Bridget Furybridget@bridgetfury.com

Opportunities in social enterprise development ?

Introduction Interest in social enterprise (SE)is growing in South Africa (ILO, GEM, UJ research SEWF, Government interest, etc.) A growing belief in the advantages of SE in delivering social / developmental goalsBut, it is a relatively new concept and not well understood and definitions can be contentious Social enterprise vs. social entrepreneurship confusionB-BBEE codes encouraging enterprise development (ED) support Confusion over ED and CSI / SED boundaries

2010 scoping exercise aimed to better understand

What is meant by social enterprise in South Africa? Where, if any, overlaps exist between CSI, enterprise development and social enterprise?What organisations currently exist in the social enterprise space in South Africa and what do they do? What is the current policy environment? How to encourage more focus on and money into social enterprise development?

What is a social enterprise?No legal definition of social enterprise in South Africa

ILO National Conference agreed a working definition: “A social enterprise’s primary objective is to address social problems through a financially sustainable business model where surpluses (if any) are mainly reinvested for that purpose”

GEM Report 2009 working definition:

“individuals and organisations engaged in entrepreneurial activities with a social goal”

Three generally accepted components: social purpose is primary objective business model is financially sustainableaccountability and transparency

What a social enterprise is notA social enterprise is not any organisation run by a social entrepreneur A corporate entity or directly-owned subsidiary is not a social enterprise A business whose purpose is profit maximisation, even if it creating social value, is not a social enterprise

Summary of the GEM Report – social enterprise

Defines social entrepreneurship broadly to include:

“individuals and organisations engaged in entrepreneurial activities with a social goal”

South Africa’s social entrepreneurship activity (SEA) is average relative to other similar economies

However, differences exist as follows: Fewer women involved in SEA in South Africa

Fewer 18 -24 year olds involved in SEA in South Africa . Individuals aged 25-34 most likely to be involved

There is little population association with SEA in South Africa (there is for EA)

There is less SEA in rural areas than in urban areas in South Africa

There is a perception that SEAs are more capable that Government or civil society organisations to deliver social good

Therefore, why are there not more social enterprises, or is the study not identifying them?

Social enterprise – a potential win-win Social enterprise presents a simple and compelling

opportunity for corporates By supporting sustainable businesses which meet social needs

we can create lasting social impact If social enterprise can qualify for both SED (CSI) and ED

BEE scorecard points, 20 points up for grabs A win-win-win for business and society Not just finance required, but also essential non-financial

BDS needed

Benefits and risks Potential benefits: Meet both the ED and SED requirements Lobby for inclusion of social enterprise in section 18A tax status Direct social impact and create jobs

Potential risks: Potential tension between delivering on both financial and social

agendas Few established social enterprises in South Africa with long

track records, although may emerging

Social enterprise and “blended value” Impact Investing:

A market-based approach to addressing many of the social and environmental issues facing the global community Monitor Institute & WEF

Blended value:

Investors simultaneously generate financial and social / environmental through providing capital to organizations, where the where the value itself is non-divisible and thus a blend. Jed Emmerson

SROI:

discounted, monetized value of the social value that has been created, relative to the value of the investment. Roberts Enterprise Development Fund

The Policy environment ILO has been leading the policy dialogue A 2009 National Conference made various

recommendations, including: Encouraging the government to stimulate the market for social

enterprise Developing intermediary space and products to link investors to

social enterprise (A Guide to Finance for Social Enterprise in SA)

Exploring mechanisms to mitigate risk to free up commercial finance

Business Development Service (BDS) providers

Few BDS providers have an explicit social enterprise focus

Some that do, include: TechnoServeHeart Global UnLtd South Africa (with partners where possible)

Examples of general BDS (non-financial ) providers with interest in / opportunity to service SE:

Business Place Black UmbrellasRaizcorp

Business Development Service (BDS) providers (cont.)

BDS providers (finance plus):Enablis Endeavor

Government initiatives (past / present):A number of government initiatives in place to support SMMEs, through provision of finance and or BDS. E.g. SEDA, NYDA, Khula, etc.

Commercial banks / corporates: Many of the banks provide some BDS in small business loan packages or support of public-private partnerships (e.g. Enablis Khula Loan Fund) Corporate BDS provision in conjunction with finance to internal ED programmes e.g. Anglo Zimele, Sasol

South African collaborationsAfrican Social Entrepreneurs Network

Membership-based online platform to enable collaboration and access to resources for social entrepreneurs

ILO- SETYA A programme of research and policy dialogue to strengthen understanding of SE as a conceptIncludes: UJ research on enabling environment; SAIE research into social BDS need; a National conference on enabling environment; various research projects (international, national, community); and formation of a Financing for SE working group

South African collaborations (cont.)SASIX (SAII, Business Trust and JSE)

Research currently being undertaken to asses the feasibility of creating a fully independent social stock exchange in South Africa. Phase One has seen the creation of an online database of all constituencies

UnLtd Pathfinder GroupA group of interested individuals used to test UnLtd ideas and methodology on entry into the South African marketPathfinder Group will have opportunity to test M&E framework being developed

ANDE South AfricaSouth African chapter of the international network which provides support in the small and growing business area

Some South African social enterprises Johannesburg Housing Company www.jhb.co.za Heart Lines – www.heartlines.org.za Streetwires – www.streetwires.co.za Stitchwise – www.stitchwise.co.za Wizzit Bank – www.wizzit.co.za MSR Project (previously Men on the side of the Road)

www.employmen.co.za TSiBA Education www.tsiba.org.za Lapdesk www.lapdesk.co.za