Great Article: Social Business Enterprise

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between the linesSocial Business Enterprise
by Mamun Rashid

Last semester I taught ‘Entrepreneurship’ to the BBA students at Institute of Business Administration(IBA), Dhaka University as well as MBA students at NSU Business School. Usually we focus on perspective of an entrepreneur, challenges of building an enterprise, business plan formulation, raising money from various sources, marketing and organizational plan while talking on entrepreneurship. This time I faced a lot of queries about social business or social business enterprise from my students. In fact in the backdrop of recent global meltdown, the entire corporate America or Europe, along with regulators and civil society, are raising their voices in favour of a responsive business model or running the business in a responsible way with an ultimate goal of public good. However, here in Bangladesh, few people, more shockingly at the decision-making level, seems to be suffering from serious disconnect, as far as the concept of social business enterprise is concerned. This is contributing to further public confusion and loss of respect for them for passing fluid remarks without having any background knowledge.

Social business is a model designed to support the poor or ultimately the social causes. The investors of this type of company, after recovering the amount invested, does not take share of the profit or want any sort of monetary gain, instead it is being used to achieve social goals of the company by providing services to the poor in healthcare, housing, financial services, etc. This model is being used in America, Europe, Africa and Asia. Recently, more emphasis has been put on this by Professor Yunus in his book – ‘Creating a World without Poverty – Social Business and the Future of Capitalism’. However, it is also to be noted, it was Sir Fazle Hasan Abed from BRAC, who first ‘walked the talk’ by putting up few very good institutions like Aarong and other profitable but socially geared responsible business entities.

The aim of Social Business Enterprises (SBE) is to reduce the poverty and illiteracy. Provide support to the poor by encouraging them to be self-employed. This will, in turn, create unity among the social groups. The Social Enterprise World Forum was established in 2008 to provide an opportunity for social enterprise leaders and practitioners from around the world to collaborate in support of social enterprise development.

The Social Enterprise Alliance (SEA), based in the USA, puts together the largest gathering of leaders, representing enterprises for non-profits, fair trade, digital inclusion, micro-finance, for-benefit companies, and others, pursuing a social or environmental mission using market-driven approaches. The event is known as the Social Enterprise Summit.

The first agency in the UK – Social Enterprise London (SEL) – was established in 1998. In 2002, the British government launched a unified Social Enterprise Strategy, and established a Social Enterprise Unit (SEnU) to co-ordinate its implementation in England and Wales. Italy passed a law in 2005 on social enterprise, which is a private entity that provides social utility goods and services, acting for the common interest and not for profit.

In Ghana, the registered non-profit ‘Trashy Bags’ was launched in 2007 in order to increase public awareness about the country’s solid plastic waste problem and clean up sachets from the streets of Accra. This company buys waste from collectors. After washing and drying the sachets, it sews them into fashionable bags and other products which are then sold in Accra and exported to eight other countries around the world. In Kenya, KOMAZA, a non-profit social enterprise, plants trees with small holder farmers and uses economies of scale to enable them to access high value markets for processes trees. Another example of this is Regional Institute for Social Enterprise (RISE), Kenya, which runs project to ease climate change in the semi-arid Eastern Province of Kenya. They also run weaving projects where by women who would traditionally engage in weaving, make products that are marketed in the capital city Nairobi and in the overseas markets of Europe and America.

Grameen Bank and BRAC are the two best examples of Social Business Enterprises in Bangladesh. Another example of SBE can be Grameen DANONE’s ‘Shokti Doi’. It is said to provide 30 per cent of a child’s daily requirements of vitamin, iron, zinc and iodine. Rural women, as well as tiny shops in rural areas are engaged in the product selling process. As for Grameen, today more than 8.0 million customers in around 80,000 villages of Bangladesh are benefiting from this business model. Still more have been helped worldwide as the Grameen Bank has served as an example for many micro-finance initiatives on almost all continents.

Today BRAC is known as the world’s largest not-for-profit organization, with its international footprints in Asia and Africa, mainly in Afghanistan, Sri Lanka, Pakistan, Uganda, Tanzania, Sudan, Sierra Leone and Liberia and also in the USA and the UK. BRAC University as well as Bank are creating differences in the space they are operating in and at the same time, money made is not entering in any person’s pocket.

Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social purpose remains central to their operation. Businesses all over the world are commercially driven or profit centric. However, history has also taught the businesses, why they should be increasingly focusing on ‘how side of doing business’ or run business with a social objective to share the successes with teeming millions.

Therefore, while the today’s companies are increasingly focusing on their people as the growth drivers, tomorrow’s companies will more be focusing on making this planet a more livable one. Therefore, all over the world successful companies must be equally focusing on profit, people and mother planet, more importantly to create an equitable justice biased growth. (The writer is a banker and economic analyst. He can be reached at: mamun1960@gmail.com)