Green small business funding digital platform Hloolo aims to close the gap between the funding needs of green and sustainable small and medium-sized enterprises (SMEs) and green finance available from investors wanting to make a positive impact on society, climate change and the environment.

Hloolo is the digital platform of business growth agency Fetola. The platform acts as a matchmaking service for SMEs, by helping entrepreneurs find suitable investors and funding, markets and knowledge, including providing access to resources via the Fetola Learning Management System.

“Investors struggle to identify sustainable businesses to invest in, but SMEs struggle to access sustainable finance. Hloolo addresses this disconnect by helping SMEs become investment-ready and then connect these businesses with market opportunities and finance,” says Fetola founder and CEO Catherine Wijnberg.

Fetola’s Investment Readiness Scorecard allows small businesses to identify how closely their business model and operations align with investor and market needs, she notes.

“Ecosystem stakeholders have an important role to play in providing SMEs with non-financial support to help them embark on the path to net zero, and to address knowledge- and capacity-related constraints within these businesses.

“The provision of non-financial support must go hand-in-hand with the provision of financing,” she adds.

Hloolo was developed from Wijnberg's goal of creating five-million new jobs in the SME sector though Fetola's business development support and acceleration.

While achieving this would provide people with financial sustainability, it would not address the sustainability of lifestyles, she told entrepreneurs and SME owners at the launch of Hloolo, on August 14, in Kramerville, Gauteng.

The aim, therefore, evolved with Hloolo to also help people create sustainable businesses that are good for communities and the planet.

Circular economic practices were one of the ways to facilitate this and developing sustainable SMEs was a way to change not only the lives of the entrepreneurs, but also the economy of South Africa as the SMEs grew, she explained.

The Circular Economy Accelerator (CEA), launched in 2021, is an initiative designed and implemented by Fetola in partnership with financial firms Nedbank, JP Morgan Chase and the Embassy of Finland to create a thriving circular economy ecosystem in South Africa.

Hloolo is the third phase of the CEA dedicated to closing the gap between green businesses and the world of finance and market opportunities.

“South Africa has very high structural inequality, and 50% of people of working age earn R1 166 a month or less, while 59% of households live on less than R8 000 a month,” said Nedbank executive in the office of the COO Grant Kelly.

Nedbank's goal, through Hloolo and through its green economy-focused Nedbank Foundation, was to support economic and social justice by providing capital to existing innovative and sustainable SMEs, and also thereby creating new sustainable ecosystems, he said at the launch.

“When we started with our corporate and social investment strategy, the communities we were working with came up with a strategy to build resilient communities. With our focus on lending to sustainable businesses, this pivoted to a focus on the green and circular economy,” he added.

However, to achieve economic, social and environmental justice in as unequal a country as South Africa required the transformation of the structure of the current economic system, as too many people were systematically excluded from opportunities, Kelly emphasised.

Nedbank believes that its corporate and social investments must be transformational, and it is using its investments to build business cases and be a catalyst for the desired outcome of a growing, positive social and environmental impact.

“Our aim, including through platforms like Hloolo, is to make the circular, green economy a catalyst for sustainable economic development,” said Kelly.

Three circular economy principles support the way the platform operates, namely to design out waste and pollution, to maximise productivity and materials use, and to restore natural systems.

Initial case studies from the impact of the CEA were promising, with companies increasing income by 411%, profit by nearly 70% and creating 196 new jobs between them, while 100% of the businesses that participated in the pilot phase took up circular economy business models, he highlighted.

These businesses also significantly improved their sustainability and circularity performance.

Significantly, the transition to circular economy practise was found to be readily accessible for 95% of SMEs and resulted in an immediate opening of new revenue streams, which contributed to the improved growth and profitability, he highlighted.

“The case studies have proven our hypothesis that sustainable businesses are profitable businesses, and also suggest that the expected impact from this initiative may be understated.”

The opportunities emerging from the initiative are exciting and the next phase is to highlight the transformation potential of the circular economy.

“Specifically, once we have definitively proven the hypothesis that sustainable businesses are profitable, then the normal capital ecosystem of the economy will shift and be gravitationally pulled to businesses such as these, as lenders look for new development and growth opportunities that are more sustainable,” he said.

“Green SMEs often do not have a financial track record or data on their green and sustainable performance that would satisfy potential investors. Sustainability tracking and reporting is a complex and specialised skill that few entrepreneurs are familiar with. This limits their ability to tap into available pools of sustainable finance,” said Wijnberg.

This is addressed through the Fetola Scorecard, which enables SMEs to evaluate their business potential, strengths and areas for improvement, enhance their investment appeal, and match their business with investment opportunities.

Hloolo also provides SMEs with learning opportunities focused on sustainable practices, circular economy principles, investment readiness and access to markets.

“The business case for sustainability and circularity is becoming stronger. Nedbank is committed to helping SMEs to become more resilient and investment-ready, which will help unlock commercial funding, thus fast-tracking their growth and their impact,” said Nedbank CSI Green Economy portfolio senior lead Maluta Netshaulu.