By Avant Shrestha
The idea of social entrepreneurship is still a relatively new concept in Nepal. The official induction of social entrepreneurship in the business eco-system happened around the mid 2000’s. However, people have been practicing social entrepreneurship and establishing social enterprises for generations. For example, the Newars established ‘Guthi’, a social system where activities were conducted whilst generating revenue for members of the community and improvement of the society.
In today’s context, the social and economic disproportion in Nepal is vastly evident. As a result, people and entrepreneurs alike are connected by the possibility to do business and generate money but at the same time create a positive outcome for the community. Anup Tamang, Managing Partner at Biruwa Advisors says, “Social enterprise is an organisation or a business venture that utilises commercial practices or strategies to address problems or gaps in the society. The gaps could be social or environmental but a social entrepreneur’s venture is intended to make lives of people better but also have financial returns as well”.
Generally, social enterprises do not serve to increase the wealth of their shareholders; instead generated profits are reinvested into the enterprise in order to contribute to social equality and improve the living conditions of the community.
Nanda Kishor Mandal, Executive Director of Women Development Advocacy Center and Head of Yunus Social Business Center, King’s College, expresses, “Globally, there are no said definitions because social entrepreneurship is a very iterative process, but their commonality is in all the definitions. A social enterprise is any venture that is solely created to address social, economic and environmental issues of a community or a country with a motive to create a larger social impact. Social entrepreneurship is the process that creates triple bottom line impact and finance sustains the venture”.
Social Enterprise in Nepal
When you look at the present predicament of social entrepreneurship in Nepal, the movement is definitely growing as many entrepreneurs, especially the youth, are joining this space. Various major companies have implemented ‘social responsibility’ in their business model as well and many start-ups have made it their focus to create social impact.
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“It was a relatively new concept back in 2008. There was no set definition because there hasn’t any policy and nobody talked about social entrepreneurship as it is done today.”
Luna Shrestha Thakuri
Founder of ChangeFusion Nepal
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“Social enterprise is an organisation or a business venture that utilises commercial practices or strategies to address problems or gaps in the society”.
Managing Partner at Biruwa Advisors
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“Financials are sometimes over-looked in social enterprises because in the process of creating impact, we tend to forget that there is ‘enterprise’ attached to it,”
Nanda Kishor Mandal
Executive Director of Women Development Advocacy Center
Luna Shrestha Thakur, Founder of ChangeFusion Nepal shares “It was a relatively new concept back in 2008. There was no set definition because there wasn’t any policy and nobody talked about social entrepreneurship as it is done today.”
“The concept of social entrepreneurship itself came from developed countries because social entrepreneurship itself is a raw concept in the developing world,” adds Mandal.
One of the reasons people in the developing world are moving towards social entrepreneurship is because they perceive that the efforts of the aid workers and aid agencies are failing. So, people reckon that any issue in the country has to be looked at through a market perspective.
The New Business Model
Today, there are lots of events and competitions around social entrepreneurship that are happening, at least, in Kathmandu. People are talking about it and media is not shying away from giving space to the issue. Having said that, when one looks at the media coverage on social enterprise, more emphasis is given on form than substance.
Additionally, a number of colleges have started offering courses on social entrepreneurship. There are impact investors, angel investors coming into the eco-system as well. It’s fair to say social entrepreneurship is experiencing a boom. “Social entrepreneurship can be a new model because it has come as a new way of solving problems,” states Tamang.
There seems to be a lot of buzz around the social entrepreneurial sphere but Thakur believes there are no real dialogues as to how social enterprise can create impact and actually sustain themselves. “Yes, there are events and competitions happening; great ideas are formulated but the ratio in terms of implementation is very less,” claims Thakur. “Regardless of it being a social entrepreneur, and starting a business in Nepal is in itself an arduous task. There are lots of challenges,” she adds. Mandal backs up the statement by saying, “It is difficult for social entrepreneurs because the eco-system is not yet in place in Nepal. The support system must be built. The ecosystem should be created first.”
But the possibilities of ‘social impact business models, look encouraging in the long run. There are multiple issues in Nepal like environmental challenges, poverty, quality of education, health and sanitation. All these issues need to be addressed and the ‘social impact business model’, definitely has the potential to thrive.
Finding the Optimum Balance
Social enterprise is a business no matter the garb it takes; therefore, it has to be operated as a business. “Financials are sometimes over-looked in social enterprises because in the process of creating impact, we tend to forget that there is ‘enterprise’ attached to it,” states Mandal. The impact motive of a social entrepreneur or a social enterprise has to go hand in hand.
Financial sustainability is the major reason why a majority of the social enterprises shut down. Focusing too much on the social aspect and ignoring the financial aspects can be an attributing factor. This creates a ‘lose-lose’, situation because if a social enterprise which is creating a positive impact in the community cannot sustain itself, there is no chance the enterprise can help the community in need. Tamang says, “Finding the balance between the principle of a social enterprise and the returns is crucial. Returns mean adequate returns; just because you run a social business doesn’t mean you should not earn profit”. “The focus should not be leaving out generating revenues while generating impact; the impact and the sustainability have to be in balance,” adds Mandal.
Embarking on a social venture or starting one definitely sounds fun and noble but there has to be a balance between the principle of it and the profit aspect. Tamang says, “When you tilt more on the principle side of it, you cannot make a profit. That’s the reason sometimes it is not sustainable. Then again if you look at it only for profit, it does not remain a social enterprise”.
Thakur expresses, “I think a social entrepreneur’s initial thought should be sustainability because it’s just like starting a business. If you cannot sustain a social enterprise, you obviously cannot create any impact.”
Maya Universe Academy, a chain of privately run schools in the rural areas of Nepal, can be referred to as the perfect example of creating positive impact as well as keeping the school sustainable. The school offers its students free education; however, parents are required to give two days of their time and effort per month for construction, handicraft, agriculture or poultry instead of the standard school fee. Efforts put into the school’s agriculture, handicraft and poultry is turned into cash which supports the operation of the school.
Collaboration is the way forward
In social entrepreneurship, the word ‘competition’ has to be replaced with ‘collaboration’ because according to Mandal, the fight is not over a piece of profit or revenue. In a social eco-system, entrepreneurs are striving to enhance the welfare across different social development goals.
Social entrepreneurs should be able to collaborate with stakeholders of the community to achieve a social goal. However, it’s a two-way street, the entrepreneurs’ perseverance, persistence and commitment should be accounted for, but at the same time, the community, NGOs and government agencies should be equally committed. “If the private sector, government and NGO come together to support a social entrepreneur, the talk about scaling up, sustainability, creating impact and bringing innovation can all be achieved,” emphasises Thakur.
There are a number of challenges faced by a social entrepreneur – funding being the major one. Funding is a major reason that an established social venture which has innovative ideas eventually collapses. The debacle that a social enterprise experiences can be attributed to lack of support system in terms of investment. However, the attitude of the entrepreneur goes a long way in the success of a social venture. Thakur illustrates, “I have witnessed the greatest ideas fail because of improper leadership approach. Then again, I have seen an average idea succeed because of the persistent improvement in the individual himself and his venture.”
The future of social entrepreneurship in Nepal is positive. Entrepreneurs are coming up with innovative ideas and ventures. Supporting organisations have heavily invested their time and efforts to the social entrepreneurial sphere in terms of impact investments, capacity building, networking, handholding mentorship and social business incubators.
Thakur explains, “Just a few years ago, barely anyone was talking about social entrepreneurship.
The networks weren’t strong before and everyone was working in isolation. Today, I believe, everyone is in a single thread.”