Social enterprise ecosystem (1)

During the past few weeks, this column has drawn attention to the new world of social enterprise. It believes that some order needs to be brought to the sector for its own good. It is in the interest of social enterprises to have some form of regulatory framework to operate. Regulation brings order to any activity. It also brings respectability, trust and confidence of the many partners needed for sustainability. This column believes that discussion of the sector has not been properly focused but instead, is beclouded by a lot of fuzz and misconceptions that need to be cleared.

The informal credit markets in Nigeria benefited from such scrutiny in the early 90s. This nonbank financial intermediary sector of the finance industry received a boost when the Microfinance Regulatory Framework was introduced in 2005. Not only did it define the critical elements of the sector, it removed much of the fog over the image of the sector. This was naturally followed by increased inflow of financial and human resources that boosted its operations. The reform increased the flow of skilled manpower to the sector, as it became more attractive to potential partners and the public. The same thing will happen in the social enterprise sector if government creates an enabling environment for social entrepreneurship.

There is need to clearly understand the ecosystem of the budding social enterprise sector, for it to effectively contribute to national development

It is important to understand the key characteristics of social enterprises – what are their demographic credentials? Who are the likely partners – financiers, suppliers, benefactors and the many publics with which they deal. We need to dimension the sector, appreciate its dynamics and interactions, so as to design appropriate policy interventions that correctly promote their growth and integration with other sectors of the economy. There is need to clearly understand the ecosystem of the budding social enterprise sector, for it to effectively contribute to national development.

The importance of investigating the social enterprise ecosystem has been canvassed by the Aspen Network of Development Entrepreneurs (ANDE). According to them, an important preliminary step in the stimulation of entrepreneurship (including social entrepreneurship) is to map and measure its ecosystem. This view is shared by KPMG and FATE Foundation, in their study of the Nigerian Entrepreneurial Ecosystem, carried out in 2016. The study further opines, “such measurement would enhance our chances of a better understanding of the gaps and opportunities that exist in such an ecosystem. Clearly, it is impossible to design and implement effective policy support for any sector of the economy without a proper understanding of its nature and dynamics.

Effective dimensioning of the social enterprise ecosystem should begin with some important statistics on the economy within which the sector is domiciled. Nigeria has a population of about 205million people, making it the most populous country in Africa and the seventh largest in the world. In terms of landmass, the country sits on 923,768 km2, making it the 14th largest in the continent by land area. A naturally well-endowed country, Nigeria has an abundance of arable land, and oil and gas reserves and the weather is good, with the sun out in the sky practically all year round. These endowments have, unfortunately, not been managed effectively for the maximum benefit of the people. As a result, Nigeria has suffered Resource Course and Dutch Disease, typical of countries with abundant resources but poor managerial capacity, which go on to develop inappropriate habits, including conspicuous corruption and profligacy. These negative forces have created many socioeconomic problems, including mass poverty, high levels of unemployment and inequality, illiteracy and a significantly stunted economic development.

Certain unfulfilled public aspirations have fueled the growth of the social enterprise sector around the world, as individuals with giving hearts step into the vacuum created by ineffective governments. The largely poorly educated political leadership, driven by wrong priorities and primitive acquisition, has delivered little more than misery, frustration and interethnic hatred. Social amenities are decadent and there is perennial low investment in Social Overhead Capital. A weak criminal justice system, subservient to the Executive, has become famous for everything except justice delivery.

Doing business in Nigeria has never been easy as the shortage or outright absence of key infrastructure presents serious challenges, and critical business- promoting facilities remain inadequate. Indeed, a banking study carried out by KPMG in 2014, found that 80 per cent of Micro, Small and Medium Enterprises in Nigeria agreed that the absence of enabling environment was the most critical challenge they faced. Consequently, Nigeria now hosts the largest concentration of poor people in the world, with about 15 million out-of-school children. Less than sixty per cent of the population, according to the World Bank, had access to electricity in 2018, while drinking water remains a luxury to a large percentage of the population. These factors have propelled many kind-hearted citizens into the business of social entrepreneurship, the ecosystem of which we would like to explore.