Social business transitions to a more realistic and pragmatic stage
Martin Vogelsang, program coordinator for FemS3, led the discussion at Endeva’s 8th inclusive business lunch on May 20th. FemS3 implements a program in India that catalyzes social businesses in various sectors, from organic agriculture to water and waste. The ultimate objective is to nurture a 'social business' culture, where NGOs seek entrepreneurial solutions to social problems. Martin asked “Is the emergent microfinance crisis in India an indication of insurmountable contradictions in the idea of social entrepreneurship or a salutary shock that will ensure necessary conditions?”
Martin spoke to the group, consisting of 22 representatives from Ashoka, the GIZ, MicroEnergy, Planet Finance and others, about FemS3’s work in India and the challenges facing the microfinance sector. A lively discussion followed. Most discussants felt that the microfinance crisis meant a "salutary shock" not only for the microfinace sector but for social business - in the general sense of business solutions for social problems - as a whole. After years in a 'bubble', where people seemed to believe that microfinance was the cure to poverty, a more realistic attitude is now setting in. It has become obvious that markets, including those where social business operates, require competition and proper regulation, just as in any other market. It is also becoming obvious that more is needed to get people out of poverty than just handing them some cash. This is not an argument against, rather for, more social business, and for more investment into the infrastructure that enables it, including policies and financing tools.