RADHIKA MIA: Social innovators spur growth — from moringa to mourning flowers

Landmark research recently released by the British Council, called “State of social enterprise”, identified and compared businesses that are creating a sustainable world across the globe. The count was millions of social enterprises.

Witnessing this as a quiet social revolution, Schwab Foundation for Social Entrepreneurship director and World Economic Forum social innovation head François Bonnici remarked: “The movement does not have a visible leader or figurehead, or feature media-made unicorn successes. Rather it is driven by millions of people developing the kinds of companies we need in the 21st century.”

These below-the-radar, bottom-up businesses have a strong sense of purpose and a deep commitment to drive change in their communities, inadvertently achieving the UN sustainable development goals (SDGs). Some of the striking characteristics these social businesses share are:

• Creating jobs, often faster than other businesses.
• Often led by women, creating jobs for women, and also often tend to be led by the youth.
• Work from local to global level.
• Balancing social goals with financial imperatives.
• A total 80% of the businesses are optimistic to grow and so they reinvest profits towards scaling and greater social impact.

The main driver for social innovation is the need to tackle unmet social needs at the local level. The social context, including local institutions, is critical for innovation and diffusion. In developing countries, the institutional environment is weak, if not absent, regarding social innovation.

Social businesses grow organically, as they facilitate and respond to the social needs at grass-roots level. For example, Ghana-based Moringa Connect sells oils, foods and other products made from the seeds and leaves of the moringa tree to reduce malnutrition and help lift Ghanaian farmers out of poverty. Ghana has about 26,000 social enterprises, mostly in the agriculture sector.

Ethiopia is experiencing dynamic growth in social enterprises, providing significant employment opportunities for young people and women in Africa’s second most populous country. Tebita was set up in 2008 by former nurse anaesthetist Kibret Abebe in response to Ethiopia’s lack of ambulance services. The social enterprise cross-subsidises its work for those in need by providing first-aid training and medical assistance services to commercial clients.

Not registered

India-based company Phool collects 8.4 tonnes of flowers from temple sites daily that would otherwise have landed up in the Ganges, and recycles the flowers into incense sticks, soaps and eco-packaging. Award-winning Phool, which employs 75 women full-time, is an example of a circular economy model. It was invested in by India-based social impact investor Social Alpha.

Compared with Ghana, Ethiopia or India, SA has only a handful of such social innovation businesses, though many are not registered so it is difficult to track them down. Many of its programmes, such as Barclay’s accelerator Think Rise, RLabs and Tech Lab Africa, are focused solely on supporting technology solutions.

Post-1994, SA’s economic development continues to be dominated by the mineral-energy complex. When this happens, according to University of Johannesburg professor Simon Roberts, “those sectors which have been identified to have weak linkages to the minerals-energy complex are inadequately developed”.

The social development sector in SA has weak linkages with the dominant industrial complex, and hence provisions to create ecosystems that initiate and drive social innovations remain neglected. Besides, financing mechanisms tend to be focused on large-scale industrial businesses in such economies, repeatedly overlooking micro and small enterprises that need institutional support such as long-term, high-tolerance risk financing.

Slow-burning

Social innovations are simple solutions to the world’s most complex problems. For example, Social Alpha invested in another social business that integrates street waste-pickers into its waste picking and recycling business model. Fair Food Company cofounder Quinton Naidoo promotes business development among smallholder farmers in SA and helps them take their rightful place in the country’s food and agriculture value chain.

“When it comes to the development challenges facing this continent we don’t need bright glares or dazzling innovations — we need slow-burning and sustainable fires that bring about systemic change,” says Mills Soko of the Graduate School of Business at the University of Cape Town.

Social innovators are just the kind of leaders we need to solve the problems of the 21st century. They are purpose-driven, inclusive entrepreneurial individuals who develop sustainable new models across businesses. They are transforming the lives of 722-million people worldwide, and in Sub-Saharan Africa alone in 2020 about 28-million to 41-million jobs were created by social enterprises, according to the Schwab Foundation. In South Korea, the social economy is estimated to be worth 3% of the country’s GDP.

Social innovations are driven by partnerships between social enterprises, civil society, government and corporations. To drive social innovations, it is critical to link vertical and horizontal markets, across sectors and value chains. Innovation guru Anil Gupta, a professor at IIM-Ahmadabad in India, says: “When it comes to supply chain logistics we ignore the role of horizontal markets, such as procurement and distribution of goods and services at local level; from village to village or from small village to town and vice versa.”

There is a growing example of how social enterprises are assisting large companies achieve their SDG goals. A Brazilian waste management company is helping the world’s largest brewer, AB InBev, achieve their circular packaging goals.

With traditional industries like the minerals-energy complex no longer contributing to jobs or economic growth, the need for new models of social innovation is being felt worldwide — to provide jobs for the youth, skills for the new economy and entrepreneurial opportunities for transforming resources and skills.

The millions of social businesses that operate across the globe indicate that if a country wants to drive inclusive growth, gender equality and employment opportunities, it must prioritise the development of its social economy. These are the kinds of businesses and leaders we need in the 21st century.

• Mia is associate faculty at the Da Vinci Business School.