Forum addresses social enterprise and innovation for sustainable development

Ramphele noted that in a country like South Africa where the overall level of unemployment is greater than 25%, one of the highest in the world for similar GDP/capita countries, you would expect a lot more people would be getting involved in entrepreneurial activity.

"Yet, South Africa's Total Entrepreneurial Activity (TEA) is still only about a third of the level it should be and only 5.5% of the adult population are involved in start ups or new firms vs 14% in other developing countries." South Africa needs discussion on entrepreneurship just as urgently as it needs oxygen.

New colonials possible

She also cautioned Africa, a continent that has over 60% of the world's arable land and approx 70% of the remaining mineral resources, to take heed of the fact that if the rest of the world does not get what it needs from our continent, we may experience a new surge of colonialism and said we are already seeing signs of this.

Therefore, while the unemployed wait for both the government and private sector to find them jobs we are faced with another set of challenges.

Plummeting life expectancy, largely due to HIV/AIDS; a growing inventory of unemployable un-matriculated young adults; increasing food prices, often due to a deficit in domestic production; lack of movement on a feasible green economy which could produce 33 000 direct jobs and as many as 700 000 for people involved in bio fuels; a looming water crisis; a country with a massive waste disposal problem and last but not least a massive digital divide where so few of the population are linked to the rest of the world via the internet.

Emotional capital lacking

So where exactly does the problem lie? Ramphele believes the answer lies in our people and says, while skills are obviously important, the real problem lies with the emotional capital of our people.

She says in South Africa we sit with a unique problem where people have been subjugated for so long that they have learnt to be poor and forgotten how to help themselves. Festering spiritual wounds have sapped their energy and it has become easier for people to get money free than work for money. "We haven't created the role models in our society who earn a good living from pursuing a social purpose."

This situation is complicated by the fact that the four models that are typically used to create jobs have not worked well enough either.

Government has not been able to create viable economic activity; big corporate have not grown as much and typically employ around 30% fewer people for every R1 million of economic value added than smaller companies; venture capital and private equity want too great a return and philanthropy is not the right vehicle for building economic enterprises.

She says the time is right for communities to start creating responsibility for their own future. Young and old need to think through viable community enterprises, regain their exuberance and energy and place their investments next to the most promising business ideas.

Social entrepreneurs needed

"Social entrepreneurship is a way of reframing the "job creation" challenge in South Africa. We should not be caught up in the definition of a social entrepreneur and its purpose. My view is that the intersection between enterprises that are commercially feasible and enterprises that are socially impactful in South Africa is almost 100%. As long as one does ethical business; employs a few people and addresses a need that South Africans have, then you are a social enterprise."

She says social enterprise is particularly relevant in a country that does not yet have a strong SME sector or a strong ecosystem to support entrepreneurs. The types of entrepreneurs we need to support are operating in a space a long way from 'non-profit'. "I believe in 'catalytic capital' - capital that makes it easier to get things going but is not consumed in the process. People are setting up funds on this principle in this country as we speak. If you take a R100m today and aim to return the inflation adjusted R100m in 10 years time (i.e. return R160m in 10 years) then, after management costs are subtracted you need to find investments that give you around 6% IRR at a minimum but preferably more like 10-15% to ensure that they weather the storms that they will face when they are operating in the 'free market'."

She says making money is not just important in ensuring that the entrepreneurs are rewarded for their efforts. It is a necessary pre-condition to ensure that the social impact is enduring. "Between pure charity and pure financial return, there is an unexplored space with tremendous opportunities for innovation, social impact and lasting change."

Innovation at the heart

Innovation needs to be at the heart of a growing social enterprise movement. This will help fulfil a social need in a more profitable way than government or philanthropy does it now."

"If between us all we could create 10 social entrepreneur role models who have made decent money; contributed to society; contributed to innovation and created a sustainable business then we would have done enough to light the fire in the bellies of thousands more hidden gems that exist in our human capital inventory today.

Then we would start a social movement that will take South Africa way beyond where it is today. Now is the time to move beyond setting 'success' as your goal in life - it is time to strive for 'significance'," she concludes.

For more information, visit: www.sewf2011.com