Social entrepreneurship arises like any kind of entrepreneurship. But the one difference is that it is specifically aimed at solving social issues. Across Africa, social enterprises are proving to be a powerful engine for inclusive growth, job creation, and community development.
The Schwab Foundation for Social Entrepreneurship, in partnership with the World Economic Forum, African Union Commission, Africa Forward, Motsepe Foundation, and SAP, estimates that the continent is home to 2,18 million social enterprises that generate a combined $96 billion in annual revenue and support 12 million jobs.
Looking only at South Africa, there are approximately 140 000 social enterprises, with around 51,2% being operated by Black South Africans. Despite their growth, many face high failure rates due to limited financial resources and a lack of familiarity with formal business processes.
The Schwab report further highlights the rising influence of women and youth in this sector, with more than 55% of social enterprises led by women and one in three led by founders under 35.
Characteristics of a Social Enterprise
Social enterprises – the businesses run by social entrepreneurs – are enterprises that have the structure, governance and operational strength of businesses but blend it with goals that ultimately impact society and the environment in a positive way.
It can easily be mistaken for a non-profit business, but this is a misnomer. Instead, the dimensions of this organisation are measured against:
- Mission-Driven Focus: Social enterprises place their mission of solving societal or environmental challenges at the centre of what they do. Standard enterprises, on the other hand, aim to maximise shareholder returns.
- Reinvestment of Profits: Social enterprises usually reinvest a significant portion of their profits back into their mission, whereas traditional businesses distribute profits to owners or shareholders. This shouldn’t be confused with non-profits that generate income from donations. Social enterprises can still generate an income from the sale of goods or services, but profits contribute to the mission, not the owner’s equity.
- Inclusive Market Reach: Target markets differ greatly in that social enterprises often serve underserved or marginalised communities.
- Systemic Change: Social enterprises are marked by the long-term solutions created that extend beyond transactional business activities.
Notably, social enterprises are not limited to a single industry. They are found across education, health, agriculture, and other sustainable development goal-linked sectors. These organisations often rise to fill a gap left by shrinking development aid, sluggish economic growth, and persistent inequalities.
South African Social Entrepreneurs
It has long been believed that purpose-driven companies can help reverse the deterioration in South Africa’s social cohesion. This further highlights the need to break loose from the concept that the only businesses that make a measurable difference in the social and environmental landscapes are non-profit organisations.
According to Marcus Coetzee, a legal consultant who works closely with social entrepreneurs, many are encouraged to take a hybrid business model that has both a company (Pty) and a non-profit (NPO) side. But he argues that this is more confusing than running your social enterprise as a for-profit, although he understands why people get this advice. In an old blog from 2019, he writes, “The desire is typically to establish the non-profit organisation as a funding conduit.”
Instead, he argues that entrepreneurs should think like a business but embed social impact in their product while leveraging existing frameworks and social investment as a way to obtain startup- or venture capital.
Not a Charity, but a Change Agent
Social economy organisations continuously appear as institutions led by people who see opportunity where ongoing systemic failure affects societal progress.
“Internationally, investment in social entrepreneurship is booming. The sector accounts for 3% of global businesses, with billions flowing to ventures that deliver both social impact and financial returns,” says Francisco Da Silva, Change The World (CTW) Founder and CEO. CTW is South Africa’s fastest-growing social entrepreneurship platform.
“Access to finance remains one of the biggest barriers facing African entrepreneurs. We know that only a third of enterprises seeking funding are able to secure it, and for early-stage founders, the odds can be even tougher,” Da Silva notes.
“Change The World is built to shift that reality. We’re not asking the world to trust or invest in Africa but instead creating FOMO by building undeniable opportunity from within. By bringing the continent’s most promising early-stage founders together with investors and corporates for live startup pitches, investor panels, high-value networking and the Hult Prize South Africa National Finals, we’re creating real pathways to capital rather than just having conversations about it.”
He acknowledges that a new generation of founders is showing that Africa can compete in this space, solving real problems in an impactful and investable way, without waiting for policy to catch up.
Opportunities for Social Entrepreneurship
Recent research indicated that young entrepreneurs choosing the social economy to drive change and turn a profit face more challenges than just funding. They lack infrastructure and other resources, leading to ineffective collaboration between the community, government and social enterprises.
But that doesn’t mean these individuals should lose hope. Young entrepreneurs are encouraged to seek out hands-on experience from other agencies, international recognition or like-minded networks. This allows them to gain a deeper understanding of the needs as well as the operational strategy of a social enterprise.
If you are interested in formal training, a few South African institutions offer courses on social entrepreneurship, diving into topics like resource management and developing business acumen.
Furthermore, for entrepreneurs who already feel like they are ready to start but lack funding, there are a few options. Firstly, business owners can turn to grants specifically built to support social enterprises. Alternatively, they can also become listed suppliers for large corporate organisations that have CSI programmes aimed at the problem you aim to solve.
Social entrepreneurship arises like any kind of entrepreneurship. But the one difference is that it is specifically aimed at solving social issues. Across Africa, social… Read More
