Social entrepreneurs could be important in achieving sustainable development

It is widely understood that the United Nations Agenda 2030, which is a framework for Sustainable Development Goals (SDGs), will be difficult to achieve if only traditional instruments of implementing development programs in economically backward countries are used.
Such instruments at best include the public sector officials, the private sector’s corporate social responsibility (CSR) initiatives, or development programs implemented through public-private partnerships.
One of the new approaches that could complement implementation of SDGs is the social enterprise model. Social entrepreneurs identify a problem where both governments and markets have failed. These may be social services which these entrepreneurs provide to the community in a cost-effective manner, i.e. not charging the usual markup rates, but just enough to break even and continue their own work. These entrepreneurs are purpose-driven and not profit-driven. This is not to say that these enterprises are not making profits, however the profits are invested back into the social business.
Sustainability and acceptability of such businesses is often more certain as most social enterprises also rely on local human resources and also aim to give back their services and technical expertise to the community where they are operating. The social enterprises come in many forms, including cooperatives, employee-owned businesses, social firms, development trusts, ethical businesses, labor market companies, and community support businesses.
While policymakers in developing countries recognize the role of social enterprises in grassroots-level social uplift, there is less urgency to resolve the constraints faced by these organizations. For example, it is relatively harder for social businesses to grow as they face the same tax and regulatory regimes that conventional businesses face. If there is no differentiation between the tax treatment provided to for-profit and non-profit entities, the national governments are themselves indicating that there is little regard for activities and entrepreneurs which bring about social impact.

National and local governments can also play a key role.

Dr. Vaqar Ahmed

In the future it will remain important for our educational institutions to motivate young graduates inclined toward self-employment and startup culture to try their luck with initiating social businesses. It is also equally important to persuade the conventional businesses to look beyond CSR activities and move toward social enterprise models. This can happen if there is a good understanding of how social investment can produce a socially desirable impact in terms of local-level job creation, improving school enrolment rates, improving infant mortality, and addressing several forms of social exclusion.
In a recent article by Niamh Goggin, published in Pioneers Post Quarterly, she states that “social investment will not be social unless its people and processes reflect an ethos, values, expertise and commitment rooted in experience of challenges and opportunities it seeks to address.” Of course raising funds for social entrepreneurs is also challenging as banks and other formal finance institutions may be more comfortable with conventional business models. If we as a society have to achieve SDGs, banking organizations also need to understand how they can offer and expand the reach of social finance.
The biggest patron of social entrepreneurs will remain the national and sub-national governments. They can always incentivize the growth of social enterprises through preferring to purchase from these businesses which give back to the society. They can even promulgate public procurement laws which bind all public sector officials involved in purchasing goods and services on behalf of the government to do so from these enterprises.
At the same time, the ability to take social risk can be encouraged through showcasing success stories in print, electronic and social media. For example, Martha Stewart’s “The Apprentice,” a show broadcast on National Broadcasting Company in the US in 2005, inspired a large number of young women to try their luck with entrepreneurial initiatives. The donors working in developing countries can also spur such a movement.
Again as an example from Pakistan, the UK’s Department of International Development helped business incubators and accelerators to expand their reach through a series of innovative challenge funds. In another similar effort in Pakistan, Fintech startups have been invited to pitch social business ideas with the key aim of promoting financial inclusion which, in turn, will allow the have-nots to access affordable financial services including savings, insurance and credit facilities.
– Dr. Vaqar Ahmed is Joint Executive Director, Sustainable Development Policy Institute, Pakistan (SDPI). He is author of the book “Pakistan Agenda for Economic Reforms,” recently published by Oxford University Press.  Twitter: @vaqarahmed