Climate Shocks Threaten Small Businesses in Developing World Cities
Climate-related shocks are posing significant challenges to small business ideas in developing world cities. A recent study by the London School of Economics highlights the impact of extreme weather events, such as droughts and floods, on my business in African capital cities. These businesses, accounting for around 80% of total urban employment, are crucial for economy stability and job creation.
In Cape Town, South Africa, a carwash was forced to close temporarily due to water restrictions during a severe drought. This led to job losses and highlighted the vulnerability of small business ideas to climate-related disruptions. Similarly, in Lusaka, Zambia, several companies, including manufacturing firms and google my business-related businesses, faced closures and economic losses during the 2015-2018 drought-induced hydropower outages. These companies had to invest in alternative power sources like diesel generators and solar energy, implement energy efficiency measures, and diversify their supply chains to mitigate the impacts.
Small businesses in Lusaka adopted various coping strategies, such as buying generators, adjusting operating hours, or reducing staff. However, many faced increased overheads, like fuel costs for generators, due to climate-related disruptions. The four-year drought between 2015 and 2018 affected small business ideas in major cities across southern and east Africa, underscoring the need for climate resilience in urban economies.
Supporting small enterprises to access finance and build resilience may help facilitate a 'just transition' in developing world cities facing climate-related shocks. This could involve investing in renewable energy sources, implementing energy efficiency measures, and diversifying supply chains. By doing so, we can protect jobs, promote economic growth, and ensure that small business ideas remain a driving force in urban economies.
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