Inaugural international conference of Lanka Social Ventures: “Social Enterprise and SMEs for sustainable development and poverty reduction

 

Objective: Create awareness on social enterprises and social financing, and reflect on their potential to contribute to sustainable development and poverty reduction.

 

Lanka Social Ventures organized this conference in partnership with Oxfam, National Enterprise Development Authority (NEDA), British Council, Good Market and VEGA BIZ+, Lanka Impact Investors Network (LIIN) and Social Enterprise Lanka.

The conference was an overwhelming success, attracting over 450 delegates on both days representing 14 countries. The 44 speakers representing diverse sectors provided great intellectual and social interaction for the participants. The Deputy State Minister of public Enterprise Development Eran Wickremaratne graced the event as the chief guest.

About the speakers

The 44 Local and international speakers from diverse sectors spoke at the plenary discussions. Jonathan Alles CEO of Hatton National Bank, Chandula Abeywickrema representing National Savings Bank, Deputy Governor of Central Bank Asoka Handagama, Dr Amanad Kiesel Founder Member of Good Market, Head of Social Enterprise UK Peter Holbroke, OXFAM  GB regional office representative Roxanne Abdulali, representative from Grameen Capital India, Royston Braganza, representative from Unitus Capital Abhijit Rai, Anir Chowdry senior policy advisor to Bangladesh Prime Minister’s office,  Selyna Peiris, and  award winning social entrepreneur Shanaka Fernando were some of the key speakers at the conference.

Exhibitor pavilion

Another unique feature of this conference was the exhibitor pavilion for social enterprise the: “Social Enterprise Showcase”.  Social enterprises with a diverse range of products and services across different parts of the country showcased their experiences in the social enterprise showcase. The products and services included recycled garments, spices and rice, herbal medicine, rice based food products, handicrafts from recycled paper, educational and business support services for social enterprises and services. The social enterprises were of key importance as all the social entrepreneurs showcased not only the products and services but also the social impact. The Social enterprises that participated in the pavilion  were   Radha Lanka, Earth Bound Creations, Gospel House, Life Academy, WDC Kandy, Sunera, Ecowave, Kaularaga ma Ceramics, Sari Connection, Rice and Carry bags, Sivanarul Foundation, Social Enterprise Lanka and Rainbow Institute. The exhibitor pavilion was supported by USAID Vega BIZ+.

The inauguration session: Nurturing social enterprises & SMEs for sustainable development and poverty reduction

The inauguration session set the scene by exploring the definition and how social enterprises are interpreted and understood locally and internationally, the drawbacks and potentials. The key points emerging   were:

  • The WEF (world Economic Forum) recognizes fiscal imbalances and severe disparities in wealth sharing pose a much bigger threat than all other issues. A very small segment of people holds the world’s wealth. (top 1% of wealth holders have increased power and have thrived in the past several decades). More people are dissatisfied with this system. There is a calling for fairer economic systems and the world is developing is seeking solutions to these issues.
  • Social enterprises combine traits of non-profit (mission driven) and for profit (self-sustainable). SE’s are mid spectrum between non-profits and for-profits. It is hard to define exactly what makes a SE, and it varies from one to another. The big challenge is to know how we change from the current economy to a social enterprise economy. It is not possible to simply switch from one to another. Currently, there are 1019631 SEs in Sri Lanka which includes 900 and more SME’s.
  • Social Enterprise sector in the UK employs over one million people. Growth in Social Enterprise sector over the last 10 years overcomes the growth of SMEs and large businesses in the UK.
  • “Social enterprise must become more than tinkering of the existing capitalist system and be a truly transformative movement”

Day one of the conference focused on the need for ecosystems for social enterprises & socially responsible SMEs, livelihood development and poverty reduction through social enterprises and SMEs, Contribution of social enterprises & SMEs to environmental sustainability, role of social enterprises in social inclusion, women & youth economic empowerment and the multi-dimensional nature of social enterprises.

Social enterprise eco system: An eco-system in relation to social enterprises refers to an environment that influences the business dynamics and operations. A main constraint encountered by the SMEs and social enterprises is the lack of coherent eco systems. Other barriers for social enterprises are shortage of technical skills, cash flow, capital debt, obtaining grant funding, understanding/awareness of SE (general public customers and policy makers) and lack of access to support and advisory services.

