NAVIGATING GREEN HORIZONS: OBSTACLES TO ENVIRONMENTAL STEWARDSHIP AND CIRCULARITY IN NIGERIAN SMES
Keywords:
Environmental sustainability, Circular economy, Small and medium enterprises (SMEs), NigeriaAbstract
This article investigates the multifaceted challenges hindering the adoption of environmental sustainability and circular economy practices among Small and Medium-sized Enterprises (SMEs) in Nigeria. Drawing upon a comprehensive qualitative review and synthesis of existing academic literature and reports, the study identifies key barriers including pervasive financial constraints, limited knowledge and awareness, technological limitations, deficiencies in regulatory and policy frameworks, nascent market demand and consumer awareness, complexities within supply chains, and internal organizational factors. The findings highlight that Nigerian SMEs, despite their crucial role in economic development, struggle to transition from traditional linear economic models due to these interconnected obstacles. The article concludes by emphasizing the need for a multi-pronged approach involving tailored financial instruments, targeted capacity-building initiatives, supportive technology transfer, robust governmental policies, and public awareness campaigns to foster a more sustainable and circular economic future for Nigeria's SME sector.
References
1. Adesua Lincoln, A. (2022). Barriers to Supply Chain Sustainability Innovation Amongst Nigerian Entrepreneurs in the Food and Agriculture Industry. In: Idowu, S.O., Schmidpeter, R. (eds) Case Studies on Sustainability in the Food Industry. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-031-07742-5_2
2. Adesua Lincoln, A., and Diamond, B., (2024), Corporate Social Responsibility Practices in Small and Medium Enterprises. Available at SSRN: https://ssrn.com/abstract=5001531 or https://doi.org/10.2139/ssrn.5001531
3. Brammer, S., & Pavelin, S. (2008). Factors influencing the quality of corporate environmental disclosure. Business Strategy and the Environment, 17, 120–136. https://doi.org/10.1002/bse.506
4. Caldera, H. T. S., Desha, C., & Dawes, L. (2019). Evaluating the enablers and barriers for successful implementation of sustainable business practice in ‘lean’ SMEs. Journal of Cleaner Production, 218, 575–590. https://doi.org/10.1016/j.jclepro.2019.01.239
5. Carlos F., Arranz A., Marta F., Arroyabe B., Juan Carlos Fernandez de Arroyabe (2024) Organisational transformation toward circular economy in SMEs. The effect of internal barriers. Journal of Cleaner Production, 456. https://doi.org/10.1016/j.jclepro.2024.142307
6. CAMA, 2020. Corporate and Allied Matters Act.
7. De Jesus, A., & Mendonca, S. (2018). Lost in Transition? Drivers and Barriers in the Eco-innovation Road to the Circular Economy. Journal of Ecological Economics, 145, 75–89. https://doi.org/10.1016/j.ecolecon.2017.08.001
8. Dey, P. K., Malesios, C., De, D., Budhwar, P., Chowdhury, S., & Chef, W. (2020). Circular economy to enhance the sustainability of small and medium-sized enterprises. Journal of Business Strategy and the Environment., 29, 2145–2169. https://doi.org/10.1002/bse.2492
9. Dey, K. P., Malesios, C., Chowdhury, S., Saha, K., Budhwar, P. De, D. (2022). Adoption of circular economy practices in small and medium-sized enterprises: Evidence from Europe. International Journal of Production Economics, 248.
10. European Commission (2020) Circular Economy in Africa-EU Cooperation Country report for Nigeria. Available at: Country-Report-Nigeria_Final_20122020 Circular Economy.pdf.
11. Elkington, J. (1994). Towards the Sustainable Corporation: Win-Win-Win Business Strategies for Sustainable Development. California Management Review, 36(2), 90–100.
12. Elkington, J. (2018). 25 Years Ago, I Coined the Phrase ‘Triple Bottom Line.’ Here’s Why It’s Time to Rethink It. Harvard Business Review.
13. Ellen MacArthur Foundation (2015b). Delivering the Circular Economy - A Toolkit for Policymakers. Isle of Wight: Ellen MacArthur Foundation. Available at: https://www.ellenmacarthurfoundation.org/a-toolkit-for-policymakers
14. Ellen MacArthur Foundation (2015). Growth Within: A Circular Economy Vision for a Competitive Europe; Ellen MacArthur Foundation: Cowes, UK. Available at: https://www.ellenmacarthurfoundation.org/growth-within-a-circular-economy-vision-for-a-competitive-europe
15. Ellen MacArthur Foundation (2019), Artificial intelligence and the circular economy - AI as a tool to accelerate the transition. Available at: Artificial Intelligence and the Circular Economy: AI as a Tool to Accelerate the Transition - Google Sustainability.
