Overcoming Financial and Capacity Barriers to Empower Small‑Scale Enterprises in South Africa

Roadmap for empowering small-scale enterprises in renewable energy and other environmental sectors

Rationale and objective

Numerous initiatives have generated valuable insights into financing environmental-friendly entrepreneurship. However, translating these lessons into sustained outcomes, including tangible job creation and the gradual phase‑out of public support, remains a persistent challenge.

Building on the analysis from this report, stakeholder consultations and survey results (Annex D), this roadmap sets out a comprehensive set of non-prescriptive recommendations across key thematic areas to support the mobilisation of private finance for small-scale enterprises in the renewable energy space in South Africa.

Implementing this roadmap will require collaborative efforts by a range of public and private stakeholders, including national, provincial and local governments, municipalities, business incubators and development partners. Not all recommendations can be implemented within the same timeframe. While some actions will deliver short‑term results, others require longer‑term engagement, significant resources or structural reforms beyond the scope of this project. To support accountability and ongoing learning from implementation, good practices and lessons learned, a structured stocktaking exercise is proposed for the end of 2027 to assess progress, identify remaining gaps and refine priorities.

While the implementation of the full roadmap goes beyond the scope of the joint project, Annex A identifies a sub-set of potential activities to be implemented by the OECD CEFIM Programme, in partnership with South Africa’s Department of Forestry, Fisheries and the Environment and other stakeholders.

Key non-prescriptive recommendations

Strengthening the enabling environment to empower small-scale enterprises in renewable energy and broader environmental sectors

Strengthening the enabling environment for small-scale enterprises in renewable energy and broader environmental sectors is essential to scaling their contribution to South Africa’s energy transition. Financing alone will not be sufficient, and more systematic combinations of financial and non-financial support are needed, particularly in coal-dependent regions where entrepreneurial ecosystems remain nascent. While recent policy and institutional reforms signal growing recognition of the role of small businesses in renewable energy and other environmental sectors, further efforts are required to ensure that support reaches informal and underserved businesses, including those in townships and rural areas, youth and women-owned enterprises. This calls for more targeted, locally grounded approaches that expand innovation support, strengthen market access and align financing, technical assistance and ecosystem development across renewable energy and other environmental value chains. Table 1 provides an overview of non-prescriptive recommendations put forward in Chapter 2 and identifies lead institutions, possible implementing partners and measures of progress.

Table 1. Strengthening enabling conditions for small-scale enterprises in renewable energy and broader environmental sectors

#	Key non-prescriptive recommendations	Level	Lead institutions	Implementing partners	Measure of progress
1	Mainstream green targets in all public MSME support measures.	National & provincial	DSBD; line ministries; DTIC	PCC, DFIs	Standardised gree nmetrics adopted across department; MSME support funding linked to green objectives.
2	Ease licensing requirements and simplify regulatory constraints to enable start-ups to access new professional services sectors more easily.	National	National Treasury, DSBD, DTIC	DTIC	Licensing procedures simplified/removed; business registration time.
3	Strategically leverage green public procurement to stimulate green industries and support structural reforms.	National	National Treasury; ministries	Municipalities	Share of contracts awarded to MSMEs; alignment with international good practices.
4	Develop a strong agrivoltaics regulatory framework with targeted incentives, clearer land‑use rights and streamlined access to environmental data, while engaging in international initiatives.	National	DoA, DEE, DFFE, DTIC	African Agrivoltaics Platform; DARDLEA	Participation in knowledge-sharing activities, awareness raising, guidelines, training programmes.
5	Strengthen provincial inter‑departmental co-ordination to ensure alignment between energy, economic development, environment and municipal support functions.	Provincial and local	Provincial government DARDLEA, National COGTA	SALGA: MGCA; municipal planning departments	Co-ordination forum established; Green objectives integrated across sectoral policies.
6	Establish a multi‑year agreement for the Mpumalanga Green Cluster Agency (MGCA) with results‑based contracts.	Provincial and local	Provincial government; MGCA	JET-PMU; PCC; financiers	Multi-year funding secured; staff hired versus planned; partnerships.
7	Develop a harmonised database of MSME in renewable energy and other environmental value chains for Mpumalanga, hosted within MGCA to improve co-ordination, transparency and tracking.	Provincial	MGCA	Business incubators	Publicly accessible MSME online database (subject to funding).
8	Develop green innovation hubs in Mpumalanga using a cluster‑based approach, bringing together training institutions, industry partners, municipalities and support organisations	Provincial and local	Provincial government; MGCA	JET-PMU; PCC; development partners	Number of hubs established and operational; co-working spaces available with free wifi access.

