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

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  • Crick, Florence
  • Eskander, Shaikh M.S.U.
  • Fankhauser, Samuel
  • Diop, Mamadou
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.

Suggested Citation

  • Crick, Florence & Eskander, Shaikh M.S.U. & Fankhauser, Samuel & Diop, Mamadou, 2018. "How do African SMEs respond to climate risks? Evidence from Kenya and Senegal," LSE Research Online Documents on Economics 87482, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:87482
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    Cited by:

    1. Shaikh M. S. U. Eskander & Sam Fankhauser, 2022. "Income Diversification and Income Inequality: Household Responses to the 2013 Floods in Pakistan," Sustainability, MDPI, vol. 14(1), pages 1-12, January.
    2. Mathews, Shilpita & Surminski, Swenja & Roezer, Viktor, 2021. "The risk of corporate lock-in to future physical climate risks: the case of flood risk in England and Wales," LSE Research Online Documents on Economics 112801, London School of Economics and Political Science, LSE Library.
    3. Antonis Skouloudis & Thomas Tsalis & Ioannis Nikolaou & Konstantinos Evangelinos & Walter Leal Filho, 2020. "Small & Medium-Sized Enterprises, Organizational Resilience Capacity and Flash Floods: Insights from a Literature Review," Sustainability, MDPI, vol. 12(18), pages 1-17, September.
    4. Mathews, Shilpita & Surminski, Swenja & Roezer, Viktor, 2021. "The risk of corporate lock-in to future physical climate risks: the case of flood risk in England and Wales," LSE Research Online Documents on Economics 112807, London School of Economics and Political Science, LSE Library.
    5. Gannon, Kate & Crick, Florence & Atela, Joanes & Babagaliyeva, Shanna & Batool, Samavia & Bedelian, Claire & Conway, Declan & Diop, Mamadou & Fankhauser, Samuel & Jobbins, Guy & Ludi, Eva & Qaisrani, , 2020. "Private adaptation in semi-arid lands: a tailored approach to ‘leave no one behind’," LSE Research Online Documents on Economics 102537, London School of Economics and Political Science, LSE Library.
    6. Declan Conway & Robert J. Nicholls & Sally Brown & Mark G. L. Tebboth & William Neil Adger & Bashir Ahmad & Hester Biemans & Florence Crick & Arthur F. Lutz & Ricardo Safra Campos & Mohammed Said & Ch, 2019. "The need for bottom-up assessments of climate risks and adaptation in climate-sensitive regions," Nature Climate Change, Nature, vol. 9(7), pages 503-511, July.
    7. Askar N. Mustafin* & Jaroslav Gonos & Katarína ?ulková, 2018. "Development of Small and Medium-Sized Enterprises on the Example of the Russian Federation and the Slovak Republic," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 85-89:5.
    8. Alam, Ashraful & Du, Anna Min & Rahman, Mahfuzur & Yazdifar, Hassan & Abbasi, Kaleemullah, 2022. "SMEs respond to climate change: Evidence from developing countries," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    9. Eichsteller, Marta & Njagi, Tim & Nyukuri, Elvin, 2022. "The role of agriculture in poverty escapes in Kenya – Developing a capabilities approach in the context of climate change," World Development, Elsevier, vol. 149(C).
    10. Gannon, Kate & Crick, Florence & Atela, Joanes & Conway, Declan, 2021. "What role for multi-stakeholder partnerships in adaptation to climate change? Experiences from private sector adaptation in Kenya," LSE Research Online Documents on Economics 110377, London School of Economics and Political Science, LSE Library.
    11. Jayasundara, JMSB & Rajapakshe, PSK & Prasanna, RPIR & Naradda Gamage, Sisira Kumara & Ekanayake, EMS & Abeyrathne, GAKNJ, 2019. "The Nature of Sustainability Challenge in Small and Medium Enterprises and its Management," MPRA Paper 98418, University Library of Munich, Germany.
    12. Achbah, Rachid & Vitanova, Ivana & Fréchet, Marc, 2024. "Failure Escape: The role of advice seeking in CEOs’ awareness of financial difficulties and corporate restructuring," Journal of Business Research, Elsevier, vol. 175(C).
    13. Oscar Chakabva & Robertson Tengeh & Job Dubihlela, 2021. "Factors Inhibiting Effective Risk Management in Emerging Market SMEs," JRFM, MDPI, vol. 14(6), pages 1-12, May.
    14. Junxiu Sun & Feng Wang & Haitao Yin & Rui Zhao, 2022. "Death or rebirth? How small‐ and medium‐sized enterprises respond to responsible investment," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1749-1762, May.
    15. Naradda Gamage, Sisira Kumara & Ekanayake, EMS & Abeyrathne, GAKNJ & Prasanna, RPIR & Jayasundara, JMSB & Rajapakshe, PSK, 2019. "Global Challenges and Survival Strategies of the SMEs in the Era of Economic Globalization: A Systematic Review," MPRA Paper 98419, University Library of Munich, Germany.
    16. Gannon, Kate & Castellano, Elena & Eskander, Shaikh & Agol, Dorice & Diop, Mamadou & Conway, Declan & Sprout, Liz, 2022. "The triple differential vulnerability of female entrepreneurs to climate risk in sub-Saharan Africa: gendered barriers and enablers to private sector adaptation," LSE Research Online Documents on Economics 115222, London School of Economics and Political Science, LSE Library.
    17. Mark Brennan & Stephen Graves & Jonars Spielberg & Bish Sanyal, 2022. "Operations, risk, and small firms: Field results from irrigation equipment vendors in Senegal," Production and Operations Management, Production and Operations Management Society, vol. 31(9), pages 3594-3610, September.
    18. Bozzola, Martina & Smale, Melinda, 2020. "The welfare effects of crop biodiversity as an adaptation to climate shocks in Kenya," World Development, Elsevier, vol. 135(C).

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