WHAT IS SOCIAL ENTREPRENEURSHIP?

For twenty years, I have been deeply involved in the social sector and have seen the challenges related with running an NGO in a sustainable way amidst changing donor priorities among other factors. Therefore, I picked a lot of interest in this conversation as I have witnessed how organizations have been wiped away due to loss of funds or change of priorities. Because of this challenge, since 2009, I focused on working with a model which is a social enterprise or doing business for social good, as an answer to creating sustainable social impact.

Social Entrepreneurship is defined by many practitioners and scholars in different terms however, the common understanding is doing business for social good. Capital Solutions defines social entrepreneurship as having the following two components:

1) Identifying a marginalized or suffering segment of humanity that lacks financial or political clout to address its challenges and create new solutions that would bring a trans formative benefit to the society.

(2) Identifying an opportunity in this unstable and unjust environment, create a social value proposition, and bring inspiration, innovation, direct action, positive energy, to create a stable ecosystem ensuring a better future for the targeted group and even society at large.

Makhlouf 2011, said that Social entrepreneurship starts with an entrepreneur who has a novel idea, an innovative product or service, a creative approach to solving a perceived problem, a new business model, and a previously untried approach to product or service delivery.

Muhammad Yunus, founder of the Grameen Bank and father of microcredit, provides a classic example of social entrepreneurship. The stable but unfortunate equilibrium he identified consisted of poor Bangladeshis’ limited options for securing even the tiniest amounts of credit. Unable to qualify for loans through the formal banking system, they could borrow only by accepting exorbitant interest rates from local moneylenders. More commonly, they simply succumbed to begging on the streets. Here was a stable equilibrium of the most unfortunate sort, one that perpetuated and even exacerbated Bangladesh’s endemic poverty and the misery arising from it.

I believe that with the increased pressure on funding and social challenges, the public sector is unable to address all the social needs and whereas the civil society has the passion to deliver for social good, it is largely challenged with limited access to alternative funding. At the same time, the private sector for profit, pays much attention to the bottom line in order to meet its shareholder’s expectations, with very minimal attention to social needs. Therefore, as a way of closing these challenges, Capital Solutions believes that social entrepreneurship is the solution. This would bring sustainable social and economic solutions to the ever growing social needs specifically SDG 1, 3 and 5. To this end, CSL, is creating a ready platform where social entrepreneurs will be transformed, built and inspired for business growth and doing good.

Distinction between a Social entrepreneur and an Entrepreneur

The social entrepreneur, however, neither anticipates nor organizes to create substantial financial profit for his or her investors – philanthropic and government organizations for the most part – or for himself or herself. Instead, the social entrepreneur aims for value in the form of large-scale, transformational benefit that accrues either to a significant segment of society or to society at large. Unlike the entrepreneurial value proposition that assumes a market that can pay for the innovation, and may even provide substantial upside for investors, the social entrepreneur’s value proposition targets an underserved, neglected, or highly disadvantaged population that lacks the financial means or political clout to achieve the transformative benefit on its own. This does not mean that social entrepreneurs as a hard-and-fast rule shun profitmaking value propositions. Ventures created by social entrepreneurs can certainly generate income, and they can be organized as either not-for- profits or for-profits. What distinguishes social entrepreneurship is the primacy of social benefit, basically “mission-related impact.”

 

In the past 10 years I have been working with an organization that created a sustainable social enterprise, firstly, NGOs shun away from designing such models either because they are complicated or could draw their attention to making money and lose the social impact. I would like to attest to the fact that this is one of the best models for the social sector, it has proved even when tested with loss of funds form a major funder. Combining selling a product or service that is at social good is very sustainable. The impact this model creates is inelastic.  I would recommend all NGOs to think of this model as it is the most applicable approach to creating sustainable organizations in Africa and beyond. It is against this back ground I have joined hands with capital solutions a social enterprise designed to inspire, transform and build capacity of social entrepreneurs working with low-income communities in Africa.  We believe that creating a fund which will improve financial accessibility to small and medium social entrepreneurs in Africa, will demonstrate that small amounts of equity capital and matching grants, combined with entrepreneurial capacity building can result in thriving enterprises that serve vast numbers of the most vulnerable populations.

For instance, way back Yunus confronted the system, proving that the poor were extremely good credit risks by lending the now famous sum of $27 from his own pocket to 42 women from the village of Jobra. The women repaid all of the loan. Yunus found that with even tiny amounts of capital, women invested in their own capacity for generating income. With a sewing machine, for example, women could tailor garments, earning enough to pay back the loan, buy food, educate their children, and lift themselves up from poverty. Grameen Bank sustained itself by charging interest on its loans and then recycling the capital to help other women. Yunus brought inspiration, creativity, direct action, courage, and fortitude to his venture, proved its viability, and over two decades spawned a global network of other organizations that replicated or adapted his model to other countries and cultures, firmly establishing microcredit as a worldwide industry.

At the start of any social enterprise there are several challenges and not easy to tell whether it will succeed in creating a new equilibrium that assures more equitable access to finance or health services however its very gratifying. In defining social entrepreneurship, it is also important to establish boundaries and provide examples of activities that may be highly meritorious but do not fit our definition. Failing to identify boundaries would leave the term social entrepreneurship so wide open as to be essentially meaningless.

“If you are passionate about human kind and believe it, let’s do it, let us hold each other’s hand for social good”

Joyce N. Tamale

The Writer is the Founder and Chief Executive Officer, Capital Solutions Ltd (A Social enterprise based in Uganda, Africa)