translate into increased financing for environmentally friendly MSMEs.
The findings underscore the central importance of place‑based and intermediary‑led delivery models. Business incubators and other local support organisations play a pivotal role as trusted intermediaries, particularly in rural areas and townships, where they help translate policy objectives and financing instruments into practical support. Yet the business support landscape remains fragmented, uneven in quality and insufficient in scale, limiting its overall effectiveness. Strengthening environmentally friendlyMSME development will therefore require greater consolidation, co-ordination and investment in existing institutions rather than continued reliance on short‑term and parallel initiatives.
Municipalities emerge as critical but currently under‑resourced actors in the environmentally friendly MSME ecosystem. While awareness is increasing, implementation capacity at local level remains constrained by limited skills, fiscal pressures and unclear institutional mandates. In some contexts, this is compounded by continued reliance on coal‑based economic activity, reflecting concerns about jobs, revenue and local economic stability. Strengthening municipal capabilities, embedding energy security objectives within existing planning frameworks and improving co‑ordination with national actors will be essential to enabling more effective local delivery.
From the perspective of commercial banks and development finance institutions, the evidence points to a persistent gap between available capital and investible projects. High transaction costs, perceived risk and weak pipeline readiness continue to restrict engagement with environmentally friendly MSMEs, particularly at micro and early stages. Financial market institutions show strong interest in risk‑sharing instruments, aggregation mechanisms and intermediated delivery approaches, reinforcing the importance of integrated models that combine finance with technical assistance and project preparation. At the same time, additional incentives will be needed to encourage institutions to move beyond established operating models and engage more actively with smaller, higher‑risk transactions that fall outside their current comfort zones.
The findings suggest that unlocking the potential of environmental-friendly MSMEs will require moving beyond fragmented programmes towards a more coherent ecosystem approach. Key priorities include aligning expectations and definitions across stakeholders, decentralising and simplifying access to finance, strengthening non‑financial support and investment readiness and improving transparency and co-ordination across support providers. Addressing these challenges would not only enhance the effectiveness of MSME support but also help ensure that South Africa delivers tangible and inclusive economic benefits, particularly in regions most exposed to structural change.
← 1. Financial approaches and instruments are explained in Chapter 4.
← 2. POPIA refers to South Africa’s Protection of Personal Information Act (Act No. 4 of 2013), which regulates the collection, processing, storage and sharing of personal information. The Act aims to protect individuals’ privacy while allowing for the lawful use of data, and imposes obligations on organisations to obtain consent, ensure data security and limit the use of personal information to specified purposes.