Is the Social Enterprise Bubble About to Burst?

Thursday, February 2, 2012

Over the past two months, GOOD has profiled organizations in Africa using market solutions to solve water and sanitation challenges, improve agriculture, and promote public health. Social enterprises like these are transforming development work, and social entrepreneurs are being hailed as rock stars.

But social enterprise isn’t the first trend to hit the development sector. From women’s empowerment to “sustainability” to microfinance, the aid community has moved through its stash of silver bullets. What makes social enterprise any different?

We decided to ask some of Africa’s social entrepreneurs what they think is driving the hype, where the sector is going, and what advice they have for those just starting off.

Andrew Youn, founder of One Acre Fund, East Africa

Sharon Chang, founder of Yoxi TV, U.S.A.

Ashley Murray, founder and CEO of Waste Enterprisers, Ltd., Ghana

Timothy Wade, COO of Waste Enterprisers, Ltd., Ghana

Chid Liberty, CEO of Liberty and Justice, Liberia

Tzameret Fuerst, CEO of Circ MedTech, Ltd., maker of PrePex, U.S.A.

Peter Gross, business development manager-Africa, MicroEnsure,Africa and Asia

GOOD: Why do you think social enterprise has become so popular recently?

TIMOTHY WADE: [It’s the] economic downturn and disenchantment. People are looking for a new place to use funds and the traditional “safe” instruments have proved to be less than secure. Idealistic college graduates have a very bad taste in their mouths because large corporations and government corruption are being blamed for the near collapse of the capitalist system… College grads and MBAs in increasing numbers believe that they can and should use business to change the world while making a decent profit.

PETER GROSS: On the one side, development workers have watched a few mobile phone companies bring more development to the average African in the last 10 years than aid accomplished in the previous 50 years. On the other side, there are business people who have lived through two boom and bust cycles in the West in the last 10 years—dotcom, then housing—and are realizing that the classical motive of short-term profit maximization can be destructive… A final contributor is the breakdown of the idea that aid is good and business is bad. Social enterprise tries to combine the best development and business ideas, and that combination resonates with a lot of today’s global leaders.

ASHLEY MURRAY: NGOs and aid agencies are increasingly subject to critique for being slow, ineffective, or out of touch with their client’s needs or preferences. On the other hand, social enterprise allows for having a social objective … while still being subject to market forces. If your idea, your management team, or your execution sucks, you’re out of business.

CHID LIBERTY: I think everyone feels good about providing opportunities for people who live on less than $2 a day or doing something to help conserve our environment, so it’s just a bonus to do that while making money. It’s a really cool concept.

Source: GOOD (link opens in a new window)

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