The social enterprises agenda
Social enterprise is a rather diffuse terminology. The literature names companies that address societal problems, create a social rate of return, and see profit maximization not as the sole goal of entrepreneurship as social enterprises or social business Some definitions also require the use of profit to be reinvested in the social purpose of the business, while others go even a step further and require no profit to be made at all. Others see any start up business with new ideas already as a social enterprise, no matter whether the benefit would be for poor or for better off people.
Social enterprises (SE) is based on self claiming: Despite the wide use of the terminology, there is – also in Ghana – no agreed system with accepted criteria that prove what the social enterprises are actually doing and how their assumptions and claims actually benefit people and planet. Many mainstream businesses also create a social or environmental rate of return and claiming claim to contribute to poverty reduction, environmental and climate sustainability, and innovative technology development is not the same than proving that societal changes really happen..
There are two types of social enterprises:
- NGO-driven social enterprises which may be profitable (or not) and derive most of their revenues from grant contributions. These type of SEs are the large majority of SEs in Ghana.
- For profit social enterprises earning the majority of their funding through market principles (or being on the way to do so) and scaling their impact to be more relevant for society. Although often small in scale of impact and revenue, this second category of SE is part of the IB/IGB agenda and included as IB/IGB initiative.
Large numbers: Studies commissioned by SEGh suggest that there are about 130,000 social enterprises comprising 6% of all SMEs. However this number does not seem to be consistent as 6% of the total 640,000 companies counted in the latest (2016) company census is 38,400 firms. So these large numbers seem to be heavily overstated given that the studies use a very broad definition, and include all cooperatives, many NGOs and CSR activities, and nearly all start-up mainstream business.
Real impact rather questionable: The same studies claim that these enterprises (a) had in 2022 a consolidated revenue of GHC 23 billion revenue (4% of GDP), averaging to GHC 0.2 million revenue per company., (b) employ 808,000 people (3% of employment, 7 persons on average), and (c) create 80,000 new jobs per year (however the additional jobs are not netted because many firms disappear in short time). Again this is probably overstated and requires a more scientific data update
Social Enterprises Ghana (SEGh) : a registered network of SEs (and support institutions) in Ghana has 1,100 registered members, of which much less (perhaps 25%) are really active.
The SE bill: Since 2017 the social enterprise movement in Ghana aims for a law on social enterprises with a separate business registration system, an institutionalized support organization and a fund to (mostly grant-) finance such firms. However this proposed social enterprise law is not moving. SEGh Ghana therefore favors including the SE agenda under the IB/IGB agenda as this may bring more tangible benefits to at least some SEs.
Bringing the SE and the IB/IGB agenda closer: Since 2024, the leadership promoting the SE agenda in Ghana is an active promoter of the B/IGB movement. For profit social enterprises are increasingly interested to transition into IB/IGB initiatives. Also the IB/IGB program activbely promotes the incousionm of the SE agenda by
- including Social Enterprise Ghana (SEGh) as business association representative in the IB/IGB accreditation board;
- doing advocacy work with SEGh and its members to transition into IB/IGB,;
- providing impact drives return business coaching and mentoring (IDR-BCM) (link to page 4.5) to some SEs; and
- offering the same incentives to commercially viable SE transforming into IB/IGB than to IB/IGB.