16. EPI (2024) Nigeria Environmental Performance Index. Available at: https://epi.yale.edu/country/2024/NGA
17. European Academies Science Advisory Council (2015), Circular economy: A commentary from the perspectives of the natural and social sciences. http://www.easac.eu/fileadmin/PDF_s/reports_statements/EASAC_Circular_Economy_Web.pdf
18. European Institute for Gender Equality (2024) Gender Equality Index 2020: Digitalisation and the future of work. Available at: https://eige.europa.eu/publications-resources/toolkits-guides/gender-equality-index-2020-report/foreword?language_content_entity=en
19. FRC (2024) SME Corporate Governance Guidelines: Unlocking the secrets to business excellence. Financial Reporting Council of Nigeria. Available: SMECorporateGovernanceGuidelines2024–3_compressed-2–1.pdf
20. Garcés-Ayerbe, C., Rivera-Torres, P., SuárezPerales, I., & Leyvade la Hiz, D. (2019). Is It Possible to Change from a Linear to a Circular Economy? An Overview of Opportunities and Barriers for European Small and Medium-Sized Enterprise International Journal of Environmental Research and Public Health, 16, 5.
21. Gennari, F. The transition towards a circular economy. A framework for SMEs (2023). Journal of Management and Governance 27, pp 1423–1457. https://doi.org/10.1007/s10997-022-09653-6
22. Ghisetti, C., Mancinelli, S., Mazzanti, M., & Zoli, M. (2019). Financial barriers and environmental innovations: Evidence from EU manufacturing firms. Climate Policy, 17, 1.
23. Ghisetti, C., & Montresor, S. (2019). On the adoption of circular economy practices by small and medium-sized enterprises (SMEs): Does “financing-as-usual” still matter? Journal of Evolutionary Economics, 30, 2.
24. IFC (2022) Market Bite Nigeria. Innovation Offers Key to the Broader MSME Finance Market. International Financial Corporation - World Bank Group. Available at: SME Nigeria.pdf.
25. Kirchherr, J., Piscicelli, L., Bour, R., Kostense-Smit, E., Muller, J., Huibrechtse-Truijens, A., & Hekkert, M. (2018). Barriers to the circular economy: Evidence from the European Union (EU). Ecology Economics, 150, 264–272.
26. Lincoln A. (2017), Corporate Social Responsibility in Challenging Times: A Consideration of How Small and Medium Scale Enterprises Attempt to Deal with CSR Challenges in Nigeria. In Idowu, Samuel O., Stephen Vertigans Adriana Schiopoiu Burlea (eds.) Corporate Social Responsibility in Times of Crisis. Practices and Cases from Europe, Africa, and the World. Springer Germany.
27. Lincoln, A. (2018). Nigerian Entrepreneurship in the Twenty-First Century: Corporate Social Responsibility Challenges and Coping Strategies of Nigerian Male and Female Entrepreneurs. In D. Opoku & E. Sandberg (Eds.), Challenges to African Entrepreneurship in the 21st Century (pp. 117–146). Palgrave Macmillan.
28. Lincoln A, (2022) Barriers to Supply Chain Sustainability Innovation amongst Nigerian Entrepreneurs in the Food and Agriculture Industry. In Samuel O Idowu and Rene Schmidpeter (eds.) Handbook of Case Studies on Sustainability in the Food Industry, Springer Germany.
29. Lincoln, A., Adedoyin, O., Croad, J., (2016) Fostering Corporate Social Responsibility Among Nigerian Small and Medium Scale Enterprises. In Idowu, Samuel O. (ed.) Key Initiatives in Corporate Social Responsibility: Global Dimension of CSR in Corporate Entities. Springer Germany.
30. Lüdeke-Freund, F., Gold, S., & Bocken, N. M. P. (2019). A Review and Typology of Circular Economy Business Model Patterns. Journal of Industrial Ecology, 23, 36–61. https://doi.org/10.1111/jiec.12763
31. Malesios, C., Skouloudis, A., Dey, P. K., Abdelaziz, F. B., Kantartzis, A., & Evangelinos, K. (2018). Impact of small- and medium-sized enterprises sustainability practices and performance on economic growth from a managerial perspective: Modeling considerations and empirical analysis results. Business Strategy and the Environment, Wiley Blackwell, 27(7), 960–972.