 

#	Key non-prescriptive recommendations	Level	Lead institutions	Implementing partners	Measure of progress
9	Develop a co-ordinated province-specific capacity‑building programme for municipalities in Mpumalanga, with a focus on strengthening technical and financial skills for the energy and broader transition and systematically disseminating good practices.	Provincial and local	DHET, SALGA	Just SA and other development partners	Progress reports of capacity building programmes; number of trainings delivered.
10	Improve municipal readiness to develop Small-Scale Embedded Generation (SSEG) and harmonise and simplify SSEG) processes, including the digitalisation of key approvals processes, such as SSEG registration and environmental clearances.	Provincial and local	Municipalities	OECD; provincial governments; Res4Africa; SALGA	Information-sharing between Mpumalanga and Western Cape; number of municipalities adopting SSEG procedures.
11	Embed inclusive energy transition objectives within existing Integrated Development Plans and sector strategies, rather than relying on stand‑alone plans.	Municipalities	Municipalities; COGTA;	National Treasury; development partners	Number of municipalities integrating MSME support into IDPs and SDBIPs.
12	Leverage the role of municipalities to enable MSME development by improving access to land, streamlining administrative processes and ensuring the provision of basic infrastructure and services.	Municipalities	DRDLR; DARDLEA; COGTA; DFFE	Municipalities; development partners	Reduction in administrative processing times for permits and licences; number of MSMEs accessing municipal land or facilities.
13	Strengthen municipal capacity in project preparation and investment facilitation for renewable energy, energy efficiency and circular economy activities.	Municipalities	SALGA; COGTA	JET-PMU; DEE; NBI, business incubators	Municipality survey; number of renewable projects advanced at local level.
14	Strengthen existing publicly available business incubators and improve collaboration among incubators and accelerators to reduce fragmentation and duplication.	Business incubators and support	JET-PMU; DSBD	SEDFA	Number of knowledge-sharing events between incubators; joint projects.
15	Improve transparency and information sharing on beneficiaries and support received, in line with POPIA, to reduce serial incubation and gatekeeper behaviour, while strengthening local delivery capacity.	Business incubators and support	JET-PMU, MGCA: DSBD	MPGA, business incubators; SEDFA	Publicly available online database.
16	Strengthen monitoring, evaluation and learning systems at provincial and local levels so that good practices can be replicated, institutional knowledge is retained and results can be demonstrated to funders and communities.	Provincial and local	Provincial government	Municipalities; MGCA; Wesgro; Development partners	Good practices documented; M&E tools embedded in routine processes.

Note: COGTA: Department of Cooperative Governance and Traditional Affairs; DARDLEA: Department of Agriculture, Rural Development, Land and Environmental Affairs (Mpumalanga); DEE: Department of Electricity and Energy; DFFE: Department of Forestry, Fisheries and the Environment; DHET: Department of Higher Education and Training; DoA: Department of Agriculture; DRDLR: Department of Rural Development and Land Reform; DSBD: Department of Small Business Development; DTIC: Department of Trade, Industry and Competition; IDPs: Integrated Development Plans; JET: Just Energy Transition; JET‑PMU: Just Energy Transition Project Management Unit; M&E: Monitoring and Evaluation; MGCA: Mpumalanga Green Cluster Agency; MPGA: Mpumalanga Provincial Government Agency; MSMEs: Micro, Small and Medium‑Sized Enterprises; OECD: Organisation for Economic Co-operation and Development; PCC: Presidential Climate Commission; POPIA: Protection of Personal Information Act; Res4Africa: Renewable Energy Solutions for Africa; SALGA: South African Local Government Association; SDBIPs: Service Delivery and Budget Implementation Plans; SEDFA: Small Enterprise Development Finance Agency; SSEG: Small‑Scale Embedded Generation; Wesgro: Western Cape Tourism, Trade and Investment Promotion Agency.

