Social Entrepreneurship: The Simple Solution?

By Fatima Waheed

The following article was published in Impact SEPLAA Vol. II.


What do Muhammad Yunus, Robert Redford and Florence Nightingale have in common? Apart from the fact that they are internationally renowned personalities with numerous credits to their name, they also happen to be the trademark faces of a rising trend-social entrepreneurship.

The challenges faced by the international community are multiplying and exacerbating-poverty, illiteracy and malnutrition have reached record highs. And with the global economy plunged into a recession, the future seems increasingly dire. Investment in social entrepreneurship has been touted as a panacea to all these problems. Could the solution to the world’s problems really be that simple?

A social entrepreneur is a person who identifies a problem in the society and tries to come up with a solution to it by capitalizing on its business potential. The prime difference between a business entrepreneur and a social entrepreneur is that the former measures success in terms of the profitability and the latter measures it in terms of social impact.

Although it has gained immense popularity over the past decade, the concept is, by no means, recent. Though there are lesser known cases, Florence Nightingale’s contributions to the field of nursing can be quoted as one of the earliest examples of social entrepreneurship.  Maria Montessori developed a system of childhood education that is now used all over the world. On the local front, Dr. Akhtar Hameed Khan’s low cost sanitation programmes for squatter colonies (e.g. The Orangi Pilot Project) are noteworthy.

More recently, Muhammad Yunus and his Grameen Bank have come under the international spotlight as the flag bearers of social entrepreneurship. Since its establishment in 1976, the microfinance institution has given easy loans to around 7.4 million borrowers, 58% of which are now no longer living below the poverty line.

KickStart International, which started in 1991, came under media fire for selling, instead of donating, cheap irrigation pumps to poor African families. The theory behind their business model was that “people are more invested in the success of a tool they buy than in one they are given.” KickStart’s MoneyMaker irrigation pump has increased the revenues of small African farmers by almost 10 times, and has benefited almost 60,000 families across the continent.

In 2003, three university students formed Better World Books, an organization which has raised up to $7 million to date. The organization collects unused books from libraries and donors, selling them online for profit, which is then invested in literacy programs all around the world.

We live in times where the pursuit of self interest is no longer morally or socially acceptable. The above mentioned examples show how a small group of people can manage to leave a lasting impact on the world. And this is exactly what we need today. With unemployment levels reaching unprecedented levels, people all over the world are struggling financially. Investment in social entrepreneurship programs can provide a possible solution to everyone’s problems-the entrepreneur not only manages to create a stable source of income for himself but also has the ability to create thousands of potential jobs. Also, such businesses can provide employment to people such as the disabled and the elderly, who would be otherwise unable to get suitable jobs. The benefits of such a business venture extend to not only the customers and the employees but also to the community as a whole, as economic development are stimulated.

According to Reuters, social enterprises have a 40% success rate in their first five years as compared to a mere 5% success rate for normal businesses. Furthermore, little capital is required to start up such a business. Grameen Bank, now a multimillion dollar bank, started with only $27. And with governments now providing lucrative incentives such as tax exemptions, starting up such a business is almost effortless- little money is needed for a business which is highly likely to generate millions in return.

As this business sector is still in its early stages of development, it has to overcome several challenges-lack of access to sufficient capital, inadequate marketing, lack of public awareness and competition from existing firms. Also, it can take a very long time to have a significant impact on the community. The compounded results of these factors discourage many people from entering this field.

The potential contributions of social enterprises have been ignored far too long. In a world shaken by an unprecedented economic recession, they can be viewed as saviors. They amalgamate the interests of different opposing sectors the community and direct them towards one path, which benefits all. Their ideas are not only achievable, but also innovative and highly profitable, which makes them able to revolutionize the world as we know it. Challenges are turned into opportunities; waste is turned into machinery; and money is turned into gold. Jeffery Skoll, founder of the Skoll Centre for Social Entrepreneurship put it best: “Not everyone can be Gandhi, but each of us has the power to make sure our own lives count – and it’s those millions of lives that will ultimately build a better world.”



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