Social Enterprises- A Catalyst for Socio-Economic Growth

A country with a myriad of social ills like ours deserve a vibrant social economy that can solve its social problems. Our social economy can only be revolutionized by innovative and creative social entrepreneurs. Social entrepreneurs establish social enterprises which solve a social problem and create jobs at the same time.

Social enterprises are commercial strategies employed to maximize improvements in the society. It is structured in a way that the owners or facilitators are able to make profits from doing good.

I heard of social enterprise for the first time couple of years ago, when I sat on the board of a mid-sized charitable organization in Calgary, Canada. In an effort to raise the charity’s dwindling fund, one of the board members suggested that we set up a social enterprise generate more revenue. Since then I have monitored events within the social enterprise sector and its effect on the economy.

The sector is still developing and as such there exist variations in definition by different social enterprise bodies around the globe. While there may be variations to the definitions, one thing is universal in all the definitions; they are businesses that make community impacts. As the definition varies from country to country so also is the structure. There are different structures for a social enterprise from one country to the other and until recently there have not been proper legislation on the structure of social enterprises. Legally, there’s no businesses form that is called social enterprise.

Regardless of how it is structured, what differentiates them is that their social mission is as core to their business as any potential profit. It is worthy to note that a social enterprise is distinctively different from charities or a social responsible for profit business that engages in corporate social responsibility. The social enterprise business model is unique in its synthesis of financial and social goals.

Social enterprises may be the vehicle or catalyst to change the economy. They produce positive change as well as provide financial gains to the facilitators.

Recently the federal government launched its N500 billion social investment program and the question on every lips was how this will be carried out without a database or a platform. If the country has a vibrant social enterprise sector, some of these funds could be channeled through them. So also is the Federal Government’s school feeding program, this also could be channeled through social enterprises but alas, this cannot be so.

Governments all over the world have used and continue to use the social economy to reach the most vulnerable in the society.  In 1998, funding for the social economy was shared between the provincial and federal governments of Canada, and the dual governments made an investment of $54 million for employing people with disabilities. By 2004 the then Prime Minister Martin’s government announced a social economy stimulus of $100million over five years to support social and environmental entrepreneurs.

There is no doubt that the way out of our current economic crisis and the mono-product economy is to create inclusive sustainable markets. New policy briefs and research point to the importance of inclusiveness for economic development and this is where social entrepreneurship can help translate these policies to reality. Social enterprises provide vital resources to communities and they are visible in areas where public services are poor or lacking.

The dearth of social and environmental ills in Nigeria is alarming. We need innovative social entrepreneurs to facilitate enterprises that will address these social issues.  Drunk driving, discrimination on the less privileged, affordable legal representation, poor healthcare delivery, poor maternal healthcare, Heat wave, waste management, affordable housing, employment for people with disabilities, substance abuse, fake drugs, child care, care for the elderly. Others include environmental issues, poverty reduction, providing services and products to underserved communities, and developing social and cultural capital. All these present huge opportunities for social entrepreneurs. Social enterprise can fill these massive social gaps.These enterprises will no doubt stimulate economic activity and revitalization. Social enterprise can be a key element of economic diversity and development.

Notwithstanding its emerging sector status, there are available data that show how social enterprises create jobs as well as its rating as innovation pioneers.

In the UK, government data estimates that there are approximately 70,000 social enterprises in the UK contributing £18.5 billion to the UK economy (based upon 2012 Small Business Survey, 2013) and employing almost 1 million people.

Another report from the Social enterprise UK also show that close to half (49%) of all social enterprises are five years old or less. 35% are three years old or less more than three times the proportion of SME start-ups. In terms of new business formation in the UK, social enterprise is where the action is.

The report also recognized social enterprises as innovation pioneers and job creators indicating that the number of social enterprises introducing a new product or service in the last 12 months has increased to 59%. Among SMEs it has fallen to 38% while 41% of social enterprises created jobs in the past 12 months compared to 22% of SMEs. The value of social enterprises is indisputable.

 

Governments at every level should as a matter of exigency develop a social enterprise strategy framework that will set in motion the development of the social sector. Recently, the province of Manitoba in Canada launched its Manitoba Social Enterprise Strategy tagged “A strategy for creating jobs through social enterprise”. The 28 page document emphasized the importance of social enterprises to Manitoba’s economy. In November 2014 Nova Scotia, another Canadian province drafted its Social Enterprise Strategy framework. The document highlights the strategy and framework needed to grow the province’s social sector.

