Meeting with a Social Entrepreneur: How to address the needs of poor communities while creating economic empowerment

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A social entrepreneur is a person who establishes an enterprise with the aim of solving social problems or effecting social change while being financially sustainable. This new vision of the role of a company appeared in the 60s and is now booming in Cape Town today.

This Thursday 22nd of August 2013, the Cap40 met with a French social entrepreneur based in Philippi. Cécile Pompeï is project director of the MicroFranchise Accelerator and recently won the Ashoka Changemakers Power of Small competition. The main focus of this talk is the concept of social entrepreneurship and its most successful applications as well as the main challenges social entrepreneurs can face in a country like South Africa.

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  • A friend was asking me how come they are so many people into social entrepreneurship. I don’t know. But it goes with the same trend of life coach – people are unhappy in their day job, they don’t take the time to find something they really like and seem to be tired of the normal system. They see you can be happy doing what you want Social entrepreneurship is attractive because you can combine doing something good and making money to make it simpleNot a new concept, but a new trendy word2) Social problemAt scale“Social profit” rather than financial profitSHOULD NOT BE NGO !
  • Blurry definition here as well > we don’t all agree on who is and who is not
  • What is that ? Explain kerosene, the dangers, what’s possible to do from thereKerosene can be up to 20% of a family s incomeEvery year over 6 million people sustain severe burns as a result of accidents related to kerosene lamps. Worldwide, more school children die in fires than from tuberculosis or malaria.
  • LEARNINGS:Market that start to be interesting for big companies that realise the size of the marketPeople transpose knowledge to the market or take cut – in the end, very different market and need strong market analysis tooRevenue model: selling a product. You don’t make money on margin for these products, but a different revenue model >> either absorb margin in richer countries to subsidise in poorer countries, OR very low margins but big volumes
  • Savings levels increase from ave of R1015pp to over R5300pp – 522%92% - say they are better parents and children are more disciplined and doing better @school64% do not have to rely on anyone for financial support83% have not opened a new credit account 76% only buy for cash48% have been able to leave an abusive relationship64% have better relationships with their families/partners81% have hope for their child’s future75% have an idea for a business they would like to start after leaving TCB
  • REVENUE MODEL:Both cases the idea is to cover your cost by selling for example supply or taking a cut on the product to cover your training / mentoring / recruitment costs.Again, it’s a game of volumeLearning:Again, we learn that our logic is not the same >> for example, might not want to work harder to earn more
  • Raising funds not depending on funds: - Not NGO ! Misconceptions – have to make profit and have investorsScale: market of volume so everyone has very low margins – but until getting volume, there is a long struggleWho is really doing scale too ? Shall you do scale ? (every market is specific)The market is still unknown and we all assume we know it all (people want TV and phones)Measuring impact measurement: everyone has a wrong idea of the sector and think it really helps: a lot of project are actually not helping this much (world bank water project, micro credit)
  • Meeting with a Social Entrepreneur: How to address the needs of poor communities while creating economic empowerment

    1. 1. 22 August 2013 – Cap40 entrepreneurs series event with Cécile Pompéï
    2. 2. How to address the needs of poor communities while creating economic empowerment Cécile POMPEÏ - cecilepompei@gmail.com - Head of the Micro franchise Accelerator (MFA)
    3. 3. Social Entrepreneurship  Where is social entrepreneurship coming from ?  What is social entrepreneurship? Social entrepreneurship takes a social problem and solves it at scale, while focusing on social value rather than profit "Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.” Bill Drayton, Ashoka Founder
    4. 4. Examples of current well- known Social Entrepreneurs  Muhammad Yunus (Bangladesh), Founder of Grameen Bank  Vikram Akula (India), Founder of SKS Microfinance in India  Harish Hande (India), Founder of SELCO  Jacqueline Novogratz (USA) , Founder of Acumen Fund  Daniel Epstein (USA), Founder of Unreasonable Group
    5. 5. A few interesting social businesses  Healthcare: Aravind eye center, Eye to solve cataract, Vision Spring, Embrace, sanitary pads  Energy: micro solar products for off-grid regions  Technology: Ushaidi  Housing: Micro home solutions, More than shelters  Water: Hippo water roller, water filters  Job creation: Jaipur rugs  Finance: micro credit institutions  Agriculture: Kickstart, sms to inform farmers of market prices
    6. 6. A few concrete examples • Micro energy off-grid solutions: Selling products to improve the living standard of low income communities across the world • The Clothing Bank &The Micro franchise Accelerator (MFA): Creating skills development and aspirational job opportunities
    7. 7. Small off-grid solar energy lamps
    8. 8. • Start 1 Feb 2010 with 10 volunteers, now have over 10 staff and 40 volunteers • Received over 640 000 garments, cost value of R38m • Trained 275 women – recruit 100 women per year x 2 years = 200 women in the incubation programme • 65% retention record • Women collectively generated profits in their businesses of over R8.5m ave of R350k per month. • Average monthly profit per women = R3700pm (very conservative) • Opening a branch in Jburg this year IMPACT • Income levels increase by 335% to average of R4200 • Debt levels reduce by 57% after 1yr • 64% do not have to rely on anyone for financial support The Clothing Bank
    9. 9. The Business model Corporate Other Organisations Individuals Enterprise Development NPOs and Social Services Collect Mend Remodel Wash Store TrainDispatch Sort Debrand 70%30% Goods Donated based on need Goods Sold to ED Business women All Goods Donated Recovery funds operational costs R2.7m 300 000 garments pa Cost value of R18m
    10. 10. Holistic development model Beneficiaries • Unemployed mothers • With dependent children • South African citizens • From townships around CT • 67% are single • 65% have not completed school • Recruited through partner organisations 4. Practical Trading Experience 5. Coaching & Mentoring 6. Performance Management 1. Self Motivation 2. Practical Teaching Methods 3. Work Experience
    11. 11. Micro Franchise Accelerator • Create business in a box opportunities for low income communities • Streamline the process of forming micro- franchising initiatives by offering a toolkit of best practices • Fundamentally, micro-franchising transposes the strength of traditional franchising to low- income markets • The cost of a traditional franchise can reach R5m - The cost of a microfranchise is usually between R10,000 and R100,000 • Emerging as the most innovative and fastest way to create opportunities for the world’s poor to transform temporary micro- enterprises into legitimate, stable businesses
    12. 12. Challenges & learnings  Raising funds  Not depending on funds: - Not NGO ! Misconceptions – have to make profit and have investors  Scale  Market understanding  Measuring impact  Role for everyone in the sector
    13. 13. Isn’t social entrepreneurship something that all company integrate in the way they operate and have a vision?
    14. 14. Thank You

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