Social Businesses: Businesses That Make a Difference

 

 

 

It takes money to accomplish virtually anything. If you want a new car, it takes money. If you want to improve childhood nutrition in regions of poverty, it takes money. Moreover, there are two ways to get money: Ask someone to give it to you, or earn it yourself.

Let us look at improving nutrition, although what I am about to say here applies to solving any endemic problem facing a society. Historically, there have been two ways to pay for improving nutrition and health. Countries can invest more tax money or other state revenues in food or non-governmental organizations (NGOs) can come in and establish programs to improve nutrition.

I have recognized where the countries get the funds, how about the NGOs? They typically ask people and governmental agencies for money. No matter where you live in the world, you probably know that money from governmental agencies is limited and NGOs are always on fundraising quests. In other words, going back to my example again, money to improve childhood nutrition is difficult to come by.

A third way to spur change

What if there were a different, more innovative and self-sustaining way, to do the things that must be accomplished to improve society?

There is: Social business.

Social business is an idea originally proposed by Professor Muhammad Yunus, a Nobel Peace Prize winning economist, banker and civic leader from Bangladesh. He originally explained his idea in his book, Creating a World Without Poverty—Social Business and the Future of Capitalism.

The idea is to create businesses that help society overcome poverty and other social problems. Social businesses differ from traditional businesses in the way that the profit from the business is handled. Original investors are repaid their investment, but do not receive additional profits. Profits stay within the company and are used for its expansion.

As businesses, they are to be financially sustainable, pay market wages and offer improved working conditions. They are also to be environmentally conscious. Finally, the work of the social business is to be done with joy.

Microloans for financial independence

There is a great deal of interest in creating social businesses today and they can be found in many areas around the globe. One of the most common examples are the various social businesses that give microloans to small business owners and startups in impoverished areas.

A microloan might be made to a mother so she could buy a sewing machine that would enable her to make and alter clothes for others in her area. When she pays back the loan – with a reasonable rate of interest – the money would be loaned to another individual.

However, not all social businesses hand out loans. Let us go back to nutrition one more time. French dairy food company, Danone, teamed up with Professor Yunus' Grameen Bank to build a yogurt factory in Bangladesh. Its goal is to produce a fortified nutritional yogurt for the poor population of Bangladesh, especially its children. Statistics show that about half the children in Bangladesh suffer from malnutrition. Further, the Danone plant buys local milk, supporting farmers, and pays about 300 saleswomen to take the yogurt around to villages.

Applying the model to the MENA region

MENA has no shortage of social problems that could be addressed at least in part through the social business model. Many areas suffer from chronic poverty. Unemployment, especially among the youth, is dangerously high. Major firms around the world are supporting social business programs. Solving these problems not only makes life better for the individuals, looking forward it creates a climate that is much more conducive for all business, including profit-making ventures.

Under the bigger umbrella of social enterprise – which in addition to social business includes non-profits and for-profit firms working to improve conditions – there has been some encouraging activity in MENA. Five social entrepreneurship projects were recently honored with prizes ranging from $10,000 to $30,000 at the ninth annual Enriching the Middle's East's Economic Future Conference, which was held in Doha, Qatar in May.

Among the winners were Yomken, a Cairo-based open-innovation platform combined with crowd funding, and the Business Development Center for Women in Palestine, which works to train and support businesswomen in the Palestinian economy.

Additional benefits of social business

However, much more can be done. Our society is accustomed to supporting charities and giving to the poor. However, it seems that Professor Yunus' idea of social business has a number of distinct advantages. By investing in business ventures designed to help solve social problems, you are doing much more than making a donation; you are becoming involved in an ongoing process that will improve conditions.

Further, throughout the process, many individuals will benefit. As the social business venture is formed and grows, others become involved and learn what it takes to start a business. Also, when the business becomes successful and repays the original seed money the investor put up, that money can then be used to fund another social business project.

I believe it is time that business leaders in MENA look beyond short-term profits and envision how they can leverage social business projects that will lift up entire segments of society, increase stability and make the economic future brighter for everyone.

 

 

About Hamzeh Al Fuqha:

Hamzeh Al Fuqha is a serial entrepreneur, inventor and angel investor. He founded Next Presentations and co-founded SmartAd. Hamzeh is a frequent speaker at industry seminars and guest lecturer at the American University of Sharjah on entrepreneurship and leadership. He has received several awards and won numerous national public speaking and debating competitions. Hamzeh has trained various public figures and high-level managers on executive communication skills and speech delivery techniques.

 

 

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