Building Sustainable Social Enterprises for Africa’s Future

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Africa is the world’s second-largest and second-most-populous continent yet, the constant scourge of poverty, dearth in infrastructure, diseases, social and economic impoverishment has bagged the continent the award of an underdeveloped continent (Maji, A. & Itodo, D. (2016). Africa has been branded as the world’s second poorest continent after Asia in spite of her huge material and human resources (European Journal of Business and Management, Vol.8, Pg 10). The United Nations (2012) and World Bank (2013) both report that one out of every two Africans lives in extreme poverty and majority of the population live on 1.25 dollars a day or much less. Sadly, despite government initiatives, private sector interventions and targeted projects, as well as partnerships and foreign aid, African governments are still unable to eradicate poverty in the region.

The Actors

The government and the private sector are the ‘main cast’ acting and driving the essential change needed for economic growth and development; to each country, its own. These two players are constantly looked upon to implement, drive necessary policies and put needed structures in place. As a major game-changer with the lead and support of the government, the private sector is credited with leading extensive variety of business model hybrids which have been proficient and successful in yielding results such as building capacity, productivity, innovation, and providing job and other opportunities.

Where these main actors cum key players have in certain situations failed, however, social enterprises have emerged to protect the interests of the poor in the global market. What has been repeatedly evident is the fact that the government and private sector cannot achieve sustainable development without the support of other stakeholder groups.

Social enterprises (SE) are organizations that operate between the for-profit and not-for-profit spheres, capable of linking innovation, resourcefulness and opportunity to address critical social and environmental challenges such as crime, climate change, pollution, overpopulation, education, diseases, unemployment and the likes. According to Jurgen Nagler, in his paper, “The importance of social entrepreneurship for economic development policies, Social enterprises should be seen by policy makers as a positive force, as change agents providing leading-edge innovation to unmet social needs”. It has been identified that SEs are key to addressing bottom of pyramid (BOP) issues in sub-Saharan Africa, and the need to provide sustainable solutions is greater than ever in the region. If social enterprises were in the position to save the degrading African continent, why does Africa seem to possess the highest share of world’s socio-economic problems, why are there not sufficient SEs in the region, and why have existing social enterprises not transformed the continent?

Major roadblocks

The major roadblocks to attaining sustainable development are:

  1. Lack of potential and resources:

Social enterprises differ from traditional or mainstream enterprises in the sense that their objectives are different. Income generation occupies an important, but secondary/supportive role in Social enterprises (SEs), which makes it difficult for them to approach investors for funds.  Some SEs are able to generate sufficient income through the sale of socially valuable goods or services, but many are limited. Also, while other funding opportunities such as corporate investment, donations and government funding, may exist, donors are still skeptical about giving their money to an SE that operates not for profit.

Another reason why many African SEs have inadequate funds and resources is the lack of established crowd funding platforms for generating funds. Crowd funding is the practice of getting funds via Internet platforms – where entrepreneurs can ask the general public to invest in their businesses. Although debatable, one major reason for the yet unpopular strategy of crowd funding may be the fact that crowd funding is still relatively a “western” concept and yet to gain grounds in Africa.

Furthermore, most African nations suffer from inadequate infrastructure in forms of electricity, road, housing, and water, needed for operating any enterprise successfully.

  1. Failure to engage stakeholders: The failure to connect local capacities to support communities at risk of social and economic exclusion over the long term, is a major challenge to addressing Africa’s issues using social enterprises. In order for SEs to fully understand the needs of the people, there is need to involve the people in the community they wish to make impact in, in order for better interaction with them – stakeholder engagement. By developing initiatives tailored to local needs and using perhaps a language that is familiar, SEs will better respond to the needs of a given territory and assist policy-makers to develop a sound understanding of the potential of the social economy and what is required to fulfill that potential.

What then can social entrepreneurs do to increase their chances of achieving sustainability—and profitability?

Seek to solve social needs: For social enterprises to remain relevant, they need to identify social and environmental needs, which directly affect people. It is simple: see a need, fill a need. Take generally, the essence is to benefit a specific group of people; permanently transforming their lives by turning around the present socio-economic equilibrium that works to their disadvantage. Sometimes, as with environmental entrepreneurship, the benefit may be extended to a broader group once the project has provided proof of concept. For instance, Sue Barnes is honored today as one of the female social entrepreneurs who has made impact in Africa. Susan created ‘Subz’ in response to a request for the donation of washable sanitary pads and panties for the under privileged girls in her area. Subz are panties to which sanitary pads can be clipped. There are about 7 million girls in South Africa between the ages of 10 and 19 that every year miss 3 months of vital school education, as they cannot afford sanitary pads or do not have access to them. Sue designed, developed and patented a sustainable washable sanitary pad that will last these young girls for 5 years, and as a result, allows them to continue their schooling uninterrupted. She distributes the pads to the girls free of charge, accompanied by essential educational information on female reproductive organs, for as many are not well informed on such vital health and wellbeing issues. Sustainable social enterprise is about making impact.

Being financially sustainable: SEs operate on two major objectives – to tackle social issues and to generate revenue. Hence, they need to engage in activities that will enable them finance their causes for the long-term such as organising events, fundraisers, and creating sustainable products/services.

In some cases (which is advisable), a social enterprise may even breed a profitable business. Although it has been argued that social enterprises should not be centred on profitmaking, it is important to understand that for SE operations to run smoothly, adequate funding is needed to make any impact at all. Social enterprises may engage in a single venture, or a “market aggregation” or “access to markets”, project, thereby generating income.

To achieve sustainability, an enterprise’s costs should fall as the number of its beneficiaries rises, allowing the venture to reduce its dependence on philanthropic or governmental support as it grows. In all these, the good news is that it’s not all down for Africa, countries like Ghana and South Africa have shown potential in the rising number of SEs and their ability to solve social ills. Take South Africa for example, the country has an extensive social sector, which boasts of close to 200 000 registered and non-registered non-profit organisations, which work collectively to provide services to alleviate poverty and build societal capacity.

As the British Council points out: “The African narrative is gradually shifting from aid-led solutions to enterprise-led solutions to developmental problems.” Africa is in dire need of more sustainable Social Enterprises, to solve some her many socio-economic problems.

Source: *References are available on: www.sustainableconvos.com

 

References:

https://hbr.org/2015/05/two-keys-to-sustainable-social-enterprise

http://www.iiste.org/Journals/index.php/EJBM/article/viewFile/33374/34312

http://www.financialnigeria.com/developing-the-social-sector-in-nigeria-sustainable-513.html

https://www.pioneerspost.com/news-views/20170322/social-enterprises-africa-rise-new-challenges

http://www.lionessesofafrica.com/blog/2016/1/10/meet-38-women-social-entrepreneurs-who-made-a-major-impact-in-africa-in-2015

http://www.cencomfut.com/SocialEnterpriseManual.pdf

http://www.seechangemagazine.com/?p=2270

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