A Firm Foundation

Friday, August 11, 2006

Excerpt: We can?t all be Warren Buffett: The 75-year-old billionaire recently announced that he would donate $37 billion to the Bill and Melinda Gates Foundation, which works to alleviate disease and poverty in developing countries. But that doesn?t mean that we turn a blind eye to the world?s problems: Sometimes, the most seemingly mundane of objects can spark great opportunities for change.

For Laila Iskandar, founder and managing director of the Community and Institutional Development group (CID), that opportunity came in the form of an empty shampoo bottle. Multinational cosmetic companies were frustrated that empty bottles of their products were being filled with bogus material, then resold as the real thing with the labels still intact.

Who was doing the refilling? The garbage collectors, of course.

Iskandar put two and two together, and the result is a program in which garbage collectors recycle the empty containers instead of reselling them in return for educational funding from the companies looking to protect their brands. Big business is happy, plastic goes eco and the garbage collectors get a chance at educational mobility. It?s a win-win situation.

And she?s got the accolades to match: At the World Economic Forum held May 20-22 in Sharm El-Sheikh, Iskandar was named Schwab Foundation Social Entrepreneur of the Year for Egypt. Prime Minister Ahmed Nazif presented Iskandar with her award.

Business Today Egypt served as the Schwab Foundation?s partner in Egypt, nominating a handful of worthy social entrepreneurs for the most respected prize in the field. CID is the second Egyptian group to win recognition from Schwab: In 2004, home-grown organic foods giant Sekem Farms took home the top global honor.

Established in 1998 by Klaus Schwab president and founder of the World Economic Forum (WEF) and his wife Hilde, the Schwab Foundation for Social Entrepreneurship, in Schwab?s words, ?encourage[s] and foster[s] entrepreneurs working for the public interest ? to support them and provide them with access and funding to an international platform for experience exchange that they might otherwise lack.?

The Foundation does this in a number of ways. Although it is legally and financially separate from the WEF, the de facto association, and formal cooperation between the two institutions gives the Foundation?s social entrepreneurs an unmatched network of influential contacts within both the public and private sectors.

Forging connections between social entrepreneurs and their government or business counterparts, the Foundation works to create an environment in which business can contribute positively to social change and eases the burden on overworked social visionaries, who often face seemingly endless stretches of red tape to simply accomplish the smallest of objectives. By incorporating the efforts of non-governmental organizations (NGOs) and for-profit social enterprises alike into the wider fabric of business and public affairs, the Schwab Foundation helps to remove some of that red tape, widening the path to greater social change.

The Foundation annually recognizes social entrepreneurs across the world by naming them, like Iskandar, Schwab Foundation Social Entrepreneur of the Year in their respective nations. Candidates are judged on innovation, reach and scope, the replicability and sustainability of their business models, their direct and positive social impact, the entrepreneur?s place as a role model and mutual value added for both the entrepreneur and the Foundation if they are included in the Schwab network.

In other words, social entrepreneurship, and the responsibilities it entails, differs considerably from traditional models of either more generalized community service or charity ? and from corporate social responsibility. A social entrepreneur may head a non-profit or a for-profit enterprise, but what distinguishes him or her is that he or she has gone beyond simply throwing money at a problem. The money and the human resources eventually run out, but the problems do not. At the heart of social entrepreneurship is sustainability and seeking to eliminate problems at their root.

Other nominees for this year?s award included Abla El-Badry of the Hope Village Society, and Maher Bushra, founder of the Better Life Association for Comprehensive Development. All nominees were recommended to the Schwab Foundation by a panel of Egyptian judges including Mansour & Co. PricewaterhouseCoopers founder and chairman Farid Mansour, Vodafone Foundation chief Mohammed El-Hamamsy, the Arab Contractors? Ismail Osman, Osama Leheta of Menavia (British Airways Cargo) and Business Today Egypt Publisher Ann Marie Harrison.

Here?s a look at three finalists.
A profitable idea

Of the three finalists, CID was the only for-profit enterprise. Iskandar presents a two-sided business plan. On the one side, CID is a consulting firm with clients as varied as CARE, a United States-based NGO; Arab African Bank; USAID; Proctor & Gamble; the Dutch Embassy; and Xerox Egypt. On the other, it is an organization that has, with some success, addressed issues such as gender, health, credit, adult literacy and the environment ? counting some 10,000 members of rural communities and 20,000 garbage collectors among its beneficiaries.

The two aspects of the company work hand-in-hand for sustainable community development.

Though CID?s docket is diverse, Iskandar has striven for a ?holistic approach,? working on projects not in isolation, but in a way that builds on itself, creating networks through the replication of successful projects in new locations.

This is not only sustainable; it?s also economical in the short-term. In one project, CID sent men from the Moqattam Hills, who were already trained in recycling, to share their skills with Bedouins working in tourist towns in South Sinai, building networks at the same time as relieving its small staff of only 15 full-time employees.

