Micro, small and medium-sized enterprises (MSMEs) are key to protecting biodiversity in Malawi and Zambia. The growing urgency of conservation efforts arises from the extreme overexploitation of natural resources, especially deforestation, and the associated threat to biodiversity. Given that this has an impact on people’s livelihoods, MSMEs are key to ensuring the well-being of local communities while protecting biodiversity. The two framework studies “Filling the Missing Middle Financing Gap” provide insight into the current financing barriers in Malawi and Zambia and show the need for innovative biodiversity financing for MSMEs.
Innovative financing models for more biodiversity in Malawi and Zambia
The Biodiversity Finance Accelerator (BioFA) supports 29 MSMEs in Malawi and Zambia to give biodiversity-friendly companies access to finance and improve their business models. Participating MSMEs in both countries are characterised by models that contribute to the preservation or restoration of ecosystems and have a positive impact on biodiversity and securing the livelihood of local communities. True to the “think global, act local” concept, the companies, for example, reduce the demand for wood by offering alternative fuels or promoting sustainable agricultural practices.
What is the “missing middle financing gap”?
The MSMEs are part of the “missing middle”, which are not served by regular commercial banks and are caught in a financial bubble that restricts their access to finance. Financing barriers arise, for example, from high interest rates, very short repayment periods or the lack of support from larger funds that focus on high-growth companies and fail to address environmentally friendly entrepreneurship.
This part presents the shortcomings of current financing for MSMEs along with best practices for financing biodiversity conservation. It then explores how the current ecosystem of biodiversity financing for MSMEs works.