Professor Thierry Sibieude of ESSEC Business School, analyzes social enterprise opportunities in North Africa and how they will impact local economies
North Africa: How Social Enterprise Can Drive Development by Thierry Sibieude.
Developing countries generally enjoy dynamic socio-economic environments: their economies are becoming more structured, their populations are gaining access to a growing number of services (healthcare, public transportation, education, housing, etc.), and their local businesses are becoming increasingly diverse and interconnected. In fact, this kind of ecosystem should provide developing countries with the tools to become fully developed, providing the majority of citizens with access to all vital needs.
North Africa in particular offers the kind of exogenous internal dynamics favorable to the development of entrepreneurship: progressive developments in government, education, and communication.
Seizing Opportunities through Entrepreneurship
Economic leaders, financiers and business representatives from developed countries tend to have only a superficial knowledge of realities in Africa and tend to dwell on the risks. Indeed, sub-Saharan Africa has the lowest electrification rate in the world, estimated at 64% in Cities and 24% in the rural areas. The region also lacks skilled labour, with only 8% of young people gaining access to higher education. Low levels of access to healthcare also impact local economic development, resulting in high rates absenteeism. And lack of infrastructure is still a serious issue, with the region potentially lacking the equipment essential to a growing market. On the other hand, over the next 15 years, investment in African infrastructure is expected to grow to over $90 billion.
These actors are rarely able to see these problems as opportunities for wealth creation, even while the region reaches annual growth rates of 5-7%. The rate of return on Foreign Direct Investment is 13%, higher than the average for developing countries, despite falling prices for oil and other raw materials.
Morocco in particular looks set to rise to the challenges of economic industrialization and digitization and the increasingly international flow of people, goods and services. In this regard, the current economic development plan foresees a five-year shift in GDP, with industry growing from 14% to 23% and the creation of 500,000 jobs.
Morocco, Where Social Enterprise is Anchored in Local Culture
In recent years, the Social and Solidarity Economy (SSE) has generated real enthusiasm from social, economic, and political actors in Morocco and North Africa. In fact, SSE and collective work are not new to Morocco. Traditionally, the touiza system has ensured mutual assistance between members of the same community, particularly at harvest time and during other endeavours aimed at the common good. Here, the social economy was represented by the JMAA, an organization whose aim was to manage the common interests of the whole community.
The 2010-2020 strategic plan for the economic and social development of the country defined SSE in Morocco as “all economic initiatives seeking to produce goods or services in a way that is respectful of man, the environment, and the land.” With a new law passed in 2014 to regulate the operation of cooperatives, social enterprises look set to play a new economic role. In 2013, SSE accounted for only 3.8% of jobs in the Maghreb. Beginning in the 1990s, social enterprises, in addition to the traditional players in the social and solidarity economy, emerged in Europe and the United States, becoming integrated players in these ecosystems and contributing to their evolution and enrichment.
North Africa: Social Entrepreneurship is Booming
Social entrepreneurs put economic objectives at the service of social objectives. Their economic goals work hand-in-hand with their social ambitions to maximize the impact of their business. In so doing, social entrepreneurs contribute to the development of the societies they inhabit with entrepreneurial efficiency.
In developing countries, in Morocco as in other African countries, being profitable and meeting the local social and environmental needs is one in the same thing. They share a single long-term goal: development.
This is why it tends to be quite easy to get permission from governments to work in Africa. The real challenge for entrepreneurs is gaining the support of the local communities where they plan to develop. Indeed, if local populations fail to see the added value of a venture, it will surely not survive. This is why social enterprises are generally better equipped to take all their stakeholders into account.
The African entrepreneurial boom is furthermore amplified by micro-finance which has sprouted up from the local population’s desire to create jobs and family businesses and bodes well for the nascent market economy.
In any case, North Africa entrepreneurs are generally both interested in making money and concerned about the local environment. They see business as a means to solve society’s problems. They are Social Entrepreneurs.
The Local Ecosystem is Nevertheless Insufficient
A report published in 2014 by MCISE (Moroccan Center for Innovation and Social Entrepreneurship) highlights the challenges faced by Social Entrepreneurs in North Africa.
In fact, public policies don’t yet reflect the importance of Social Entrepreneurship, even as national and international actors work to build an ecosystem conducive to the development of social entrepreneurship in Morocco. So MCISE works to raise awareness and support high-potential social entrepreneurs. Similarly, the OCP Foundation has launched a program to support local entrepreneurs. And finally, student associations like the International Enactus Network are involved in promoting Social Entrepreneurship and developing local projects.
The CMERES (Moroccan Center for Studies and Research on Social Entrepreneurship) in Fes also offers much needed support to the local social entrepreneurship eco system and helps to create for these start-up businesses the conditions conducive to growth.
Nigerian entrepreneur and philanthropist Tony Elumelu, former president of UBA (United Bank for Africa) and President of Transcorp, created the term “Africapitalism“: an economic philosophy whereby private-sector investment in local prosperity and social wealth will bring about the economic transformation of Africa. This concept is well in line with that of impact investing, a term that first appeared in 2007 in the words of Sir Ronald Cohen, Chairman of the UK investment fund Apax Partners, to define an investment class that explicitly pursues profitability and social impact.
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