How do African SMEs respond to climate risks? Evidence from Kenya and Senegal

Florence Crick, Shaikh Eskander (), Sam Fankhauser () and Mamadou Diop

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper investigates to what extent and how micro, small and medium-sized enterprises (SMEs) in developing countries are adapting to climate risks. We use a questionnaire survey to collect data from 325 SMEs in the semi-arid regions of Kenya and Senegal and analyze this information to estimate the quality of current adaptation measures, distinguishing between sustainable and unsustainable adaptation. We then study the link between these current adaptation practices and adaptation planning for future climate change. We find that financial barriers are a key reason why firms resort to unsustainable adaptation, while general business support, access to information technology and adaptation assistance encourages sustainable adaptation responses. Engaging in adaptation today also increases the likelihood that a firm is preparing for future climate change. The finding lends support to the strategy of many development agencies who use adaptation to current climate variability as a way of building resilience to future climate change. There is a clear role for public policy in facilitating good adaptation. The ability of firms to respond to climate risks depends in no small measure on factors such as business environment that can be shaped through policy intervention. Highlights: - Adaptive capacity determines the quality of current adaptation measures of SMEs. - Supportive business environment encourages sustainable adaptation responses. - Financial barriers lead SMEs to unsustainable adaptation practices. - Current adaptation practices influence the planning for future climate change. - Policy interventions can influence SMEs’ ability to respond to climatic risks.

JEL-codes: J1 (search for similar items in EconPapers)
Date: 2018-04-13
New Economics Papers: this item is included in nep-afr, nep-env and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published in World Development, 13, April, 2018, 108, pp. 157-168. ISSN: 0305-750X

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http://eprints.lse.ac.uk/87482/ Open access version. (application/pdf)

Related works:
Journal Article: How do African SMEs respond to climate risks? Evidence from Kenya and Senegal (2018)
Working Paper: How do African SMEs respond to climate risks? Evidence from Kenya and Senegal (2017)
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