For several months, I have been working with a social enterprise incubator in Ghana named CCLEAr. Our main focus is to support livestock farmers and meat processors in growing their businesses, which will in turn create more jobs, improve incomes, and offer safe, affordable meat products to more Ghanaians. While the hustle and bustle outside REDF’s offices have now been replaced with grazing cows and sheep, CCLEAr’s activities are similar to those of REDF, and my time in the Farber program has proven invaluable.
It has been fascinating to compare the social sector in these two places, and one of the most common questions people ask is, “how is growing a social enterprise in Africa different than growing one in North America?” After some thought, it seems the main difference lies in the fact that social enterprises in the US (at least, employment social enterprises like those supported by REDF) serve a segment that accounts for a small percentage of the larger community, while social enterprises in Ghana serve a segment that makes up the vast majority of the community. This sounds simple enough, but its implications can be profound.
Prioritization of Social Impact In the US, social enterprises are formed to support a specific segment of the population or specific cause, and have an explicit social purpose in mind. In Ghana, however, many for-profit businesses formed by ordinary citizens can arguably be called social enterprises as well since they increase the earnings of the low-income owner and her employees, and the products aim to satisfy the needs of underprivileged individuals. Members of the vulnerable segment are so prevalent that conventional for-profit businesses inevitably create social impact through their daily operations. In this situation, the entrepreneur is motivated by greater earnings to support her family, not by greater social change, and it can sometimes pose a challenge to CCLEAr’s broader aspirations. It also raises the question of how much personal wealth is enough, and when technical assistance should be withdrawn once a certain level of financial success is reached. Balancing the dichotomy between financial and social goals is a constant effort with REDF’s social enterprises, and it becomes even more problematic in CCLEAr’s context.
Competing Social Goals With REDF’s social enterprises, only the employees belong to the target group being supported. With CCLEAr, the employees, the owner, and the customers are all members of the underprivileged group. This creates new dilemmas about whether employees should be paid more or whether the owner should have a greater income to put her children into school. Moreover, should the company raise prices to improve staff wages, or lower prices to improve access for impoverished customers? The latter conflict is also why charitable appeals to customers are sometimes effective for US social enterprises, but mostly irrelevant in Ghana – it is difficult to elicit compassion for those being supported by the social enterprise when the customers themselves are no better-off.
Beyond the company’s operations, its competitors often come from the same underprivileged group as well, and they usually do not enjoy the support of a well-funded incubator. How competitive should a social enterprise be in winning customers and profits from these companies? Such competing social goals are common in CCLEAr’s work, but rare in REDF’s environment.
Supporting the Entire Value Chain As many Ghanaians have limited incomes and skills training, much of the country’s industries and institutions are limited as well. There may not be an established wholesaler who can process and distribute your products across a wide geography, and suppliers may need greater investment and productivity before they can accommodate the volumes that your social enterprise hopes to achieve. Even those lucky enough to secure a government contract can end up waiting months before receiving any payment. In the US, where investment capital and education are accessible to most of the population, social enterprises can insert themselves into industries that are largely capable and well-organized. By contrast, social entrepreneurs in Ghana sometimes need to strengthen an entire value chain as they grow their own businesses.
Cultural Distinctions While there are always exceptions, those leading and supporting social enterprises in the US can usually relate to the majority of their fellow citizens. Social enterprise leaders have an inherent familiarity with mainstream American life, and a tacit agreement that the marginalized segment served by the enterprise can improve their lives by integrating with this majority. However, as foreigners working in parts of Ghana where most people live on low incomes, we cannot claim the same confidence in our knowledge of the society, and the belief that our lifestyles and methods are the better way forward also becomes less certain. As fish out of water in Ghana, the knowledge and content we bring is less effective because the familiarity with how Ghanaian consumers use certain products, or how workplace politics function in Ghana simply doesn’t exist. Even business processes that were once second nature now become unclear. What is the best way to do accounting when all you have is pen and paper, or communicate with a large number of people who don’t use email?
Deficiencies in industrialized nations and a desire for Africa to determine its own path have also called into question whether western practices are the best ones to be pursued by social enterprises in serving their target populations. One entrepreneur is very interested in learning business theories as they are taught in North America, but she stops short of accepting them wholeheartedly, constantly evaluating if African or other methods are actually better suited to the reality in Ghana. Where I was confident in making strategic recommendations for REDF’s social enterprises, there is certainly more hesitation in my current work with CCLEAr.
This is a broad comparison of REDF and CCLEAr’s social enterprises, and there are likely nuances from both sides of the ocean that have been overlooked. Still, with REDF seeking to better integrate social enterprise into America’s mainstream economy, it is interesting to note the situation in a country where most mainstream businesses can arguably be called a social enterprise.
Gordon Chan advises social enterprises and SMEs with BDS Africa, a venture of Engineers Without Borders Canada. He was previously a Farber Intern and Farber Fellow at REDF, where he supported the growth of portfolio organizations in Los Angeles and the development of a social impact bond for employment-focused social enterprise.
This is part of REDF’s Farber Blog Series.