Source: Recommendations are drawn from Chapter 2 and Annex D.

Building skills for South Africa’s energy transition

Building skills in renewable energy and other environmental sectors is central to ensuring that South Africa’s energy transition translates into inclusive and sustainable job creation. While the expansion of renewable energy presents significant employment opportunities, these will not materialise without a workforce equipped with relevant, future-oriented skills and strong alignment between training systems and labour market demand. Current skills development pathways remain fragmented and uneven across regions, with coal-dependent areas facing particular challenges in reskilling and economic diversification. Addressing these gaps requires more coherent, place-based approaches that strengthen training systems, expand work-based learning and align skills development with emerging renewable energy value chains and other environmental sectors. Table 2 provides an overview of the recommendations set out in Chapter 3 and Annex D.

Table 2. Building skills for South Africa’s energy transition

#	Key non-prescriptive recommendations	Level	Lead institutions	Implementing partners	Measure of progress
Improving co-ordination and developing a more agile and consistent skills ecosystem
1	Effectively co‑ordinate skills planning across sectors, with clear mandates, stable funding and strong engagement from industry, SETAs and local government.	National	DHET; provincial and local government	JET-PMU; SETAs; TVETs Industry associations;	Skills Desk and Advisory Forum fully operational; industry partners and local government participating in skills planning.
2	Develop localised skills mapping to better understand current and future needs and disseminate these findings at the local level to inform and strengthening local economic planning.	National, regional and local	NBI	Provincial government; district and local municipalities	Local economic plans informed by skills data; number of policies or programmes adjusted based on mapping; skills aligned with identified needs.
3	Develop harmonised industry-led, nationally recognised certification standards for renewables and other environmental skills across TVET institutions to ensure consistency, transferability and recognition by employers.	National	DHET and line ministries	TVET colleges; SETAs; Industry associations	New green certification standards; Partnerships between TVETs and industry.
4	Develop a scalable national model for training‑to‑employment.	National	NBI; DHET; DSBD, DTIC	TVET colleges; SETAs, Industry	Lessons learned of NBI pilots; successful rollout in provinces; number of green jobs created.
Expanding and scaling up TVET and other training programmes
5	Conduct a comprehensive assessment of existing TVET programmes to capture lessons learned, update curricula and integrate environmental considerations across all modules.	National	DHET	TVET colleges; SETA; Industry associations; RES4Africa	Assessment report with emerging good practices; new or revised modules developed for green TVET courses.
6	Use skills gap mapping and local skills audits to design targeted training interventions in structurally weak and coal‑dependent areas.	National, provincial and local	DHET and provincial government	SALGA; municipalities	Local skills audits completed in target areas; newly created green jobs.
7	Align training programmes with local economic needs, ensuring that TVET offerings respond directly to identified labour‑market opportunities, including renewable energy.	National, provincial and local	DHET, provincial government	TVET colleges; SETAs; RES4Africa	TVET curricula updated to reflect local economic needs; new courses developed in emerging green value chains.
8	Scale up TVET delivery capacity through stronger partnerships with local colleges, accredited training providers and mobile training units.	National, provincial and local	DHET and provincial government	TVET colleges; training providers.	Remote communities reached; demonstration projects and roadshows organised.

