When social enterprises fail to make friends, can they still influence people? The danger of repeating mistakes of aid

When you come into a country and the only locals you hire are support staff, what are you telling your customer?

NAIROBI seems to be ground zero for social enterprise in Africa. Kenya is still poor enough to need social enterprises but connected enough ‘not feel like the real Africa’, as a social entrepreneur told me. You can take a morning walk in Kibera, a large Nairobi slum,  and have lunch at the upmarket Artcaffe restaurant,  spending more than what most of Kibera’s residents make in a month on one meal.

Many of these social entrepreneurs (at least the more successful ones) come from Europe and America - bright young minds leave Stanford, Harvard and MIT for Nairobi, looking to build a socially focused business and “help” Africa. With them comes the money, because capital is needed to launch these enterprises. An entire ecosystem has been created, managed and funded by outsiders to solve Africa’s problems.

Every day, “experts” in these fields talk about what could be done to further adoption of technology and provide sustainable solutions. One thing is often conspicuously missing though - the voices of the ‘bottom of the pyramid’. 

At the 2014 Design Expo, a highly-publicised online forum exploring how to solve problems for the bottom of the pyramid, innovations in energy, sanitation, last mile distribution and financial inclusion were analysed. Of 25 speakers, four were from Africa and Asia. How do you speak about innovation in Africa and Asia without its citizens?

Impact funds are a huge part of the ecosystem. Many businesses in this space are capital intensive and need grants as well as initial seed investments to take off. Often, fund managers tap into old contacts to get into the “pipeline” -  a ready and sustainable number of good investments.

These old contacts are often school-based and so the American social entrepreneur that went to Stanford, NYU or Harvard ends up ahead of his local counterparts. A quick look at the portfolio of a majority of impact funds invested in East Africa shows this to be true. The less-than-fair competitive environment begins.

Manufactured success

The unfair advantage continues in press coverage which money often follows. Any development finance institution that has placed a lot of money in an innovation will promote the hell out of it to show that taxpayers’ money is really bringing about change. This leads to further investments in a product that has not been able to prove it can survive in the market. It is manufactured success.

Should it matter who creates the enterprises if the net gain is jobs? Yes. When you come into a country and the only local people you hire are support staff, what are you telling your customer? Good enough to buy my product but not good enough to lead the company? Could the lack of diversity be the reason why so many social enterprises are stuck when it comes to scale?

A lot of reasons have been advanced as to why there are not more Africans in social enterprise. It is true that a lot of businesses that would be classified as social enterprises do not self-identify as such. But what about management of existing businesses?

Many “Western-origin, Africa-operations” social entrepreneurs I have spoken to say they do not know how to rank local applicants who have similar educational backgrounds. To this I say learn. Find a local recruiter. Just because they did not go to schools whose names are recognisable to you does not mean they are not qualified.

The mistakes of aid

Others say most Africans do not want to work in social enterprise due to the low pay. When a candidate is shipped in from abroad, they often receive similar salaries but have accommodation taken care of, have savings to live off of and a career trajectory that will include work at top funds and foundations from “experience in the field”. Adapt to make the position attractive for them.

Social enterprise is in danger of replicating one of the major mistakes of aid. It is possible to use business to fast track development. You however will make very little headway if you do not include the very people you seek to bring out of poverty. The power dynamic has to shift from being one of “I know better”, to one of, “Let us work together.”

READ: Using business to change lives of the ‘small people’; the story of three African social entrepreneurs

Thankfully, there are efforts to address the issue. Stanford and Oxford, which run great social business focused programmes, have plans to recruit more students from Africa. Stanford and Duke University are setting up accelerator programmes in East Africa to help local entrepreneurs in the space. Still more has to be done in terms of hiring at funds and enterprises. Your team needs to reflect your market.

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