Social Entrepreneurship: Reinventing the business world

Entrepreneurship is booming in all its forms. Entrepreneurs usually engage in activities as self-employed or by creating a company. But beyond the for-profit companies, there are organisations whose main objective is to generate a social or environmental benefit. These social enterprises, as they are called, can greatly contribute to the economy. In Mauritius, where economic sectors are dominated by ‘self-employed’ individuals and companies, non-governmental organisations (NGO) are also endeavouring for social and environmental uplifting. The term NGO is very large as it doesn’t have an exact definition. The legislation governing NGOs varies from country to country. In Mauritius, such organisations are formally regulated by the Registrar of Associations, which operates under the aegis of the Ministry of Labour. An NGO is normally an offshoot of civil society and has no profit making motive. If, initially, NGOs devoted themselves mainly to social activities, where volunteering is required to relieve the misery and difficulties of the people they cater for, over the years, NGOs have seen the need to acquire the necessary skills to carry out their various philanthropic projects professionally. But as NGOs do not generate revenues, they mostly depend on the generosity of members and donations from the public, government, corporations and international agencies such as Agence Francaise de Developpement and the European Delegation, among others. The objectives of NGOs An NGO can have one or more objectives and activities. In Mauritius, NGOs are active in the fight against poverty and inequality as well as fighting social ills; they work for the protection of the environment, awareness of social ills and educating people, empowerment of women, vulnerable persons, the disabled, the protection of citizens’ rights, the promotion of arts and culture, among others. Note that the country currently has about 10,000 registered NGOs. Bureaucracy Current regulations do not encourage innovation among NGOs. For example, the computer system has greatly helped to change associations, and social networks have become a major means of communication, especially for events or meetings and sharing of ideas. Today, meetings may be held on the web, but the law requires the publication of notices in newspapers for each scheduled meeting. Moreover, in public organisations, it is a fact that meetings of boards of directors are made by video conference, with members sitting in different locations (at the Bank of Mauritius or the BOI, for example). NGOs are legally required to submit an annual report (return) to the Registrar of Associations. Since the advent of CSR (Corporate Social Responsibility), NGOs are eligible for financing from the CSR funds of commercial companies. But it is necessary that the projects comply with the rules of the CSR Committee, which operates under the aegis of the National Empowerment Foundation. Thus, NGOs have a second ‘return’ to do, to the CSR Committee. But that’s not all. Each company that allocates funding under the CSR has its own evaluation committee and the NGO must submit a third report to the corporate donor! So, there are three lines of reporting for the same project, by the same NGO, to three different organisations, a process which has a cost and represents a waste of time and of human resources. An easing of procedures and the elimination of duplication (if not triplication) will definitely promote efficiency and productivity. Authorities need to understand that NGOs are run by volunteers and to complete the complicated technical data, they must pay for the skills they lack. Social enterprises A social enterprise is a business whose purpose is not to make financial capital gains, but to generate a social or environmental benefit. They are particularly effective in areas neglected by for-profit companies, or where trade policy has enhanced profitability over human relations. This form of entrepreneurship covers all economic initiatives whose main purpose is social or environmental. These companies reinvest most of their profits to this mission. Social entrepreneurship has emerged in the 1990s in Europe and the United States. Social enterprise is still an unknown in Mauritius, although it can help solve many of our socio-economic problems. Obstacles In Mauritius, the social enterprise, strictly speaking, does not exist because the law makes no provision for this type of business. While the Companies Division is responsible for all companies, the Registrar of Associations, for its part, governs the NGOs. Note that the law in question, the Registration of Associations Act 1978, had a slight amendment in 1979. After four decades, the concept of NGOs has drastically changed over the world, but the law has not evolved here. Consequence: NGOs are limited in their actions. For example, NGOs can’t undertake income-generating activities in order to become independent. Our NGOs can only rent spaces, but can’t for example sell goods or services. With legal constraints, NGOs can’t benefit from other facilities provided by the government to contractors and entrepreneurs. Advantages If the chance is given to NGOs to transform into social enterprises, they may become more independent and generate their own income. They may also invest in technology and human resources, not to mention the infrastructure, allowing them to professionalise their services, but also no longer depend solely on donations to survive. Better, these social enterprises can create jobs for those at the bottom of the ladder as well as for graduates. Social enterprises have a strong effect of sympathy on the part of consumers. Social Enterprise v/s commercial business One should be able to make a difference between a commercial and a social enterprise. Social enterprise is a form of commercial business but the business model is reversed. In this type of project, the social purpose exceeds the economic purpose. The company will certainly generate money but it is at the service of a cause. While the corporation is liable to tax, social enterprise is exempt from taxes and other administrative molestations. Social enterprise normally favours activities neglected by commercial companies, especially unprofitable activities. On the other hand, if the activity has a huge social impact, it will be promoted through social enterprise. The Indian manufacturer of ‘Jaipur Leg’, Bhagwan Mahaveer Viklang Sahayata Samiti society (BMVSS), is a fine example of a successful social enterprise. Social enterprises have made tremendous advances in India, affecting hundreds of thousands of people through their actions. In Europe, social enterprises are present in many sectors, and contribute greatly to the economy while creating jobs and valuable products and services. Often the people running a social enterprise are those with expertise to share or who already have a job but want to contribute to a noble cause. For example, employees who can’t be or do not desire to be for-profit entrepreneurs but want to contribute to social field in a professional way. Cooperative societies also fall under the category of social enterprises, but the model we have in Mauritius differs from the European social enterprises. Suitable areas Social enterprises operate in sectors involving the mass, the poor, and the unemployed who do not have a high level of education and otherwise capable. For example, agriculture, manufacturing, recycling and crafts. But the trend is that social enterprises are gaining ground in the services sector too, such as ICT and the media, thanks to technological progress. Besides the unemployed, young graduates looking for a first experience in the labour market and executives in conversion, find their salute in social enterprises. Interesting opportunities exist in Mauritius in several areas, but firstly, the appropriate legislation must be in place. The concept The concept of social business was redefined by Muhamad Yunus, Nobel Peace Prize 2006, inventor of microcredit and founder of Grameen Bank in Bangladesh, in his book “Towards a New Capitalism”. But the concept of social enterprise dates from the 19th century in Europe where they created many cooperatives and mutual associations. They represent 11% of European employment and 7% of GDP. For example, in Switzerland, 70% of the retail is managed by social cooperatives. French example In France, the Cocagne’s gardens helped reintegrate 25,000 people and are the largest producer of biological fruits and vegetables in the country. They welcome women and men of all ages, in a precarious situation and with professional, social or personal difficulties. Through bio vegetable production, distributed in the form of weekly baskets to members-consumers, Cocagne’s gardens allow these people to find a job. By developing a social, economic, environmental action by promoting local, organic and citizen consumption, and by recreating the proximity link, the Cocagne’s gardens advocate sustainable development and socio-economic solidarity. [[{"type":"media","view_mode":"media_large","fid":"10353","attributes":{"class":"media-image size-full wp-image-17956 aligncenter","typeof":"foaf:Image","style":"","width":"640","height":"431","alt":"dabbawala"}}]] Indian example The Mumbai Dabbawala, a 130-year old delivery system that collects hot food in lunch boxes from the residences of workers in the late morning, to deliver to the workplace, is a perfect Indian example of a successful social enterprise that has helped the economic integration of countless common men while providing an invaluable service to workers. The Mumbai Dabbawala system has stunned even Harvard specialists as, without the use of any technology, they make ‘less than one mistake in every six million deliveries’, a feat not even Royal Mail or any seasoned global courier service can boast about.