Note: COGTA: Department of Cooperative Governance and Traditional Affairs; DFFE: Department of Forestry, Fisheries and the Environment; DHET: Department of Higher Education and Training; DSBD: Department of Small Business Development; DTIC: Department of Trade, Industry and Competition; JET‑PMU: Just Energy Transition Project Management Unit; NBI: National Business Initiative; RES4Africa: Renewable Energy Solutions for Africa Foundation; SALGA: South African Local Government Association; SETAs: Sector Education and Training Authorities; TVETs: Technical and Vocational Education and Training institutions.

Source: Recommendations are drawn from Chapter 3.

Unlocking access to finance for small-scale enterprises in renewable energy value chains and other environmental sectors

Access to finance remains a key barrier to the growth of small-scale enterprises in renewable energy value chains and other environmental sectors in South Africa, despite a sophisticated and well-regulated financial system. Small-scale enterprises continue to face limited access to bank lending, high perceived risks and financing conditions that are often poorly aligned with their needs, including short tenors, collateral requirements and complex application processes. Survey results highlight a fragmented support landscape, significant information gaps and a strong demand for more accessible, affordable and locally delivered financing solutions combined with non-financial support. Addressing these challenges will require more co‑ordinated, place-based and intermediary-led approaches, alongside greater alignment between financial institutions, support programmes and enterprise realities. Table 3 provides an overview of the proposed actions from Chapters 2 and 5.

Table 3. Unlocking access to finance for small-scale enterprises in renewable energy value chains and other environmental sectors

#	Key non-prescriptive recommendations	Level	Lead institutions	Implementing partners	Measure of progress
Improving access to finance enabling conditions
1	Pursue ongoing efforts to integrate informal MSMEs into the formal financial system through gradual formalisation, alternative data for credit assessment and risk‑sharing instruments.	National	DSBD	SEDFA; business incubators	Uptake of transitional support programmes (number of firms); number of newly formalised MSMEs
2	Align expectations and definitions across stakeholders, particularly around investment readiness, pipeline development and bankability.	National and provincial	DTIC; DSBD	DFIs; commercial banks; other financiers.	Common definitions or guidelines developed and used across different government bodies.
3	Encourage commercial banks to develop or strengthen green growth strategies, including for MSMEs, to expand engagement beyond rooftop solar, by building internal expertise in other green sectors and refining risk assessment approaches.	National	Major commercial banks	OECD; BASA; fintech and alternative financing providers; DFIs	Mutual learning on current green growth strategies; MSMEs financed; early‑stage MSMEs financed.
4	Incentivise development finance institutions to make stronger use of guarantees and risk‑sharing instruments, while freeing up more equity and first‑loss capital to support early‑stage green enterprises and small-scale renewable energy, and to crowd in private finance.	National	DBSA; IDC; DFIs	National Treasury; commercial banks	Volume of guarantees and risk‑sharing instruments used; number of early‑stage green enterprises financed;amount of equity and first‑loss capital deployed.
5	Leverage the JET PMU platform as a co-ordination mechanism to promote wider use of concessional loans, linking them explicitly to enterprise development objectives, priority green sectors and structured graduation pathways towards commercial finance.	National	JET-PMU; National Treasury	JETP partners; Commercial banks	Volume of concessional loans deployed; share of JETP concessional funding matched with projects;
6	Work with entrepreneurs and communities to stimulate demand‑side uptake, by raising awareness of energy transition opportunities and strengthening financial education, supporting a shift towards more market‑oriented entrepreneurship that is not solely dependent on grant funding.	Provincial and local	MGCA; business incubators: MEGA	Municipalities	Stronger willingness to take risks; uptake of concessional funding and commercial loans; long-term mindset shift (difficult to measure).
#	Key non-prescriptive recommendations	Level	Lead institutions	Implementing partners		Measure of progress
Strengthen financial support for small-scale enterprises and renewable energy adoption
7	Strengthen bundled support models that combine concessional finance with technical assistance, compliance support and post-investment follow-up to help bridge the project preparation to financing gap as well as to help strengthen renewable energy adoption.	National	DSBD; National Treasury; SEDFA; business incubators	SEDFA; JET-PMU; Commercial banks		Volume of concessional finance deployed alongside technical assistance; number of integrated support models; JETP registry.
8	Leverage concessional financing under the JETP to support Mpumalanga start-ups and early-stage MSMEs in the renewable energy value chain to establish an operational track record and access follow-on commercial financing.	National and provincial	JETP partners;	JET-PMU; DBSA; IDC; DFIs		Volume of concessional finance or philanthropic capital for early-stage MSMEs; MSMEs accessing follow-on repayable finance.
9	Setup a pilot small-scale concessional finance facility targeting fintech providers, platform-based financing providers or traditional lenders using alternative data and innovative, cash-flow–based lending approaches tailored to micro-enterprises.	National	National Treasury; DSBD; DFFE	DBSA; Fintech providers; other providers		Operationalisation of a pilot concessional finance facility; number of participating fintech providers; volume of concessional finance.
10	Provide first-loss guarantees to unlock private capital for renewable energy adoption.	National	National Treasury; DSBD	DBSA; IDC; DFIs		Volume of first-loss guarantees issued; number and value of renewable energy projects financed.
11	Establish a blended finance facility to scale financing and mobilise private capital for renewable energy MSMEs.	National	DSBD	DBSA; IDC; DFIs; commercial banks		Operationalisation of a blended finance facility; total volume of capital mobilised (public/private); number of participating commercial banks.
12	Pilot innovative financing mechanisms, including securitisation and crowdfunding, under the JETP to support aggregation and standardisation of MSME renewable energy projects.	National	JET PMU	Development partners; fintech providers		Lessons learned from pilot initiatives; volume of additional capital deployed; participating financial institutions and MSMEs.
13	Support digital finance for small-scale solar adoption and MSME financing.	National	National Treasury; DCDT	Digital lending platforms		Volumes and diversity of digital finance solutions deployed for solar and MSME financing.
14	Enable aggregation mechanisms at provincial level, including pooled financing platforms and intermediary‑managed delivery models.	Provincial	Provincial governments; National Treasury	DBSA; IDC; commercial banks		Number of pooled financing mechanisms established; Volume of capital mobilised for MSME development
Strengthen co-ordination, alignment and sequencing in the delivery of financial support
15	Enhance programme alignment and sequencing to facilitate the transition from pipeline building and support to follow-on financing.	National	National Treasury; DSBD	DBSA; IDC; DFIs		MSMEs moving from support programmes to finance

