Operating environment of social enterprise

The fundamental philosophy behind social enterprise is to exploit the opportunities in the business world and share the benefits with your community, in a bid to make the world a better place. Social enterprises therefore engage in business to earn legitimate profits and use it to intervene in the many ills of society, mostly arising from the failure of government to deliver on its mandate, and the growing lack of empathy in society. Unfortunately, many social entrepreneurs arrive on the field, with much enthusiasm and passion to impact the particular segment of society they choose, only to discover the hydra-headed nature of the challenges confronting their community, and the deficiency in the supporting structures of the operating environment. They find that the problems are more deep-rooted than they had imagined; probably an indication of some missing links in the preparation of the entrepreneur.

Let’s try to do what might look like an academic stage-setting to help us to grasp the gist of social enterprise. The concept of entrepreneur is of French origin and dates back to the 17th and 18th centuries. It is interpreted as one who undertakes, and one of its earliest definition by Jean Baptiste Say in the 19th century, was to the effect that the entrepreneur is one that moves resources from areas of low to high productivity – value creation. Modern day theorists now regard the entrepreneur as one who recognizes opportunities, exploits them and creates value, primarily for himself. Social entrepreneurs, on the other hand, do pretty much the same thing but the value they create is not for the entrepreneur to enjoy and make merry. It is for the community and applied to solve identified social problems. But social entrepreneurs must first be entrepreneurs before they can effectively innovate solutions to social challenges.

Social enterprises must be properly registered, structured and capitalized to be relevant in the battle against the societal ills they desire to tackle

 

The challenge of poor operating environment, coupled with lack of capacity of some social entrepreneurs, is a real and present danger threatening the effective functioning of the young social enterprise sector in the country. Improving the operating environment would entail understanding the requirements of a healthy ecosystem for the effective delivery of social enterprise services. Capacity building should begin with acceptance of the fact that this is not an all-comers field where quackery reigns. An entrepreneur, no matter his focus, must be well-equipped with both technical and leadership credentials needed to lead a social enterprise.

Social enterprises are business organizations that seeks to make profit for the public good. It is therefore first and foremost a business entity. It must therefore be established in the proper manner; just like other business entities. It must be properly capitalized and staffed. Most social enterprises begin with the little savings of the founder and rely on donor agencies. This is usually the root of future problems of capital inadequacy and cash flow challenges that tie them to charity funding. But reliance on donations is no longer a sustainable financing strategy, as donor-fatigue and the general global economic downturn have reduced the significance of charity funding. In other words, social enterprises must be properly registered, structured and capitalized to be relevant in the battle against the societal ills they desire to tackle.

On the part of government, the improvement in the operating environment for social enterprise would, of necessity, involve some level of regulatory or supervisory intervention. There may be some valid argument against regulation, but there are many in favour of it, that would benefit operators. Obviously, the sector will acquire more respectability and credibility if it is understood that it is not an all-comers industry. Partners will become more confident and encouraged to support the worthy causes pursued by social entrepreneurs, if there is transparency and are sure the sector operates above the line.

Nigeria faces many socioeconomic and environmental challenges, which make social enterprises intervention very relevant. The level of social and environmental ills plaguing the country is very high. Hosting the largest concentration of poor people in the world is bad news. Having over 15million children out of school and struggling with over 40 percent poverty rate and inflation trending at about 20 percent ups the ante. Government is working to control the worsening security situation Nigeria has ever face, including the civil war, as all kinds of aggrieved groups strike at the main arteries of the nation.

Most public facilities are not providing effective services; from the clinic in the Presidential Villa that cannot handle the President’s medical checkup to the state hospitals that have no beds and medicines. Today, the provision of most utilities including housing, transportation, health and even education remain solidly in the hands of private individuals. There is therefore a huge service gap being filled by social enterprises. The least government can do is to improve the operating environment.