Bangladesh experience: In Bangladesh alone 80k is generated by social enterprises and has created 3.5million jobs between 20019 -2016.  Bangladesh has wide and varied social enterprise categories – education, products services. Further there are social enterprises with a large female workforce and many instances of women led social enterprises. Big women leadership and SE’s also have a larger female workforce. Some of the innovative financing for social enterprises in Bangladesh were the-stop service delivery centre, Service innovative fund, and Grameen Phone accelerator etc. Sri Lanka needs to create a suitable business model for SE. A majority of traditional business have the potential to be converted into social enterprises.

In Sri Lanka : There are many organisations supporting and promoting social enterprises.

The National Enterprise Development Authority strives to build technological capacities and provide access to financial services. British Council also works with private sector and with young and aspiring entrepreneurs and had conducted various mentoring and training programmes for social entrepreneurs, and has conducted needs analysis on the sector.

British Council works with private sector and with young and aspiring entrepreneurs. BC Sri Lanka has conducted various mentoring and training programmes for social entrepreneurs, and has conducted needs analysis on the sector

Lanka Social Ventures: focuses on the sector of social enterprise and developmental needs. They recognize that many social enterprises in Sri Lanka are operating isolation. LSV is focused on linking these SME’s and bridge the gaps in support systems.

Social Enterprise Lanka seeks to organize, support, measure, and reward social enterprises. A new initiative of Social Enterprise Lanka is the Social Enterprise Awards which will be initiated in 2017.

Recommendations:

There is a network of Pro-bono mentors and coaches. Regional chambers are instrumental in mobilizing these mentors from the respective business communities. It also helps build a sense of community.

The unique role played by SME’s in creating employment opportunities within the communities they work with. It is important to understand the dynamics of the communities that are stakeholders, and building long lasting, mutually beneficial partnerships through understanding.

Social enterprise needs to be included in formal education and political leaders need to be made aware of the significance of social enterprise. Policies, regulations and tax breaks will follow when those in leadership become aware of social enterprise.

Social enterprises need to consider being resource efficient, energy efficient, minimum waste generation, efficient use of water and energy, shifting to use of renewable energy sources, innovative packaging solutions etc.

A snapshot of some successful social enterprises participating at the conference

The success of Lentil as Anything as a Social Enterprise is the community goodwill it has generated through its relationships and customer interaction. The sincerity of the practice and the clarity of operations at LAA ensured it a massive community support to sustain the business during its early stages.

Vindhya E-Infomedia Private Limited, a BPO started in the year 2006 with the vision of bringing Business and Philanthropy together employs close to 1400 employees with many of its production staff comprising physically challenged, hearing impaired, socially disadvantaged women and border cases of Autistic.

Sagara Liyanage founder of Earth Bound stated that Earth Bound is a social enterprise that intends to minimize environmental hazards caused by disposal of waste matter such as polythene, plastic, etc. The eco-friendly recycled paper provides raw material for all their products.

Rainbow institute sharing their experience stated that the institute empowers people throughout the country to tell their stories. Their courses include English and communication. The venture was started with a capital of 3 million LKR and now has a turnover of 14 million. 300 students each 1/3 of them are on full scholarships who are change agents.

 

 

Day two of the conference focused on alternative social finances for social enterprises and identified recommendations to develop the social enterprise sector.

The Special plenary session – Global innovations in social finance focused the discussion on social finance within the context of social enterprise, as well as political initiative which is necessary to make it possible.  Catalysing all forms of capital will make real acceleration possible. Towards this purpose, social venture capital fund within alternative investment funds must be set up. Regulations on 2% CSR contribution, revised priority sector guidelines provide additional opportunity for growth, different categories of banking licenses, national skill development and draft guidelines on peer to peer lending. The process has to initiate with creating a capital with a conscience ecosystem.

While microfinance facilities should be available, there needs to be a genuine dialog at policy and regulatory level. Ecosystem innovation towards mainstreaming SE sector should include social impact bonds, diaspora bonds, crowd funding, credit bureaus, 3rd party rating and certification and building awareness through reality shows.

Banks promote inclusivity and support grassroots businesses. Institutional commitment, operating autonomy, and a management environment that encourages supportive policies and procedures will enhance program sustainability.

Considerable assistance is required for present social enterprises in order for impact investors to partner and have real impact. To scale these industries, different kinds of capital are needed not necessarily impact investment. Some of it could be blended capital, while some are grants.

The plenary session on Demystifying Impact Investment focused on the finer points of impact investment as well as a closer inspection of services available to Sri Lankan SMEs and Social Entrepreneurs through the Central Bank of Sri Lanka.

