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Africa has a significant contingent of social entrepreneurs making social impact. This same group is also a significant asset for business. Social entrepreneurs understand Africa, and this is something businesses need to enter African markets successfully points out Nassir Katuramu, Program Manager for Venture and Fellowship in East Africa for Ashoka, the pioneering support organization for social entrepreneurs.
There are many definitions of social entrepreneur, but Ashoka defines the role as simply a combination of the words, “social” and “entrepreneur.” In other words, “We’re looking for individuals who have got the characteristics of your typical, leading business entrepreneur: they’re visionary; they are able to mobilize resources; they are creative in the way that they approach challenges; they are able to manage a team and resources; and they’re able to build a system that works on its own. This is what business entrepreneurs are known for,” says Katuramu. “But then when you throw on the social piece, then it changes the context. So, it’s not about the bottom line any more, it’s more about a triple bottom line. It’s about creating social transformation more than it is about making money.“
David Kuria, founder of Ecotact in Nairobi and an Ashoka Fellow, demonstrates his business savvy. Ecotact addresses the social issue of hygiene by providing clean, well-run public toilets. However, users pay a small fee to use the toilets. This fee is affordable for both lower and middle income people.
Since the toilets have been successful and generate traffic flow, Kuria designed the areas to provide other services like shoe-shining stands and cafés. Each toilet complex can bring in multiple streams of revenue while addressing public hygiene and also creating jobs or entrepreneurial opportunities for others. Kuria also generates revenue through advertising and has moved into franchising the model to expand.
One strength social entrepreneurs may have over a normal business entrepreneur is that they understand the importance of creating win-win situations for key stakeholders in the entire value chain and their business models often reflect this. In Kuria’s case, he is providing a service that the City of Nairobi is to provide but has not been able to successfully. So, Kuria partners with the City to service public toilets under their authority, branding both Ecotact and the City. The City is empowered to deliver services through this partnership and improve its image overall. In exchange, Kuria gets key locations around the city.
Another Ashoka Fellow in Kenya, Haron Wachira, is working with rural agricultural communities. Kenya has many processing facilities that are used well below capacity because they cannot get enough agricultural inputs. Wachira guarantees the processing plants a certain amount of inputs from farmers in exchange for ownership in the processing facilities by farmers. Wachira also works with the farmers to make sure they can efficiently produce their crops.
For businesses looking to enter or expand into African markets, social entrepreneurs can serve as key partners. Social entrepreneurs like Wachira and Kuria demonstrate success in implementing market-based, for-profit models. They understand developing products for a market. Through this process, they have gained immense intellectual property about Kenyan markets and have established themselves in the local market. Companies who work with them can find avenues to accelerate market entry and acquire market information more readily. This can translate into reducing costs and minimizing risks.
Traditionally, companies have partnered with social entrepreneurs on their corporate social responsibility programs, but for both companies and social entrepreneurs there is a new movement to partner on profit-making ventures. It is not hard to understand companies tapping into this opportunity, but some find it difficult to understand why social entrepreneurs would choose this route. The simple answer is sustainability.
Katuramu explains, “…we have come from a time where social intervention was purely donor funded to a point in time where, caused by the pressures in the economy, [there is] a cut back on the amount of dollars that are coming in, in terms of donations. So, now that the donor money is shrinking what organizations are having to do is to figure out how to sustain their primarily social goals by integrating within their models a revenue-generating component, so to speak. So that has given birth to what is commonly known as social enterprises. Social enterprises can be profitable, so depending on who is at the helm of a particular social enterprise, it can be designed to make a profit for its owners and shareholders.”
Profit is a means, as is donor-funding, to an end for social enterprises, but it also reduces the reliance on others to financially support the drive for social transformation. Businesses also help social entrepreneurs scale their business models, thereby increasing their potential for social impact.
Ashoka calls these partnerships between business and social entrepreneurs in commercial ventures, “hybrid value chains (HVCs)”. Katuramu says Ashoka has seen the success of HVCs in other global regions but notes they are still looking for firms to latch hold of the idea in Africa.
Leveraging social entrepreneurs to do business in Africa reflects an overall strategy of leveraging networks to do business. Without the right networks, firms will likely find many more challenges which are hard to overcome in Africa. But those who know understand this is true of business anywhere.
Lauri Elliott is a strategist with over 25 years of business experience, specializing in global business, innovation, technology, and new ventures and start-ups. As a noted new media broadcaster, author, speaker, and consultant, she helps small and medium-sized enterprises (SMEs) and entrepreneurs bring life and profit to business ideas in tough, turbulent business environments around the globe, with a particular focus on emerging markets, including Africa.
Lauri is the founder of Conceptualee, Inc., under which she created the brands Afribiz™ (Afribiz.net ), GlobalBizconcierge™ (Globalbizconcierge.com), and The Art of Making Business Happen™ (Theartofbiz.net)
As the Director of Afribiz™ Media, Lauri has developed a solid reputation as a journalist, broadcaster, and media personality. She is the primary host of Afribiz.fm™, a regular radio show about doing business and investing in Africa.
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