 

Align policies and non-financial support to strengthen the impact of financial support
16	Develop a structured “financing journey toolkit” for environmentally friendly MSMEs, with a targeted module for rooftop solar.	National	DSBD; DEE	JET-PMU; OECD; SAPVIA	MSME financing toolkit used; standardised solar project documentation
17	Consider the development of a movable collateral registry to reduce reliance on fixed collateral and facilitate cash-flow based lending.	National	National Treasury; DTIC; DSBD	SARB; Financial regulators	Operational movable collateral registry; financial institutions using it.

Note: BASA: Banking Association South Africa; DBSA: Development Bank of Southern Africa; DBSD: Department of Small Business Development; DCDT: Department of Communications and Digital Technologies; DFIs: Development Finance Institutions; DSBD: Department of Small Business Development; DTIC: Department of Trade, Industry and Competition; IDC: Industrial Development Corporation; JET‑PMU: Just Energy Transition Project Management Unit; JETP: Just Energy Transition Partnership; MEGA: Mpumalanga Economic Growth Agency; MGCA: Mpumalanga Green Cluster Agency; MSMEs: Micro, Small and Medium‑Sized Enterprises; OECD: Organisation for Economic Co-operation and Development; SAPVIA: South African Photovoltaic Industry Association; SARB: South African Reserve Bank; SEDFA: Small Enterprise Development Finance Agency.

Source: Recommendations are drawn from Chapters 2 and 5.

