Circular economy: Social enterprises grow revenue, impact

Businesses that change the world see more than just revenue increase, writes Anton Ressel, Fetola’s strategic head for SME support. South Africa is seeing a boom in social enterprises amid government’s failure to provide sufficient services.

The concept of social enterprises – businesses with a mandate that extends beyond simply making a profit – is not a new one. As far back as the 15^th century, scholars were highlighting the need for the haves in society to support the have-nots in order to subvert social unrest.

In more recent times, the concept of businesses doing good has become very much a part of mainstream society, and many of today’s very successful businesses are what can be classified as social enterprises. Well known examples include Ashoka, Grameen Bank, the Bodyshop and TOMS Shoes.

Closer to home, the last decade or so has seen a huge increase in businesses with a social imperative being launched in SA, partly in response to the inability of government to provide sufficient services to all who need them, and partly in response to a need to redress our past and uplift sections of our society that were historically marginalised.

Organisations like the Bertha School for Social Entrepreneurship and programmes like FNB’s Social Entrepreneurship Impact Lab (SEIL) and the SAB Foundation Social Innovation & Disability Empowerment Awards are just a few initiatives providing practical support to emerging social entrepreneurs.

A great example of how a social imperative – in this case providing access to clean drinking water for communities – can also underpin a solid business model, is Kusini Water. Founded by Murendeni Mafumo, Kusini Water makes unique mobile, solar-powered water purification systems from locally sourced macadamia nut shells and nanofibers.

They work with local farmers to use their off-waste macadamia nut shells, turn them into carbon filters and make use of solar power for distribution.  An alumnus of the SEIL programme, Kusini has successfully   secured contracts with DHL, O.R Tambo Foundation, the US Embassy and DuPont Chemicals valued at over R10 million.

New water filtration sites within South Africa (including Muldersdrift, Cloetesville, Kayamandi, Kwa Thema, Hamaanskraal and Diepsloot) provide residents with clean drinking water, and in fact, Kusini Water makes available over 3 million litres of clean drinking water per month to communities across the country. The team has also trained over 200 people in basic hygiene through their WaSH Programme.

Social enterprises are often well positioned to take advantage of pressing national and global challenges, and the Covid-19 pandemic is one such example. Zinacare, a health company founded by Philip Mngadi that started out providing access to affordable and discreet home testing kits for a variety of sexual and feminine health issues, and quickly and successfully pivoted into offering drive-through Covid testing sites across Gauteng.

After opening their first drive-thru testing centre in Kyalami in the middle of 2020, they launched two additional drive-thru testing facilities and an on-demand testing service for company employees.

This rapid pivot – supported through funding from FNB – saw Philip increase turnover by over 100% and his employment impact by 600%, whilst successfully completing thousands of Covid tests with a turnaround time of 48 hours.

Once again, providing a positive and much-needed social service (fast and safe Covid testing for citizens and employees) turned into a successful business model.

Even companies that started out as ‘regular’ businesses are adapting to the new norm of adding value and creating a positive impact on society.

Former Senior Vice President at Apple, Angela Ahrendts, has been vocal on the importance of businesses building a social imperative into their business model. One of her famous quotes is: “If you aren’t building a social enterprise, I don’t know what your business model will be in five years.”

Referring to Apple, she adds: “We wanted to be led by our mission and embed our values throughout the world.” While one may not immediately think of Apple as a social enterprise, in recent years the company has made large shifts towards sustainable and socially impactful ways of doing business, including offering recycling services in 99% of the countries in which it operates, and funding solar projects to benefit needy communities in countries such as Thailand and the Philippines.

This increased focus from many multinationals around ‘doing good business’ is powerful evidence of a global shift towards a more sustainable and socially impactful approach. Long may it continue.

Anton Ressel is Fetola’s strategic head for SME support. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or positions of Ventureburn.

ALSO READ: The worlds of business and social activism are merging