In Ontario, a province where social enterprise is thriving, the provincial government has continued to support the emerging sector so they can continue to make impact. Since 2007, the Ontario government has invested more than $6 million in the SIG (Social Innovation Generation) program. This program supports social entrepreneurs at all stages, helping them to develop and deliver programs that accelerate the growth of social enterprises.

 

In 2013, the Ministry of Economic Development, Trade and Employment established the Office for Social Enterprise to coordinate and promote social enterprise across the province as well as partner with private and non-for profit sector to expand tools available to social entrepreneurs.

In the spring of 2013, the School for Social Entrepreneurs- Ontario (SSE-O) graduated its first class of students.

In the same year the province launched ‘Impact’ a Social Enterprise Strategy for Ontario which outlines the clear steps the government will take to support social enterprises in Ontario, accelerate their growth and establish Ontario as a global leader in the area of social enterprise.

The Ontario government believes that social enterprises represent an exciting emerging sector, one that creates jobs, attracts investment and helps better the society and the environment.

All these efforts and initiatives has yielded positive results; it has established the province as the leading social enterprise center in Canada. Examples of the social enterprises making impact in the province are JUMP Math, a social enterprise founded in 2002 by mathematician and playwright Dr. John Mighton. Mighton developed a program that gives teachers a radically different way to teach students in grades 1 to 8. The results are impressive. Last year, a random study found Grade 5 students using JUMP doubled their math knowledge in five months, compared to students in a regular math program. Another one is the PARO Centre for Women’s Enterprise. PARO means “I am ready” in Latin and since 1995 this social enterprise has helped thousands of women turn their business ideas into reality. The PARO Centre for Women’s Enterprise began as a women’s microcredit fund. Today it is one of the strongest peer lenders of small business loans in North America. There is also Impact Junk Solutions, the business concept is simple: create jobs for people recovering from mental illness and provide a better alternative for junk removal services.

Social enterprise is attracting a lot of attention around the world as a great way to make the world a better place. Governments at all levels should see this as an economic issue that creates positivity as well as generate more revenue in form of taxes deducted from employees of social enterprises.

Some of the areas where the government can support the development of this emerging sector are:

  • Encourage the private and public institutions, as well as consumers to purchase from social enterprises.
  • Provide support in the setting up of a social enterprise association that will provide a centralized database and network for social enterprises.
  • Public policy can also help social enterprise development by establishing clear legal definitions of social enterprises in order to govern issues such as their tax treatment or access to public markets
  • Inserting social entrepreneurship within entrepreneurship education activities in schools, vocational education and training colleges and universities, is an important way of encouraging further development of social economy and enterprise
  • Provide sustainable finance to assist social enterprise from start-up to scale-up
  • Appoint Minister of Community Economic Development – assign an office for the social economy which will be responsible for making cross ministerial policy changes as well as being a one stop governmental office for social entrepreneurs.
  • Establish suitable mechanisms for monitoring, impact measurement and evaluation.
  •  Invest and support Social Enterprise Research to conduct cost benefit analysis and quantify the value of social enterprises that employ people

Jurgen Nagler made a strong case for social enterprises in his paper “The importance of social entrepreneurship for economic development policies” to the University of New South Wales, Sydney, he wrote thus “social enterprises should be seen by policy makers as a positive force, as change agents providing leading-edge innovation to unmet social needs. The recognition of Muhammad Yunus and the Grameen Bank with the Nobel Peace Prize 2006 for “their efforts to create economic and social development from below” (Nobel Committee,2006) is a first step towards recognizing social entrepreneurs. Economic development policies should foster entrepreneurship in general and especially when entrepreneurs take on social problems that the private for-profit and public sectors do not address or niches they overlook.”

One of the profound economic development benefits that social enterprises provide to society is that often, its services are directed to the very poor. While the private sector uses financial return on investment to measure its success, non for profit traditionally reports on social return on investment. Social enterprise however measures success with what Jed Eerson stated more than ten 10 years ago, a blended value bottom line. It is not financial or social, it is financial and social and this what makes it more significant.

 

@jideolutuyi

 

About Olajide Olutuyi

Entrepreneur Social Entrepreneur. Calgary Flames fan. Calgary Stampeders fan. Supports conscious capitalism.Progressive conservative( supports sin taxes, low taxes and laissez-faire economy). Former rap fan. Now listens to gospel and country. Believes in volunteering and community service as agents of developmental change. A lot of my time goes into community service, reading, encouraging people and most importantly God’s business. Loves culture , business start-ups and politics of both my home and adopted countries. This is my blog. The opinions and thoughts in my article are mine and I make no mistakes for having them. You may also find articles, news or opinions of others that I agree with or love to keep. More information about my professional background and interests available on my LinkedIn page.
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