SOCIAL ENTERPRISE
CIVIC
ENTREPRENEURSHIP
Putting people and the planet above profit – Kiran Dhanapala
Social enterprises (SEs) focus on improving society and the environment, and reinvest most of their profits back into the business. These enterprises put people and the planet ahead of shareholder profits.
Moreover, social entrepreneurs are driven by a sense of purpose to achieve their objectives by generating revenue. They are a subset of mainstream entrepreneurs that can reorient economies toward a just and cleaner society.
SEs form the third sector along with private and public sectors – especially in the UK – and are acknowledged as a relatively new hybrid business model. Measuring impact is the key in ensuring objectives are being met.
These SEs, which come in all shapes and sizes, are present across all sectors. They include micro, small and medium enterprises (MSMEs), as well as larger businesses. In addition to addressing the UN Sustainable Development Goals (SDGs), SEs also engage in green economic activities, pollution abatement, resource conservation, climate resilience and aiding service delivery to marginalised groups.
Social entrepreneurs are increasingly leveraging technology to develop scalable solutions, enhance access to basic services, facilitate financial inclusion, and enable collaboration and knowledge sharing.
Green entrepreneurs are the social types. They focus on green activities. These may include climate change mitigation or adaptation activities, offering green products and/or services such as waste management or engaging in clean technologies in a value chain. Green entrepreneurs focus on making positive environmental impacts.
Dr. Muhammad Yunus received the eponymous Nobel Peace Prize in 2006 for founding Grameen Bank and pioneering the concept of microfinance. This impacted the lives of millions of poor Bangladeshi women since it promoted financial inclusion and a different approach to lending.
SEs attract private capital and investors who seek evidence of social impact and financial returns that are backed by robust data. And social entrepreneurs are increasingly engaging with impact investors, venture capitalists and private capital.
The Aspen Network of Development Entrepreneurs (ANDE) focusses on green entrepreneurship – which is an environmental sub-sector of social entrepreneurship – as a way to reduce greenhouse gas (GHG) emissions.
ANDE’s research on small businesses in emerging economies such as India and Kenya indicates that if these countries guide their small business sectors toward a green economy, they can access enormous economic potential.
Sectors with high growth potential for more tangible stakeholder support include waste and water management, and the circular economy.
It also found that green entrepreneurs in India faced challenges including a mismatch between their financing needs, types of investment instruments and ticket sizes made available by support organisations.
Other issues include a limited number of effective green business models, problems in accessing markets, inadequate collaboration between stakeholders and limited access to climate technology.
The Global Entrepreneurship Index (GEI) is an economic activity index compiled by the Global Entrepreneurship and Development Institute (GEDI) in the US. It looks at how countries allocate resources to promote entrepreneurship and rates each nation’s entrepreneurship ecosystem.
In 2019, Sri Lanka’s GEI score was 19.1 – it dropped from 31.1 in 2015. And the island nation ranked 101st of 137 countries.
Social entrepreneurship has the potential to create opportunities and solutions in Sri Lanka as it transitions out of the economic crisis. Locally owned SEs are linked to their communities. Public, private and donor support will be required for a coordinated and cohesive ecosystem that enables the work of SEs.
Recently, the Governor of the Central Bank of Sri Lanka expressed support for entrepreneurs and noted that it is necessary to ensure that macroeconomic fundamentals are better aligned to support them. This includes an enabling environment for businesses and investment, consistent policies, anticorruption measures and good governance.
He highlighted entrepreneurship as an alternative to youth migration. It is also particularly vital in creating jobs, given the expected contraction of the public sector.
Though Sri Lanka has seen the gradual emergence of a supportive ecosystem for social entrepreneurs, a more cohesive approach is needed. Various organisations, incubators and accelerators have been established, to provide mentorship, capacity building and funding opportunities.
Social entrepreneurs – especially in the early stages – find it difficult to access finance. The staff of commercial banks are often unfamiliar with SE business models, and unable to account for the fuller business values and benefits involved.
Therefore, stakeholders (particularly in financial institutions) and policy makers must act to bridge these knowledge gaps.
