3BL Entrepreneurship and the

“Missing Middle”

• Mandate & development paradigm

• 3BL & missing middle entrepreneurship

• Gains of 3BL LED work

Foundation for a

Sustainable Society, Inc

• Non-government organization (NGO) that provides development and financing assistance to social enterprises of the marginalized sectors

• Focuses on assisting enterprises that adopts triple bottom line (3BL) principles: people, profit, planet

• Partners with other local resource institutions and development-oriented organizations

50% Payment Cancelled

50% CounterpartFund

Three-years completion

Endowment Facility

Product of a debt-for-development swap

Philippines Debt to the SwissGovernment

“Development requires debt relief ”

P

U

B

L

I

C

T

R

U

S

T

Development Objectives

Develop 3BL social enterprises

Greater participation of the marginalized in 3BL local economy development

○ Local enterprises participating in value chain development

○ Community-driven enterprises by basic sectors

○ Local ecosystems development & regeneration

Advocate and promote policies conducive to 3BL entrepreneurship

3BL “Triple Bottom Line”

Kita Profitable; kumikita; wealth-creating

Kapwa Pro-poor; Maka-kapwa Community-oriented and high participation,

stakeholdership or ownership of the

marginalized sectors

Kalikasan Ecologically sound or regenerative

Structure of Philippine Society

Pulse Asia: July 2005

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

E, 26%

D2, 28%

D1, 38%

ABC, 9%

25.6 out of 100

Filipinos are poor“practically

unchanged since 2006, 2009 & 2012”

77% of poor arefound in rural areas

“Creating a space in the market”

Pathways out of PovertyPROSPERITY

POVERTY

Government PolicyMacro-Economic Conditions

Human capital development

Physical infrastructure development

VOICEParticipation in

Governance Market

Enterprise Participation in the Economy

Capital

Environmental Protection & Conservation

Source: Econ Briefing by D. Songco

InfoTechnology

UN 2015: Sustainable Development

Goals (SDGs)

Planet

Prosperity

People

3BL SOCIAL ENTERPRISES AND 3BL COMMUNITIES

Profitable enterprises | Local economic value-adding

Managed & owned by the poor | Inclusive & dynamic communities

Environmentally-sound practices | Sustainable local ecosystems

Economic goods & services

Eco-system

Social Sector

Food & derivativesHealthPublic utilities

Small farmers

Fishers

IPs

Women

Rural workers

Forests & protected

areas

Production areas

Water resources

Air and soil

Coastal resources

Support services/

Ancillaries:

• Microfinance services

• Green/Organic farming

technologies

• Small EnterpriseTechnologies

• Cooperative Dev’t Services

DEVELOPMENT AND FINANCIAL SERVICES

Triple bottom line enterprises of CSOs:

o Cooperatives (primary or secondary), NGOs, MFIs, Thrift, rural or cooperative banks, registered People’s organizations (POs), Single proprietorships

Financial products:

o Grants (start-up, capacity building, advocacy)

o Loans (term, credit line, PO financing, etc)

o Development deposits

o Equities

o Guarantees

o Fund syndication

o Special project (Agro Investment Fund) for agri-business incubation - Soft loan facility

712,361 91.6%

62,7488%

2,324 0.3%

3,0230.4%

Philippine MSME Profile, 2010

Micro

Small

Medium

Large

MSMEs in the Philippines

Source: DTI, 2010

Total No of Enterprises (2010):

-----------------------

777,687------------------------

Estimated No. of SEs: +/-30,000 or

more or less (4%)

“Very few

medium

enterprises”

MSMEs in the Philippines

Source: DTI, NSO, 2001

99.6%MSMEs

Employment

Generation

70%

30%

Value-Adding

32%GDP

68%

• Compared with our Asian neighbors, the country's MSME productivity is low

MSMEs in the Philippines & our neighbors

Corporations & Conglomerates (0.3%)

Mining, Power & Logging

Mass-produced food, pesticides, chemical fertilizer, economic

facilities, power distribution, etc

Banks, Real Estate, Hospitals, Schools,

Manufacturing, Trading, Services (wholesale-retail

PLUS: Mass Media,

Transport, Hospital System,

Education, Recreation, Investment

holdings, TOP 1,000

Economic Density in the Philippines 2007

MSMEs by Industry

Are we a nation of petty traders?

• Sari-sari stores

• Charcoal (uling/firewood)

• Fresh fruits/vegetables

• Kakanin/delicacies

• Copra

• Alimango

• Dried fish

• Firecrackers

• Soap/detergents

• Karaoke Kiosks

• Cigarettes, e-load

• Vinegar

• House/cooking wares

• Brooms

Assessing the value chainWhere are the poor in the value chain?

Where in the value chain is the

environmental impact (+/-) created?