Advancing financial solutions for renewable microgrid electrification

Fully implementing the Integrated National Electrification Programme (INEP) and achieving universal electrification by 2030 will require more co-ordinated policy action to address the remaining access gap, improve planning alignment and strengthen institutional and technical capacities. Key priorities include determining a strategic approach to microgrid rollout under the INEP, mobilising private investment in microgrid projects and portfolios, and developing microgrid regulations including a transparent tariff regime. Given that most microgrid projects are not commercially viable without public support, scaling up will depend on blended finance approaches, stronger project preparation and aggregation, and clear regulatory frameworks. This could be complemented by measures to strengthen local capacities, while developing targeted support policies for low-income households to improve affordability. Ensuring meaningful community involvement, including where feasible ownership, will also be essential to align projects with local needs and support long term sustainability. Table 4 provides an overview of the proposed recommendations drawn from Chapter 5.

Table 4. Advancing financial solutions for renewable microgrid electrification

#	Key non-prescriptive recommendations	Level	Lead institutions	Implementing partners	Measure of progress
1	Strengthen the knowledge base on microgrid financing and regulations across all levels of government	National, provincial, municipal	DEE, NERSA	AFUR, OECD, development partners, DFIs	Policy brief on microgrids issued; knowledge exchange workshop held;
2	Develop microgrid regulations including a transparent and cost-reflective tariff regime to enhance investor certainty.	National	DEE, NERSA	AFUR, OECD, development partners	(Draft) framework and tariff methodology available and discussed with stakeholders.
3	Publish information on INEP rollout, provincial electrification master plans, technology options, microgrid opportunities and capacity building initiatives on a centralised online platform to improve project planning and investment.	National	DEE	DBSA, AfDB, DHET, TVET colleges, SALGA; municipalities	Document availability, including regular updates.
4	Ensure modular and multi-factor microgrid planning (e.g. considering anchor clients, cost-efficiency, demand profiles, PUE and demand stimulation) to improve commercial viability of microgrid projects.	National, provincial, municipal	DEE	Municipalities, Eskom; private microgrid developers	Grid planning outputs comprising core criteria.

 

#	Key non-prescriptive recommendations	Level	Lead institutions	Implementing partners	Measure of progress
5	Strengthen collaboration with development partners, multilateral development banks and private developers to mobilise private finance for microgrids.	National	DEE, JET-PMU, National Treasury	Eskom, DFFE, World Bank, AfDB, partners, private developers	Number of informal or formal partnerships created, consultations held, amount of financing committed.
6	Strengthen capacities of local actors (financial institutions, municipalities, planners and developers) to improve bankability of project proposals and access to financing.	National; municipal	DBSA	DEE; DHET; TVET colleges, SALGA, incubators, partners	Number of curricula developed and trainings held.
7	Ensure local community involvement in microgrid design and implementation to improve sustainable outcomes and local benefits.	National and municipal	DEE, private developers; provincial governments; PCC	Development partners and MDBs, municipalities	Number of microgrid projects in different development stages with clear community involvement.
8	Organise knowledge exchanges on microgrid financing models, risks and mitigation instruments, and organise matchmaking events between developers and financiers.	National and municipal	DEE, BASA	MDBs, OECD, financial institutions, private developers	Number of events organised, number of projects initiated or financed.
9	Streamline and standardise application and disbursement processes for financing related to microgrids.	National	MDBs, development partners		Number of consultations held; number of standardised processes.

Note: AfDB: African Development Bank; AFUR: African Forum for Utility Regulators; BASA: Banking Association South Africa; DBSA: Development Bank of Southern Africa; DEE: Department of Electricity and Energy; DFFE: Department of Forestry, Fisheries and the Environment; DHET: Department of Higher Education and Training; INEP: Integrated National Electrification Programme; MDBs: Multilateral Development Banks; NERSA: National Energy Regulator of South Africa; OECD: Organisation for Economic Co‑operation and Development; PCC: Presidential Climate Commission; PUE: Productive Use of Energy; SALGA: South African Local Government Association; TVET: Technical and Vocational Education and Training.

Source: Recommendations are drawn from Chapter 5.