Blog – Page 2 – SOCIAL BUSINESS

Palmis Enèji: from NGO to enterprise – the ...

12 July 2017/in Energy /by quai13

In 2012, the French NGO EDM launched a programme to distribute Palmis Enèji cooking and lighting appliances to meet energy demand among the poorest sections of the Haitian population. Two years ago, that social business became a public limited company. This change in status and a partnership with Total Haiti and the microfinance institution PMS has enabled it to expand its activities and will help to underpin its sustainability.

Haiti, one of the poorest countries in the world1, has very high levels of energy poverty (72% of households have no electricity). Haitian families use candles and kerosene lanterns for lighting and 95% of households use very basic stoves and wood or charcoal for cooking, thereby exa- cerbating the problem of deforestation. These cooking arrangements are often inefficient and the fumes cause respiratory diseases.

However, more suitable equipment which is less damaging to human health and the environment does exist. Solar lanterns provide better quality lighting and are cheaper in the long term. Improved stoves and table-top cookers powered by liquefied petroleum gas (LPG)2 use less energy for cooking. But such appliances are hard to obtain in Haiti and very few financial service companies are prepared to finance their purchase. Palmis Enèji was set up – initially as a programme designed and managed by the French NGO Entrepreneurs du Monde (EDM) – to boost their distribution.

Changing status for sustainable action

EDM applies a social entrepreneurship model to support the distribution of appliances that have a very positive impact on health, the economy and the environment among the poorest populations in developing countries. In Haiti, Entrepre- neurs du Monde set about distributing gas- fired table-top cookers and improved wood/ charcoal-burning stoves and solar lanterns. The Palmis Enèji project was launched in 2012 as an Entrepreneurs du Monde programme. Because it was an NGO-sponsored programme, Palmis Enèji was able to take the time to carry out a market survey and test its model (recruit a management and sales team, set up the first franchise outlets, develop a range of products, etc.). It was primarily during this phase that it embarked on social marketing nationwide.

The diversity of social business: the case of ...

12 July 2017/in Social Business Model /by quai13

Despite a troubled macroeconomic and political environment, Madagascar possesses a fairly diversified, dynamic economic fabric in comparison to other countries with a similar level of development. This national particularity undoubtedly explains the country’s thriving social business sector. A study undertaken by AFD lists close to 90 projects2 that meet the broad definition of a social business, i.e., organisations (of all types) whose priority is to address a social problem and who aim to be financially self-sustainable.

What is the key driver of social business in Madagascar?

In a country with over two thirds of the population living in poverty and with little in the way of essential government services (due to serial political crises), non-state actors attempt to come up with alternatives in the hope of offering the population better living conditions.

We are referring here to organisations that are part of civil society – not only NGOs, but social business projects as well, which have a long history in Madagascar. Many of these existed before Muhammad Yunus coined the term “social business”.

The projects covered are on average 10 years old and over a third have existed for more than 15 years.

Nearly half of all such projects (46%) were initiated by NGOs that wished to generate their own revenue to finance their development rather than being entirely dependent on public funding.
What are the key feactures of social business projects in Madagascar?

Read the full article on the blog Privat Sector & Development, animated by Proparco.

Can social business rescue development ?

12 July 2017/in Challenge and Definition /by quai13

Donors are currently showing a very keen interest in social business and are adopting specific strategies and tools (Asian Development Bank, USAID, DFID, KFW and, just recently, AFD). Indeed, social business could be seen as a miracle solution in this context of fiscal austerity. But let there be no mistake: public financial support continues to be one of the conditions for its success.

Reconciling the social objective and the need for profitability

The aim of social business is, as with social policies, to address social problems, but at the same time by generating incomes that are essential to the sustainability of the project, based on an entrepreneurial economic model. It involves organizations with different statuses (associations, NGOs, cooperatives, enterprises…) which have a priority social (and/or environmental) objective and are seeking to achieve financial equilibrium in order not to be dependent on public financing.

While profit is not the primary objective, it is the way to ensure the autonomy of the project, as well as its growth if reinvestments are made in it. The beneficiaries of these projects can be clients (who are sold essential products at a low price), or employees (who are offered more than just a job : improved working conditions, return to work…), suppliers (who are offered stable outlets at a fair price, by helping them to structure their sectors), and external persons (who are offered products and services, or a share of the profits).

See the full article on the blog ideas4development, animated by AFD

Social Business : the challenge of scaling up

12 July 2017/in Challenge and Definition /by quai13

Entrepreneurship can meet the needs of “base-of-the-pyramid” populations, provided the business in question has reached the critical size needed for profitability and sustainability. Examples of “inclusive businesses” which have successfully “scaled up”, however, are few and far between. Rectifying this situation means removing a number of practical, psychological and financial barriers. There are many ways in which development finance institutions can help this sector to grow.

