NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, July 19, 2013

By Benard Mujuni

On July 11, 2013, Sulaiman Madada, the state minister for the Elderly and Disabled, launched the beginning of what might be one of the best things to have happened to Uganda: a social business.

A social business is a non-dividend company/organization created to solve a social problem. The concept of a social business was pioneered by the Nobel laureate Prof Muhammad Yunus, who set up Grameen bank. Like an NGO, a social business has a social mission, but like a business, it generates its own revenues to cover its costs.

All profits are ploughed back and reinvested. Part of the profits can also be used to innovate new services or social business ventures. The ideal model engages and works around people and makes them exploit their full potential. The seed capital of $300 to $450 per business can leverage expenses and create opportunities, while catapulting micro and small businesses to graduate from informal to formal sectors.

Therefore, with this new initiative, Ugandans will be introduced to an additional business model other than the capitalism-driven approach that aims at ending income poverty.

Since social businesses operate in a free- market world, they are efficient and effective in solving social challenges and problems because they effectively target the beneficiaries. They are needs-based.