Are social enterprises a worthwhile investment? Ashoka’s Arab World director says yes

Established in 1981, Ashoka is one of the world’s leading international non-profit organizations that supports social entrepreneurs. Through their unique fellowship program, Ashoka searches the globe for innovative social entrepreneurs bringing significant positive change to their community. Through a rigorous vetting process, Ashoka selects social entrepreneurs to become a fellow of the organization.

The Ashoka Fellowship provides these entrepreneurs with financial and professional support, as well as access to the organization’s global network to maximize their impact. Since their foundation almost 40 years ago, Ashoka has selected more than 3,500 fellows in over 92 countries around the world.

Ashoka’s Arab World office was founded by its current regional director Iman Bibars (who is also vice president of Ashoka Global) in 2003, a time when “the value of social entrepreneurship was largely unknown in Egypt and the region” she said to Business Forward. This was also a time when “existing efforts in the social sector centered around funding social causes through charity or for political reasons, social entrepreneurship was a radically different concept.” Since then, Ashoka has selected 112 fellows and expanded to 11 Arab countries.

According to Bibars, Ashoka’s collaborative work with social entrepreneurs across the Middle East and North Africa (MENA) region has “impacted 30 million people throughout the Arab World.”

Bibars spoke exclusively to Business Forward to tell us about Ashoka’s impact, the importance of social entrepreneurship, why social enterprises are a worthy investment, the current challenges facing aspiring entrepreneurs and how these challenges can be overcome.

How many people has Ashoka affected in Egypt over the course of its history?

From Egypt alone, Ashoka has elected 56 Fellows, to whom we provide lifelong support for their social initiatives. These fellows work to advance the SDGs and both local and global initiatives for positive change. Because our Fellows work on a wide variety of topics and utilize a range of methodologies, it is impossible to place an exact figure on the positive change stemming directly from their work, as their impact is both direct and indirect. However, we do know that the work of our Fellows has influenced 20 national policies and directly benefited over 3 million people, and we have mobilized $17 million to enhance social entrepreneurship in the region.

Why should people invest in social enterprises?

Social entrepreneurs are one of the best investments you can make. For economies and businesses to function, society must first be stable.

At Ashoka we look not just for funders or investors, but true partnerships working to achieve a shared vision. We detail this vision for partnership in the report “Embracing Complexity: Toward a shared understanding of funding systems change,” […] that was launched at Davos on January 24. The report highlights five key principles that allow donors and investors in the social sector to more effectively support the systems-change Ashoka and our Fellows strive toward, which are: embrace a systems mindset; support evolving paths to systems change; work in true partnership with systems change leaders; prepare for long-term engagement; collaborate with other stakeholders.

What are the economic benefits?

The micro and macroeconomic benefits of social entrepreneurship are huge. Not only does it create jobs and build more diverse economies, but it also plays a key role in creating more equitable, empathetic societies that are positioned to prosper.

Have recent reforms made it easier for Egyptians to establish social enterprises?

The laws governing NGOs have improved greatly over the past years, but also still have room for improvement. It is still time-consuming and quite labor-intensive to register and operate an NGO in Egypt. These laws should be reformed to allow for a friendlier legal environment for NGOs.

What challenges do Egyptians wishing to start their own social enterprise still face and how do they differ from conventional enterprises? What challenges do current social entrepreneurs face in Egypt?

The real problem for startups and even social enterprises in Egypt is the lack of a bankruptcy law. This prevents many entrepreneurs from taking loans, out of fear that they will be unable to repay them, and thus face jail time. The inability to take out loans stunts or even prevents growth, and greatly limits the number of people able to pursue such endeavors. With a lack of a bankruptcy law, we are stifling the growth of the economy, and especially the entrepreneurship community.

What policies would you recommend with regards to social enterprises?

I believe that Egypt must create a bankruptcy law to enable growth, and allow for hybrid business models. These hybrids would be similar to the B-corps model in the United States – corporations that balance profit with purpose. We also need to create more incentives for this business community to invest in social entrepreneurs.

Additionally, the funding ecosystem in Egypt has significant room for growth. Although there are Angel Investors and some Venture Capital, it is not yet enough. Social entrepreneurs and entrepreneurs alike typically have a longer profit horizon, meaning they often cannot generate the immediate profits some investors look for. This calls for patient capital that is motivated to put their money in places that can really make a long-term sustainable difference, even if it means a longer return on investment timeline.

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