32. McCarthy, A., R. Dellink and R. Bibas (2018), Macroeconomics of the Circular Economy Transition: A Critical Review of Modelling Approaches. OECD Environment Working Papers, No. 130, OECD Publishing, Paris. https://doi.org/10.1787/af983f9a-en
33. Morseletto, P., (2020). Targets for a circular economy, Resources, Conservation and Recycling, 153. https://doi.org/10.1016/j.resconrec.2019.104553
34. Mura, M., Longo, M., Zanni, S., (2020). Circular economy in Italian SMEs: A multimethod study. Journal of Cleaner Production, 245. https://doi.org/10.1016/j.jclepro.2019.118821
35. OECD. (2020a). “Getting the governance of the circular economy right: Checklist for Action and Scoreboard”, in The Circular Economy in Cities and Regions: Synthesis Report. OECD Publishing, Paris. https://doi.org/10.1787/724e5c45-en
36. OECD. (2020b). The Circular Economy in Cities and Regions: Synthesis Report. OECD Urban Studies, OECD Publishing, Paris,. https://doi.org/10.1787/10ac6ae4-en
37. OECD (2020b), “The 3Ps framework: People, policies and places”, in The Circular Economy in Cities and Regions: Synthesis Report, OECD Publishing, Paris. Available at: https://www.oecd-ilibrary.org/docserver/9daf17c9-en.pdf?expires=1728565639&id=id&accname=guest&checksum=34CB4D98248518F67ECAC47351567F09
38. OECD. (2024). Economic Instruments for the Circular Economy in Italy: Opportunities for Reform. OECD Publishing, Paris,. https://doi.org/10.1787/33e11c28-en
39. Ormazábal, M., & Puga-Leal, R. (2016). An exploratory study of UK companies’ taxonomy based on environmental drivers. Journal of Cleaner Production, 133, 479-486.
40. Ormazabal, M., Prieto-Sandoval, V., Puga-Leal, R., Jaca, C., (2018). Circular economy in Spanish SMEs: Challenges and Opportunities. Journal of Cleaner Production, 185, pp. 157–167. https://doi.org/10.1016/j.jclepro.2018.03.031
41. Prieto-Sandoval, V., Ormazabal, M., Jaca, C., & Viles, E. (2018). Key elements in assessing circular economy implementation in small and medium-sized enterprises. Business Strategy and the Environment, 27(8), 1524–1534.
42. PWC (2024) Strategies for MSME success in a changing landscape. PwC’s MSME Survey - Building resilience. Available at: pwc-msme-survey-report-2024.pdf
43. Rizos, V., Behrens, A., Kafyeke, T., HirschnitzGarbers, M. and Ioannou, A. (2015). The Circular Economy: Barriers and Opportunities for SMEs. Centre for European Policy Studies (CEPS). Available at: http://aei.pitt.edu/67297/1/WD412_GreenEconet_SMEs_Circular_Economy.pdf
44. Rizos, V., Behrens, A., Van der Gaast, W., Hofman, E., Ioannou, A., Kafyeke, T., Flamos, A., Rinaldi, R., Papadelis, S., Hirschnitz-Garbers, M., & Topi, C. (2016). Implementation of Circular Economy Business Models by Small and Medium-Sized Enterprises (SMEs): Barriers and Enablers. Sustainability, 8(11), 1212. https://doi.org/10.3390/su8111212
45. Sohal, A., & De Vass, T. (2022). Australian SME’s experience in transitioning to circular economy. Journal of Business Research, 142, 594–604. https://doi.org/10.1016/j.jbusres.2021.12.070
46. Takacs, F., Brunner, D. and Frankenberger, K., (2022). Barriers to a circular economy in small- and medium-sized enterprises and their integration in a sustainable strategic management framework, Journal of Cleaner Production, 362. https://doi.org/10.1016/j.jclepro.2022.132227
47. Tura, N., Hanski, J., Ahola, T., Ståhle, M., Piiparinen, S., & Valkokari, P. (2019). Unlocking circular business: A framework of barriers and drivers. Journal of Cleaner Production, 212, 90–98. https://doi.org/10.1016/j.jclepro.2018.11.202
48. United Nations. (2015). Transforming Our World: The 2030 Agenda for Sustainable Development. Resolution Adopted by the General Assembly on 25 September 2015, 42809, 1-13. https://doi.org/10.1007/s13398-014-0173-7.2.
49. United Nations Development Programme (2023) What is circular economy and why does it matter? United Nations Development Programme, Global Climate Promise. Available at: https://climatepromise.undp.org/news-and-stories/what-is-circular-economy-and-how-it-helps-fight-climate-change
50. World Bank (2020) Nigeria- Food Smart Country Diagnostic. International Bank for Reconstruction and Development/The World Bank. Available at: https://documents1.worldbank.org/curated/en/703791601302657183/pdf/Nigeria-Food-Smart-Country-Diagnostic.pdf
51. World Commission on Environment and Development. (1987). Our Common Future. Oxford University Press, Oxford.
52. Zamfr, A. M., Mocanu, C., & Grigorescu, A. (2017). Circular Economy and Decision Models among European SMEs. Sustainability, 9(9), 1507. https://doi.org/10.3390/su9091507.