Globalization With a Human Face -- and a Social Conscience
Social entrepreneurs in Bangladesh are turning household garbage into fertilizer. In South Africa, they are passing out low-tech, wind-up radios that link rural villages to the world’s airwaves. In Mexico, a former concert violinist is building an organization to preserve key parts of the rain forest.
For these entrepreneurs the global market is measured in misery: Half the world’s population lives on less than $2 a day; three million people – two-thirds of them children – die each year of preventable diseases; a third of the world’s children are malnourished.
Governments in many countries are too corrupt or simply incapable of dealing with social problems on this scale. Institutions such as the World Bank and the International Monetary Fund, along with large global charity organizations, are trying to help. But too often they are unwieldy and limited in their ability to come up with creative new solutions.
Increasingly, cutting-edge ideas in global economic development are coming from a small band of social entrepreneurs promoting what at first glance often seem to be obscure, odd-ball ideas.
“Social entrepreneurs are like the child who always asks, ‘Why? Why does it have to be that way?’” says Rosalind Copisarow, chief executive of Street (UK) a British micro-finance organization that works with small businesses.
Social entrepreneurs can crop up in any country, adds Pamela Hartigan, managing director of the Schwab Foundation for Social Entrepreneurship in Geneva, a sister organization of the influential World Economic Forum. “The need is everywhere,” she says.
Hartigan’s foundation supports late-stage social entrepreneurs with fellowships and introductions to prominent business and government leaders. One of these entrepreneurs is Martin Fisher, cofounder of ApproTEC, which creates and markets simple and inexpensive tools in Kenya and Tanzania. “There is a very big need for new ideas in terms of development,” says Fisher. “Social entrepreneurs are the people who are going to bring those.”
ApproTEC’s best-known product is an irrigation pump called the MoneyMaker that resembles a stair-climber in a gym. The pump costs just $38 – or $78 for a larger version – and can be operated simply, often by a woman wearing long skirts. The MoneyMaker eliminates the need to haul water from a well with ropes and buckets and dramatically increases the productivity of rural gardens.
From Stanford to Kenya
After earning an engineering degree from Stanford University, Fisher went to Kenya on a Fulbright Scholarship in 1985. He stayed.
ApproTEC estimates its products, including 24,000 pumps sold so far, generate an additional $33 million in wages and profit a year in Kenya, or about 0.5 % of the nation’s GDP. “There is a great reward in seeing the impact,” he says. “I’ve gone many years without any salary, but when I go out in the field and see the changes we have made in the lives of not only a few people, but many, many thousands, I definitely feel good getting up in the morning.”
Hartigan says social entrepreneurs are born, not made. “It’s almost biological. It’s very evident when you are with them. Even when they are from all over the world, you see the same individual traits. Primarily it’s passion and a single-minded focus.”
Today’s need for social entrepreneurs stems from the breakdown of agrarian societies through the industrialization to the development of today’s massive, information-based corporations, explains Copisarow of Street (UK). When people lived in small villages, the wellbeing of society was closely linked to the business success of its farms. As business consolidated, the links between economic activity and society were diminished, leaving governments and organized charities to fill the gap.
“The schism grew between one enormous plank, which is the economy, and another enormous plank, which is society,” says Copisarow. “Social entrepreneurs are now bridging the gap that’s gotten bigger and bigger.”
The schism is evident in her own work in micro-finance, she adds. The business entrepreneurs her organization backs generate enough cash flow to repay bank loans. But banks won’t make enough profit to bother writing these small loans. “All we’re doing in Street (UK) is what banks used to do 50 years ago,” she notes. “What’s really insidious to me is that the definition of who is credit-worthy has changed from a 19th- and 20th-century definition of somebody capable of repaying a loan with a reasonable interest rate, to somebody who is capable of giving sufficient profit.”
According to Fisher, in the past 10 to 15 years, through the combination of industrialization and the decline of state-run economic systems, much of the developing world now finds itself in transition from a subsistence society to a cash-based one.
In these countries families used to grow what food they needed on small plots. Governments provided at least basic healthcare and education and controlled the prices on most goods. “You didn’t need much money, he says. You could sell enough maize or beans to buy a few essential commodities like cooking oil, sugar and tea. Now that’s all radically changed.”
2.5 Million Listeners
The United States, Asia and Latin America, adds Hartigan, have been the leading areas in the development of social entrepreneurs, probably because these countries have more experience with the entrepreneurial model in business and the need in several regions is more acute.
China, because of its Communist history, has been slow to adapt to the idea, but is beginning to catch on. And while much of Africa remains dependent on aid, South Africa is now starting to pioneer new ideas, says Hartigan. “South Africa is beginning to really boom. There is the understanding that you can combine economic generation with social value at the forefront.”
Europe, she adds, has lagged, partly because people rely on government to provide for social needs and because Western Europe does not have the sort of glaring poverty found in other parts of the world. “The problem is that this is dramatically changing within Western Europe, with welfare states crumbling and immigration into the European Union.”
Hartigan’s organization helps social entrepreneurs in a wide range of programs around the world.