Iskandar doesn?t see this in any way contradictory to building a strong business. In her new role as a part of the Foundation?s network, she is calling for businesses, entrepreneurs and the government to step up to work for the benefit of the impoverished and marginalized. She is not asking for these leaders to act out of the goodness of their hearts ? although that can be the reason for undertaking these beneficent goals ? but rather that they act for their own motives.

Working with the poor, she argues, does not mean forgoing a profit.

?There is not a poor community that is totally bankrupt,? she says. ?They all have something to bring to the table.?

?Why can?t we actually decide to go into business ventures to make money and serve the community as well? They?re not mutually exclusive ? it just requires a different mentality,? she continues. ?We shouldn?t be going to bed and sleeping easy at night knowing that 30% of the people in this country are living on less than two dollars a day. That should be a source of great discomfort.?

Iskandar would like to see more companies making business plans with this 30% in their minds. It takes some creativity, she admits, but she says there are many ways to engage this segment of the population besides viewing them as a source of cheap labor.

?We?ve got to stop designing our economy around the well-to-do. We?ve got to design it around [the poor], because ? I swear ? they are going to drag the country down. We can?t do it with some and leave the rest behind. And all these intelligent businessmen, why don?t they see it??

For Iskandar, it has to start where it first went wrong: education.

?What can the private sector do? It suffers from a poorly trained human resource base [Job applicants] have left school with no skills. The private sector has to train and retrain and teach all the basics. Now, instead of waiting to receive these graduates and training the small group of people they are going to employ, is there something they would like to do now, for everybody, regardless if someone is going to end up in their enterprise??

?There?s mounting evidence that the state cannot provide the type of education [necessary] to bring our population up to an international standard and compete in international markets,? Iskandar continues. ?It can?t be done. The burden is too big. The problem of poor-quality education cannot be remedied by just state action. So you have a choice: do you want to say, ?That?s not my area of intervention. That?s the state?s responsibility,? and watch it improve slowly? Or do you want to truly build Egypt??

While ?building Egypt? may sound like a tall order, opportunities for social entrepreneurism can be found in the smallest of businesses. Iskandar gives the example of the neighborhood mechanic:

?The little boys that you might seek to employ, who are not schooled and have to go to work because they are in female-headed households, could be your kid, your nephews. So why don?t you train them to be mechanics rather than putting them in sweatshop situations?? she asks. ?They are going to be better workers for you. So I want you to use a selfish motive: Produce a better worker. And consider for a moment that kid could be your next of kin. A little compassion doesn?t hurt.?

And with a little compassion should come a little creativity.

?If I were to open a factory and employ people at an above average salary, that?s good,? Iskandar says. ?But in addition, have I looked at all the other aspects protecting them from industrial accidents, protecting them with social insurance, maybe helping them out a bit by establishing a pre-school so they can go to work more easily? Have I, in the screening process of employment, targeted female-headed households, the poorest of the poor? Have I done my share of thinking about how these people will grow professionally? Or am I content in giving them fair wages, minimum wages??

That model isn?t a new one. The winners of the last Schwab award in Egypt were Ibrahim Abouleish and his son Helmy, the founders and operators of organic mega-farm Sekem. Besides protecting the environment and farmers by not using pesticides, Sekem boasts a school, a health facility and cultural activities for its resident employees. It also happens to be a very successful, multi-million-pound business. Iskandar realizes that the Sekem model might not work for every company, but she appreciates the approach its founders have taken to dedicate themselves not only to profit, but to community development as well.

At the end of the day, Iskandar?s idea of social entrepreneurship seeks to harness what private sector businesses do best ? making money efficiently ? into something that could help the larger community.

?I?m all for efficiency,? she says. ?I?m for hard work. I?m for competence. Getting rich, there?s nothing wrong with that. The profit motive drives the performance. Great, let?s invest in that. But let?s take something out of the social context of development and say, ?Can business still make money and improve the population at large? Does it have a role to play with government???

Iskandar also warns that poverty and lack of education have the potential to pose problems much greater than just an unskilled workforce. Take terrorism: Her hometown of Minya is a case study of how marginalization and the inability to access resources often translate into deadly violence ? violence which hit Egypt where it hurt most, as tourists took their hard currency elsewhere after attacks in the 1990s.

Iskandar argues that business should be motivated to pour some money into education in impoverished areas such as Upper Egypt ?because if they don?t spend the money improving the curriculum, improving the teacher quality, improving the salaries, then the people are going to turn violent. And the violence is going to affect their business, particularly the tourism sector.?

Indeed, she adds, there are historic sites outside Luxor, Aswan and Abu Simbel, but most people will never see them. ?Tourists cannot go to Minya because of the security issue, so you have a big chunk of tourist sites taken out of the market. Who wants an escort??

While Upper Egypt may be at the bottom of the country?s socio-economic ladder, it is still filled with many good business opportunities for the socially-minded entrepreneur. The key is to take a holistic approach to a possible investment, Iskandar suggests.

?What I?m saying is to go to Upper Egypt and invest in a project that will make people work,? she says. ?And while we?re at it, take a look at what?s happening in the school and take a look at the water supply that people are drinking. I?m asking for deeper actions.?

Source: Business Today (link opens in a new window)