Suppliers of raw

materials

Labor supply in

processingProcessor

Consolida

tor/TraderRetailer

Consu

mer

Marketing & Distribution

Production

EXPORT

DOMESTIC

SUPPORT MECHANISMS

Pathways: Poverty to Sustainable Enterprise

Micros to sustainable small to 3BL SEs

Dev’t NGOsCivil Society and Social Entrepreneurs: Enterprise & value chain organizing for scaling-up

CSR Social Businesses : Link to bigger markets

“Opportunity Entrepreneurship”Beyond-the-backyardClearer growth & expansion path

3BL-SOCIAL ENTERPRISES

“Necessity Entrepreneurs”Production for consumptionPetty trading for cash incomeBackyard businesses

Our

“missing

middle”

Necessity Entrepreneurs (Livelihood)

“Necessity Entrepreneurs”Livelihood for consumptionPetty trading for cash incomeBackyard businesses

Order of priority:

1. Food and health

2. Education

3. Home improvement

4. Asset acquisition

Why move for SE as one pathway towards sustainable poverty reduction?

SE: Definitions & Policy Context:

“Social entrepreneurship entails innovations designed to explicitly improve societal well-being,

housed within entrepreneurial organizations, which initiate, guide or contribute to change in society” (Perrini, 2006)”

SE with the poor as primary stakeholders (SEPPS) are social mission driven wealth-creating

organizations that have at least a double bottom line (social and financial), explicitly have as principal objective poverty reduction/alleviation or improving the quality of life of specific segments of the poor, and have a distributive enterprise philosophy’.

FSSI’s “3BL SE” – Economically viable, Social equity and Ecologically sound (people, planet, profit) == our “missing middle”

Context of the movement for

social entrepreneurship

1. Policy environment has to failed to sustainably reduce poverty through its

MSME policy & programs

While microfinance has contributed to poverty alleviation –

• Only 3% of microcredit beneficiaries graduate from “necessity

entrepreneurs” (informal / petty trading) to near-small or small enterprises

or regular businesses

• The poor are still treated as clients or transactional recipients of services

(not as participants in their own poverty reduction)

2. Policies, laws and issuances governing MSMEs have not

adequately served the MSME sector & the marginalized sectors– the

missing middle is still missing:

• The country’s industry has not change for the past 2 decades

(despite the Magna Carta for MSME)

• BMBE & Agri-Agra laws – enforcement have been problematic;

intended goals have failed miserably

Context of the movement for

social entrepreneurship

The business headline (July 2014)

3BL-LED & gains of SE sector

• 3BL LED Work in Focus Areas

• Advocacy and Patronage of SE products

• Educating National and Local Stakeholders

• Champions at national government

• Champions at local level

MF-ASKI

Malaya Devt Coop1,289 farmers (657 women, 632

men) Organic Rice & Corn Dairy production Organic Sillage

DA-NDADARLGU(s)

Kapatagan MPCOrganic fertilizer

From ARBs to livelihood to diversified

SE to LED consortium

URBAN CORE ZONE

URBAN CENTER ZONE

GENERAL URBAN ZONE

SUB-URBAN ZONE

RURAL ZONE

NATURAL ZONE

3BL SEs+Communities Social & Solidarity

Economies

Protection & conservation advocacy + access of upland to livelihood

Sustainable & organic agriculture, common service facilities, cooperatives & SE consortia

Strong National cooperatives &

sector consortiums poised to access

PPP

Stakes in power & utilities, small infra/econ facilities, health & medical, finance (micro/meso), food, education sectors

SE as business innovation

for sustainable poverty reduction

Advocacy & patronage of SE products

Public Sector – Advocacies lead to favorable policy issuances from government agencies: Allowing the use of geotextiles made

from coconut coir by enterprises of the poor

for public works (erosion & slope control).

SE Champions at the LGU & local level: “Star Trek” Palawan – Roxas & San Vicente

Project Title Expanding the Habitat and Scaling Up the Social Enterprise

Location Roxas and San Vicente, Palawan

Name of proponent

Palawan Center for Alternative Rural Technologies (PCART)

Collaborating Organizations

FPE, PEF, FSSI, Municipal Governments of Roxas and San Vicente, Barangay Councils, DTI – Palawan, People’s Org’n. and Cooperatives, Haribon, ELAC, Business Groups

Project Duration

May 2013 – April 2015

Form of Financial Assistance & Amount

Grant = P 7.2 MillionSubsidized Loan = P6.8 MLoan = P18 MCounterpart (PCART)= P18.3M

Phase 1 was discontinued since local government (Mayor) wanted to reverse its anti-mining position

Succeeding mayor affirmed its anti-mining position and the phase 1 was successfully completed. Phase 2 of the project is now expanding to a new municipality.

www.fssi.com.ph

www.fssi.com.ph

Thank youvery much