Different sort of investors: grant making institutions, grand/equity investment, and commercial investment outfits. Commercial capital is needed for scaling up.

Sri Lanka is not yet ready for big league impact investment, rather small scale investments in tandem with capacity building for SMEs preparing them for large scale investments.

Many barriers are faced by SME's for raising capital through traditional methods. However there is a revolution in different methods of lending such as peer-to-peer lending, crowd funding etc. Therefore traditional methods aren’t the only options. However, there also needs to be a greater movement to increase awareness among SMEs and entrepreneurs on impact investing as well as expanding their capacities. However, in reverse, there should be clear ways for these SME's to measure impact for the investors.

Shashvati Rai discussed how investors invest in stages and make a commercial exit at the end. The discussion revealed the reason for the Venture Capital Aavishkaar to invest in Ma’s Tropical Foods. Avishkaar adopts venture capital methodology to serve the low-income market segment by creating scalable enterprises. Mario de Alwis the founder explained the importance of building relationships is key as trust is essential in transactions.

Concluding session: Plenary 7: Capturing the key messages and lessons for Sri Lanka

The participants in  groups came up with recommendations  to identify the role and importance of government, business support services, social investors, social investors, education institutes, private sector, donors, importance of research , strategic communications/ building awareness with the general public, building  a coalition with the broader social enterprise community.

Role of the government

  • Getting the government to recognize the distinctive nature of SE in Sri Lanka
  • There are many lands and assets in the country. The government should let social enterprises to leverage those assets (this is something that happens in UK)
  • Regional development loans from the banks that are catered towards SEs.
  • Insist social enterprise is in the educational curricula.
  • Ensure CSR support
  • Politicians need to have exposure on existing successful social enterprises and see the work they do and support.

 

  1. Role of business support services
  • Establish a network
  • Mentoring, pro-bono
  • Facilitate internships
  • Try to access foreign volunteers
  • Quality control mechanism, monitor impact

 

  1. Role of social investors
  • Develop technical skills and Bring expertise from overseas and investors
  • Cluster similar businesses together
  • Provide counseling services and linkage
  • Contribute to vale chain development

 

  1. Role of education (universities and schools)
  • Change education system to include SE starting from preschool level
  • Include relevant topics into curriculum
  • Field visits and foreign exposure
  • Sathi-pola in schools
  • Research on education needs
  • Look into the role of private organizations such as LSV to engage in education

 

  1. Role of donors, INGO’s and philanthropists
  • Social enterprise can be seen as an opportunity for donors to invest in (as the donors are withdrawing funding from NGOs due to Sri Lanka becoming a middle-income country
  • Grant support
  • Technical assistance
  • Awareness raising
  • Bridge the communication gap between supply and demand
  • Influence the government to develop an appropriate policy framework
  • M&E of social investments and social impact
  1. Role of the private sector
  • Be involved in alternative financing of social enterprises
  • Encourage marketing access
  • Social entrepreneurship education support
  • Use CSR initiatives to promote social enterprises
  • Build capacity of owners and founders
  • Establish partnerships with companies and social enterprises
  • Measure impact and evidence
  • Involve in tech transfer and training
  • Lobby for effective eco system
  • Facilitate impact investment

 

  1. Research and evidence base
  • To create a database
  • Merge databases that are available in the country to ensure it is complete
  • Make database accessible to everyone
  • Impact measurement
  • Database of market research and consultancy
  • Link university community with innovation (3D printers)
  • Multi-stakeholder common impact measurement methods
  • Create information hubs for SEs
  • Better public access to research from universities

 

  1. Strategic communications/ building awareness with the general public
  • Start creating appropriate content on fundraising mechanisms and ways to get involved
  • Utilize media in multiple languages to create awareness
  • Get NEDA and Ministry to come up with campaigns with advertisements
  • Capacity building with regional department of commerce
  • Social enterprise helpline
  • Set up a good market or a similar SE hub in regional centres
  • Get NEDA to talk to NIE to include a segment on SE in O/L and A/L

 

  1. Build a coalition with the broader social enterprise community
  • Aggregate existing network e.g. Goodmarket, Diyatha Uyana to form into a coalition
  • Do a mapping of coalitions, networks and organizations that already exist
  • Connect with global networks (i.e. ANDE, ICEA, AVPN)
  • Make visible the role of women who are social entrepreneurs in leadership positions