In Bangladesh, Waste Concern, founded by Masgood Sinha and Iftekhar Enayetullah, organizes community groups that collect household waste door-to-door and transform it to organic fertilizer. The compost is used in rural areas to counteract diminishing topsoil fertility due to the use of synthetic fertilizers and pesticides. Waste Concern produces 500 tons of compost a year, but estimates that demand could be 10,000 tons a year.
Rory Stear founded Freeplay Group in 1994 after seeing a BBC report on radios that take a few minutes to wind up and provide hours of listening. He bought the rights to the product, and since 1996 has distributed 150,000 radios to parts of sub-Saharan Africa that have unreliable or no electricity. The radios provide information to 2.5 million listeners. The wind-up technology is also being used in flashlights, water purifiers and cell-phone chargers.
In Mexico, Pati Ruiz Corozo abandoned a career as a violinist 15 years ago and moved to the mountainous Sierra Gordo region where she founded Grupo Ecologico Sierra Gordo. The organization has worked with residents of the region to preserve the environment with sustainable programs – including commercial tree planting and eco-tourism.
Charitable Dollars Abroad
Throughout much of the 1990s, the so-called Washington Consensus was the leading ideology guiding development policy. The idea was that if governments create institutions that support free-market conditions, economic development would take care of itself.
But in many countries that is just not possible, says Mari Kuraishi, a former World Bank staffer who, with a colleague from the bank, Dennis Whittle, founded DevelopmentSpace. The web-based organization matches social entrepreneurs with potential funders. “The role of the international finance organizations is to intermediate through governments. While there’s a lot to be done at that level, there’s another part of society that it is relatively difficult for an international organization – such as the World Bank or the IMF – to work with, and that’s the non-governmental sector,” Kuraishi notes. “The dilemma is particularly acute in countries that are corrupt or do not have the resources to adequately finance policies endorsed by the World Bank or IMF.”
For example, she says, a country might have proper business regulations in place, but be unable to pay bureaucrats enough of a salary to prevent them from accepting bribes.
So far, DevelopmentSpace has funded 70 projects and completed a pilot corporate-giving program with Hewlett-Packard to increase donations to social entrepreneurs working outside the usual development organizations.
The United States generates $212 billion in philanthropic support a year, of which 76% comes from individuals, 12% from foundations and 4.3% from corporations. Yet only about 1.5% of that ever leaves the United States, according to the Schwab Foundation for Social Entrepreneurship.
Americans may be reluctant to send charity dollars abroad because the problems seem so distant and insurmountable, says Kuraishi, adding that “we hope to create a level of security and comfort that can overcome that uncertainty.”
Another web-based organization, SocialEdge, is linking social entrepreneurs with one another to help them trade ideas. The Skoll Foundation, created by Jeff Skoll, eBay’s first president, is backing the initiative. “SocialEdge was created to bring us all a little closer, and in that process, to help each of us discover what’s possible when we learn and work together,” says Skoll CEO Sally Osberg.
In many countries, the work of social entrepreneurs focuses on minorities, women or disabled people who are excluded from broader society. Hartigan says corporations should be interested in this aspect of social entrepreneurship because it could result in greater markets for their products. “Social entrepreneurs are supporting inclusion of a fringe, but that fringe might be a billion people who have not been able to actively participate in the formal market but have remained on the periphery. The real market today for innovative corporations is actually in response to those emerging markets.”
Social entrepreneurs may work with non-government organizations abroad, but are often less interested in political ideology than their counterparts in most NGOs, she says. They will work with government, corporations, anybody who can help them get what they want, although most draw the line at working with arms companies. “They are not blinded by ideology. They would never say, ‘I’m not going to work with a tobacco company.’ They don’t take an emotional position. They won’t be protesting in the street. They’re too busy.”
While the best ideas pop up organically, Hartigan says, her organization is always looking to build scale with projects from one country to another. ApproTEC is now planning to move its projects into India, Brazil and South Africa. “Sometimes you try to transplant an idea and it doesn’t work,” Hartigan points out. For example, she says micro-finance schemes seem to have been more successful in Bangladesh and in Latin America than other parts of the world.
The key to the successful transfer of an idea, she adds, is to get wide support from government or other large institutions: “That’s one of the big problems. We have in our heads that anything social is tiny, so the social capital market is severely fragmented and underfunded and totally personalized.”
A Time of Heroes
Like all entrepreneurs, social entrepreneurs are subject to cycles and right now, they are hot. The collapse of the U.S. tech bubble has left many talented young people looking for work as well as for meaning in their lives.
“I do think a lot more people are interested in social services, certainly in the labor market,” says Kuraishi. “I also think that since 9/11 there’s been increased interest in the world in general. People know where Afghanistan is. They know where Iraq is. The fact that those things are in the news helps raise public consciousness.”
Fisher, after working in Africa for more than 15 years, finds it surprising that he has become one of the movement’s marquee names. He and his cofounder, Nick Moon, were just featured in Time magazine in Europe which declared them “heroes.”
“It’s a bit strange,” he says. “We’ve been plugging away in Africa thinking about the work and improving the model. You don’t expect to be in Time magazine.
“Development aid in general has a bad reputation – literally millions and billions of dollars have been poured into it with seemingly very little effect,” he adds. “People realize there are big problems out there, and they really want to find new ways that are going to lead to solutions.”