A global baseline for social enterprise?

Proponents of social enterprise talk a good talk: how can one fail to be convinced by a business model that says that you can both turn a profit and create social impact?

Talk, however, is not enough. Evidence is critical and there currently is not enough of it out there to convince enough people that social enterprise can be part of the solution to the most pressing problems that we face today.

In order to build this evidence base, the British Council has come together with a range of leading social enterprise support organisations in an ambitious first attempt to build a baseline for social enterprise in a number of global markets.

We first conducted a survey in India, Pakistan and Bangladesh and the results are in. The findings back-up many of the assumptions we already held, but also throw up some surprises that should help to focus the thinking of policy makers, business leaders and donors towards a more strategic deployment of resources in support of social enterprises, which in turn can play a role in creating a more inclusive and sustainable future.

A young sector led by young people

South Asia has seen significant growth in social enterprise in recent years. More than half of all the social enterprises in India (57%) were started within the last five years. In Bangladesh the average social enterprise is six years old, whilst in Pakistan more than half of all social enterprises surveyed were launched after 2013.

Much has been written about the youth bulge in South Asia and the associated risks that come with a generation of unemployed young people. Evidence from the surveys reveals that not only are most social enterprises young, but that a significant number of social enterprise leaders in these countries are also young. In Bangladesh and Pakistan the majority of leaders of social enterprises are below the ages of 35, whereas in India 56% of social enterprise leader are between the ages of 25-44.

Does this suggest that business leaders in the three countries are becoming increasingly motivated by and aware of the needs to solve social problems? Or is it perhaps an indication that social enterprise offers a route into business that is less hierarchical and more inclusive than in the mainstream? It could also be that in these relatively traditional societies, social enterprise offers opportunities to challenge the stereotypical roles and expectations for young people and help to fully realise the potential of all citizens.

Whatever the reason, a business model that encourages more young people to take leadership in addressing the critical challenges faced by the region is surely something that should be encouraged.

Social enterprises are optimistic about future growth

Despite operating in a challenging business environment, social enterprises in South Asia are positive about the future. In Pakistan 90% of the social enterprises surveyed have plans for future growth, whereas in India over 70% of social enterprises expect to expand into new geographical areas. Similarly in Bangladesh, more than 75% of social enterprises have plans to grow their impact.

Social enterprise leaders are likewise positive about the future, which is an extremely encouraging trend in a region that has seen faltering economic growth in recent years. This optimism and passion to grow impact is something that should focus the attention of policy makers and donors. If it can be harnessed, replicated and scaled across the region, then a vision of a sustainable and inclusive economy could become a reality.

Social enterprises are led by and employ more women

Perhaps the most striking and consistent trend across all three countries is the prominence of women at the helm of social enterprises. In India 24% of social enterprises are led by women, which compares to just 8.9% of mainstream enterprises. In Pakistan and Bangladesh more than 20% of social enterprises but fewer than 13% of mainstream businesses are led by women.

The question of what attracts a higher proportion of women leaders is an intriguing one in countries where business has been traditionally dominated by men. Is it because social enterprise is a business model that promotes a culture that is driven by values as well as the creation of value and therefore may be more attractive to women and more supportive of their advancement and success?

Another consideration is that much of the support that has been deployed to social enterprises in South Asia has been targeted towards women’s empowerment and this might be a significant contributing factor for the higher numbers of women leaders in social enterprise.

This question deserves further analysis and the British Council will commission new research to delve deeper into this question. If the role of women and social enterprise can be better understood and resources to strengthen this be deployed more effectively, then social enterprise may offer a powerful vehicle to support women’s empowerment around the world.

Education and skills

Access to education and skills has proved a persistent challenge in South Asia. Social enterprises are providing innovative ways to address this, both through providing educational opportunities to underserved communities as well as through employing populations that have for a variety of reasons been marginalised from the workforce.

In India 30% of social enterprises are focused on education. In Bangladesh the figure is 32% whilst in Pakistan 53% of social enterprises deliver education services. This evidence suggests an increasingly important role being played by social enterprises in filling the gaps in state provision of education and represents an opportunity for governments to capitalise and take advantage of social enterprise models as a mechanism to provide educational opportunities for all young people.

Social enterprises are also employing marginalised populations within their businesses. Employment oriented social enterprises are typically more difficult to scale and take much longer to do so than other types of social enterprises.

However they can play a critical role in ensuring that no one gets left behind as economies grow. Providing these social enterprises with the time and the right type of support, including patient capital and long term business support, will help to ensure that over time these businesses can play a key role in delivering economic opportunity to the most vulnerable in the region.

Sharpening the dialogue

A world where every business prioritises impact over profit is the ultimate dream of social enterprise proponents. As we journey towards this ideal, smart decision and policy making will be critical to convince the sceptics and to deploy limited resources as effectively as possible in support.  

Supplying leaders with the hard evidence to make beneficial policy changes was key to the growth of support for social enterprise in the UK and can play the same role in South Asia.  Through this report, we have made a first attempt at this and hope that others will join in this exciting and crucial endeavour to build the evidence base.

The study which also comprises a chapter on Ghana as well as cross-country comparisons and two page summaries of the findings in each of the countries can be downloaded here.    

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