Africa’s growth can benefit from social entrepreneurship
Finding the best ways to support and grow social entrepreneurship over the next few years should be an important part of recovering from Covid-19
The annual World Economic Forum (WEF), held virtually for the first time over the past week, has come to a close. Set around the theme of “The Great Reset”, conceived by founder Klaus Schwab, sessions focused on how to build new economies that are inclusive, resilient and sustainable.
The opening session was, significantly, on the role of social entrepreneurs in pandemic recovery. To quote Hilde Schwab, chair of the Schwab Foundation for Social Entrepreneurs, “Social entrepreneurs combine the mission, dedication and compassion to serve the most vulnerable and marginalised populations of society with business principles and the best techniques from the private sector.”
I first became aware of the concept of social entrepreneurship at the WEF more than 10 years ago. Over the last six years the Motsepe Foundation has collaborated with the Schwab Foundation for Social Entrepreneurship in identifying potential social entrepreneurs and supporting their academic development through the Harvard executive education programme on social innovation.
Our goal is to promote social entrepreneurship as a model that has the potential to contribute to the economic growth of Africa and other developing nations, while ensuring the social needs of all people are addressed.
In our current context, with job losses, high unemployment rates and increased vulnerabilities in general and especially for women and youth, we must look with a new urgency and a new determination for sustainable models that support economic growth and transform our societies.
There is an opportunity in these challenging times, but the change we need will not happen automatically. For a number of reasons social entrepreneurs can play an essential role, both in the immediate recovery from Covid-19 and in longer-term efforts to chart the way to new economies:
We need economies where values are more central if we are to get inclusion right: the last two decades have revealed the limits of too narrow a focus on growth and profits. We need innovative approaches to many of our social and environmental challenges, that neither governments or the private sector have been able to address well by themselves. We need jobs, and social economy organisations are often labour intensive and offer job creation possibilities that capital intensive industries do not.
Social entrepreneurship, with its twin focuses on making a successful business and changing the world for the better, also potentially resonates with youth and many women business owners. Finding the best ways to support and grow the sector over the next few years should be an important part of recovering from Covid-19 and pursuing the needed structural transformation of economies like SA’s, but also many others where alienation, inequality and social tensions have risen in recent years.
The Motsepe Family Foundation joined the WEF Covid Response Alliance for Social Entrepreneurs, comprising about 40 global organisations that support 15,000 social entrepreneurs with an impact on 1.5-billion people in over 190 countries, with a clear agenda for social entrepreneurs.
We believe that key elements of any meaningful support package for the SE should include:
Advocacy and profiling of the sector. We need our best and brightest to apply their energies to the challenges we face, be they climate change, the way our cities still exclude many citizens, the poor access rural people have to education and health, the failure of our correctional services systems to reform offenders, our youth unemployment rate. We need social economy champions and role models to inspire young people, to persuade policymakers, to partner with corporates.
An effective regulatory and legal framework. In SA, for example, social entrepreneurs must choose between being registered as a private company or an NGO, neither of which quite fits; often, organisations resort to adopting “hybrid” business forms with a profit and not-for-profit components, which is needlessly complicated. A social economy organisation, were it to exist in company law, would create excitement and momentum and make tax simpler and more transparent, both for the organisation and the revenue authority.
Efforts towards “buy social” campaigns that are similar to SA’s buy local campaigns. I am convinced that, in SA and elsewhere, consumers would go that extra mile to support organisations that have social and environmental values built into their DNA.
Preferential procurement. Both the state and corporations are significant procurers of goods and services, and the terms on which they procure hold immense potential for pursuing social goals. Public and private procurement criteria should provide for some “set aside” for social economy organisations.
Effective funding. Many social entrepreneurs cite finance as a key constraint on their growth and sustainability. Part of the problem is that banks do not have the information they feel they need to assess credit risk, and don’t have enough incentive to develop appropriate databases that would foster information gathering and lending. This needs to change: banks, impact investors, funders and philanthropists can and should provide flexible and or risk capital to help early projects get off the ground and to help successful projects to scale.
Measuring what matters. There is global recognition that we need to move beyond a narrow focus on economic growth. if we are to nurture economies where people prosper; what we measure, and how we measure it, makes a big difference in whether a society and its policymakers regard it as important or not. Currently, social economy work is often undercounted in measures like GDP because much of its value cannot be expressed in money terms. This needs to be addressed, by refining GDP, adding satellite accounts to the national accounts system, and popularising indicators that measure real progress.
Education institutions. Surveys have shown that the Gen Zs hold purpose-driven ideals that drive their choices in which companies they work for and buy from. Continuing education and exposure to our youth and women to this model of entrepreneurship is vital. Executive education modules and centres like the Bertha Centre at UCT help support the ecosystem for social entrepreneurs to continue with social innovation.
I strongly believe social entrepreneurship, combined with local innovation and technology, can create meaningful change and recovery in Africa and many developing nations. At its core it is about bringing together the best of business discipline and efficiency with the best of human and social values. We need this synergy, now more than ever.
• Dr Moloi-Motsepe is cofounder and deputy chair of the Motsepe Foundation and chancellor of the University of Cape Town.
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