What role can businesses play in combating socio-economic inequalities and environmental depletion? This key issue in the current debate over development straddles three relatively independent phenomena. First, with financial ressources now limited or reduced, authorities and private foundations are looking for leverage that will boost the impact of their actions. Their watchwords now are social-business support, public-private partnerships and impact investing. The second phenomenon is the 2008 financial crisis which triggered a moral conflict in many business leaders seeking to reconcile their responsibilities towards their shareholders with their personal convictions. Here the watchwords are inclusive business, shared value and base- of-the-pyramid. The third phenomenon applies to NGOs, non-profits and social entrepreneurs who wish to sustain their initiatives and reduce their dependence on ad hoc resources such as grants and donations. Their watchwords are social business, sustainability and “turning beneficiaries into customers”.

While the outlook, ideologies and vocabulary differ, the key question is the same, i.e., can businesses – long considered the source of social and environmental problems – become part of the solution? Are there any concrete examples which prove that inclusive business1 approaches can solve social problems in an economically profitable way and on a large scale? While inclusive businesses may have sprung up in developing countries, we need to ask ourselves why they are not more wides- pread? What obstacles do they encounter when changing scale and what can development finance institutions do to help them grow?

Success of scaling up: examples of your inclusive businesses

The following examples of inclusive businesses prove that scaling up is indeed possible. The businesses in question have reached a critical size that ensures both profitability and sustainability. They also directly impact a huge number of customers and have inspired the creation of similar businesses.

See the full article on the blog Private Sector & Development, animated by Proparco.

The ambitious and challenges of social busine ...

12 July 2017/in Challenge and Definition /by quai13

Social business is a demanding business model: social enterprises pursue social or environmental goals while also seeking long-term profitability and they face many challenges. In the wide- ranging ‘impact investing’ sector, it is vital that the social businesses are able to structure and differentiate themselves, both to attract investment and to boost their impact.

Despite the involvement of the international community and extensive multi-actor engagement, guaranteed access to essential goods and services is still a long way off for the world’s poorest populations. 1.5 billion people do not have reliable access to clean, affordable electricity; more than a billion lack drinking water or adequate health facilities; access to existing treatments for infectious diseases such as HIV/AIDS, tuberculosis and malaria is still very limited; and 70% of all children around the world not attending school live in Southern Asia and sub-Saharan Africa (Acumen, Hystra, WHO, 2014). Public funding alone cannot tackle all these challenges and while the private sector is already a significant funding source of development,[1] there is a need for new sources to be harnessed so that wider approaches can be developed, ‘workable’ solutions disseminated, and innovative responses devised that will benefit the very poorest. Working alongside the public sector, which plays a vital role in all these areas, investors and social enterprises face the challenge of developing capacity to meet this global demand for goods and services at affordable prices.

The emergence of ‘social business’: the culmination of a long story

The business world has many different terms for enterprise with a social or environmental focus, including “the social and solidarity economy”, “social entrepreneurship”, “bottom-of-the-pyramid initiatives”, “the inclusive economy”, “impact investing” and “social business”. However, while these terms appear to refer to the same concepts, they need to be differentiated. “The social economy” is an established term that represents a global attempt to combine economic activity and social benefits. This movement has produced different kinds of business, including cooperatives and mutual societies. Since the late 1990s, traditional private sector businesses have increasingly been embracing environmental and social issues, initially by focusing on controlling their environmental and social risks, and subsequently by incorporating notions of sustainable development and corporate social responsibility (CSR) into their organisation. At the same time, the financial sector has been creating “socially responsible investing” (SRI) tools – new investment vehicles that enable investors to monitor how their assets perform in social and environmental terms.

See the full article on the blog Private Sector & Development, animated by Proparco.

Low-cost private schools scalable solution to ...

12 July 2017/in Education /by quai13

To provide low-cost nursery and primary school education in poor neighbourhoods, Bridge International Academies has developed a vertically-integrated system. It includes operational tools and systems, curriculum materials, teacher recruitment, training processes. Its business model gives priority to academic quality using new technologies to support classroom teaching while keeping overheads and costs down in order to remain affordable.

Are social businesses able to provide efficient, sustainable, scalable solutions to problems that have traditionally been the preserve of the public sector? While few will argue that commercial businesses are the key to creating and sustaining jobs, many consider that a line has been crossed when for-profits enter sectors traditionally seen as public goods like nursery and primary education.1 Indeed, the UN special rapporteur on education, Kishore Singh declared that “For-profit education should not be allowed in order to safeguard the noble cause of education”.2 Yet there is a significant gap that needs to be addressed. Unicef estimates that there are still 58 million primary-age students globally who are out of school (UIS/EFA GMR, 2015). A recent article by Bookings Fellow Leisbet Steer reports that USD 26 billion in donor funding is needed every year to address this global education gap (Rose et al., 2013).