Social Enterprise World Forum: Why Social Enterprise in Africa Matters

Over the course of today and tomorrow (27-28 April), the Social Enterprise World Forum (SEWF) will open its digital doors to bring together a growing community of social entrepreneurs, thinkers, funders, support organisations and others to discuss key topics including the youth, climate change and social finance. We’re delighted to be taking part in the discussions which will draw on the work we’ve been doing in support of social enterprise across the continent over the past six years. While almost without exception, SEs across the continent are not registered as “social enterprises” because corporate registries don’t provide this category of business as an option, social enterprises across the continent are demonstrating that it is substance, rather than form, which really matters. Here are three reasons from our research[1] as to why:

Social enterprises are job creators

The African Development Bank (ADB) has estimated that because of the C-19 pandemic, between 24 million and 30 million jobs will be lost on the continent. And even prior to the pandemic, SSA needed to generate between 600-800 million jobs by 2050. 

Social enterprise is responding to labour market needs by creating between 28 million and 40 million jobs. Indeed, 78% of SEs expressly set out to create jobs. However, it’s not just a numbers game. The quality of jobs – the level of income, the amount of on-the-job training, the level of job security- are all key factors to consider when thinking about jobs. 

 ·      In terms of income, for companies whose turnover averaged GBP6000, only 57% of them paid their highest worker a living wage and fewer than 5% of SEs paid their entry-level workers a living wage. But for larger SEs, or those with a turnover exceeding GBP10,000, the vast majority of them pay their workers a living wage (82%). 

·      In terms of training, close to 50% of SEs offer more than 5 days of training annually while only one third of profit-first businesses do. This is a hugely valuable asset within the context of a continent where the informal economy is so dominant so there are few opportunities for training and personal development.

·      When it comes to job security, there’s not really much that differentiates social enterprises and profit-first businesses when it comes to offering job contracts but 76% of SEs said that they must give at least 1 month notice while only 61% of profit-first businesses do. 

 Social enterprises are educators 

Across the continent, primary school enrolment is pretty high- in Cote d’Ivoire for instance, it’s at 99% though in Nigeria and Sudan it’s at 85% and 84%, respectively. But secondary school enrolment is comparatively lower. In East and South-East Asia, 70-80% of 15-24 years olds have completed secondary education while in SSA it’s around 20-35% though in the rural areas it’s even more challenging. State-level education is typically under strain- although Ghana does stand out with its free Senior High School (SHS) policy. 

What is a growing trend across the continent is low-fee-paying private schools and with the C-19 pandemic we can see this option increasing even further, with parents opting for smaller, more intimate and more curated curricula. Such schools which don’t put profit as their primary objective but rather prioritise social aims or put the latter alongside profit, would be classified as a social enterprise. Around one third of schools in Ghana are low-fee paying schools, and the model is catching on in Kenya and Nigeria too. From our survey, 65% of the teachers employed by these social enterprise schools are women but there is vulnerability in terms of pay, with some studies suggesting that costs are kept low because salaries of workers within low-fee paying schools are lower than in the public sector. 

 Social enterprises empower women

Social enterprises empower women in leadership roles more than for profit businesses. Indeed, 41% of SEs have a woman in charge versus only 27% of profit-first businesses. In tandem with the growing consensus that the more diversified a leadership culture is, the more sustainable a business is, the argument for supporting women-led businesses is stronger than ever, especially in light of how the pandemic has put both women and the youth in an even more precarious position. 

The OECD has stated that “[y]oung people and women are among those at greatest risk of joblessness and poverty.” We are certainly seeing a growing interest from impact funds to better understand the opportunities for investing in gender-lens businesses and initiatives like the African Development Bank’s Gender Equality Trust Fund are also working to fill the USD42bn financing gap that exists for women across the continent.

We are an African-owned and managed firm delivering local knowledge supporting transformative and sustainable strategic decision-making. Do get in touch if you require assistance: advisory@songhaidvisory.com

[1]Our research was a collaborative effort with Mark Richardson of Social Impact Consulting and Richard Catherall of Kataris Ventures on a continent-wide study on the relationship between social enterprise and job creation in Sub Saharan Africa, on behalf of the British Council.It drewon previous research, ILO and World Bank data, more than 80 expert interviews and a survey of more than 1,800 social enterprises, businesses and NGOs from 16 countries across the region