Social enterprises are springing up in various parts of the world. From rural small town U.S.A. to large urban cities in Kenya, social entrepreneurship is becoming a global phenomenon. However, while the model has flourished in many parts of the world, social entrepreneurship is still struggling to take hold in others. East Africa is one hotbed of social innovation (East Africa refers to the region including Burundi, Kenya, Uganda, Rwanda and Tanzania). Understanding why social enterprises succeed in some locations and don’t exist in others is paramount in expanding the concept to untapped markets.
The factors attributed to the rise of social enterprises in this region are numerous and range from the affects of investment to the popular markets in these countries. One thing is certain; East Africa is becoming more of a technologically-centered, entrepreneur-friendly location. According to the Economist, there are currently 600 million mobile phone users. With such a huge market, it isn’t surprising that many enterprises are turning to the mobile technology space.
A popular example of such an enterprise is M-Pesa, which allows for mobile money transfers for individuals who may not have a bank account or lack access to one. More than half the population in Kenya use M-Pesa for these transfer services, often sending money across the country.
Another social enterprise using this mobile-rich market is Ushahidi. With various products including the Ushahidi Platform and the SwiftRiver Platform, Usahidi is using technology to develop “free and open source software for information collection, visualiziation, and interactive mapping.”
In just these two examples, we can also see two different approaches of tapping into the East African social enterprise space. M-Pesa was founded by two companies, the Vodafone affiliate Telkom Kenya and Safaricom. Usahidi materialized out of the post-election violence that occurred in Kenya in 2008 — the site was used to map the conflict.
In social entrepreneurship, we often come across an internal struggle of the insider versus outsider dichotomy. Should we seek to create positive social and economic growth by penetrating markets, or should we emphasize the need for local social innovation over outsider intervention?
Of course, there is no clear answer, though Jonathan Kalan, the founder of The (BoP) Project and a freelancer based in East Africa, thinks that the discussion should be handled carefully. On the subject of Kenya’s capital Nairobi, “A lot of people begin in Nairobi because it is waiting to be served.” It makes economic sense to begin these enterprises because there are pressing problems, and if entrepreneurs have a market to start and investments to begin then their venture could be profitable.
A problem Kalan sees though is the sustainability of these foreign entrepreneurs coming into the markets, “[These entrepreneurs] have investment and support, but how long are they willing to stay? Five years down the road, are they still profitable? At what point do people pull out?”
Kalan does point out that it’s mainly due to foreign investments from foundations and other grant making bodies that allow for any social entrepreneur, East African or foreign, to establish his or her enterprise.
Dave Mark, an HIV/AIDS researcher in Nairobi who has ties with mobile technology social enterprises, says that there is also a significant effort by the same companies that invest in these enterprises to support local entrepreneurial education. “Workshops are popular and are conducted from names like Nokia to the World Bank.”
The combination of both foreign investment and local innovation may be the key to the success of social entrepreneurship in this region. And for local enterprises, education plays a key role in creating ventures. Examples of this attempt to educate individuals on entrepreneurial skills include, m:lab and Educate! which both educate future entrepreneurs. Educate! places Ugandan high school students with mentors in the field of social entrepreneurship and trains these students to begin their own projects to solve problems of poverty, healthcare and among others.
Foreign investment in both enterprises and the education of local entrepreneurs can therefore allow for the organic growth of social innovation in East Africa, and can be a lesson for other regions. But does this still foster a sense of dependency? And what are the factors you feel should be in place to grow innovation locally in emerging as well as more untapped markets? What is East Africa’s secret and can that be replicated?
Join the conversation by commenting below or participating in i2i’s Twitter chat on the topic on Wednesday, March 21st at 12 pm EST/9 pm PKT (#i2isocent).
Alex Cooper is i2i’s Social Impact Intern, pursuing a B.A. in Government and Community Studies of Eastern Europe at The College of William and Mary in Williamsburg, Va. He loves social justice, politics, political sociology, pop culture and trashy documentaries. In the rare moments when he is not on his computer tweeting, researching or reading various news articles on the web, you can find him at coffee shops or with friends enjoying the small things in life and laughing loudly.