Ntuthuko Shezi’s start-up allows you to invest in cattle without having to own land or raise the animals yourself. He calls it ‘crowd-farming’, because it’s crowdfunding for the agricultural sector. The innovative business – called Livestock Wealth, based in Newtown, KwaZulu-Natal – connects online investors looking to invest in cows with farmers looking for investment to grow their farms.
You can choose between investing in a pregnant cow (12-month option) or in a calf (6-month option) that will eventually be sold for free-range beef with a return on investment of up to 14%. Investors can visit their cows or monitor their daily activities on the farm remotely using Livestock Wealth’s mobile app.
To date, more than 700 investors own more than R26 million worth of cattle via crowd-farming, with the farmers who raise the cattle also being funded and developed.
Livestock Wealth is among the growing number of social (or ‘impact’) enterprises, which are businesses that focus on solving social or environmental problems while generating revenue to ensure sustainability.
The key differentiator from conventional businesses is their dual purpose: Do good and make money. But it’s more than that because yes, social enterprises apply business methods to achieve their chosen purpose – but then they prioritise this purpose over profit (or at least strike a balance between purpose and profit).
While for-profit social enterprises won’t turn their founders into billionaires, they’re not a charity either. Like any business, they require a clear and scalable business model, a good product-market fit, and a viable financial strategy.
The pioneering social entrepreneur Bill Drayton, founder of Ashoka (an international organisation supporting social entrepreneurship), summed it up when he said: ‘Social entrepreneurs are not content just to give fish or teach how to fish. They will not rest until they have revolutionised the fishing industry.’
Social entrepreneurship is ‘a model that can strengthen both the economic and social pillars of a country’, according to a survey done by the Gordon Institute of Business Science (GIBS) and published in Social Enterprises in South Africa May 2018. The survey underlines the positive impact, as well as the innovation and experimentation that takes place as social entrepreneurs show new ways of doing business or advancing social change.
These new ways could eventually contribute to the job creation, poverty alleviation and financial inclusion that the region so desperately needs.
Unfortunately, progress in South Africa is hampered by the absence of a reliable database of organisations working in the sector, says the survey. A further challenge is the lack of tax registration and poor clarity on how social enterprises are legally classified in the country.
The Seed Academy, which polled more than 1 000 entrepreneurs in South Africa for its The Real State of Entrepreneurship Survey 2018, says that 69% of its respondents are involved in conventional for-profit businesses and 29% in for-profit social enterprises. Only 3% of respondents are involved in non-profit businesses. The survey noted a 10% increase in social entrepreneurs over the previous year and commented that this was ‘no surprise’, considering ‘the social challenges that plague the country’ and the increased focus on this type of entrepreneurship.
Generally, it’s more difficult for social entrepreneurs than for conventional entrepreneurs to drum up funding and business support for their enterprise.
‘For instance, 73% of young entrepreneurs in Africa want to solve a problem in their community yet half lack key business knowledge and access to networks to succeed,’ says the Global Social Entrepreneurship Network (GSEN). ‘Given that Africa has the youngest population in the world today, with those between 15 and 24 expected to double to 400 million by 2045, it is essential to increase opportunities for young people to fully participate in sustainable economic growth. Social entrepreneurship is one of the solutions.’
In 2016, GSEN together with the Thomson Reuters Foundation published the first international survey titled The Best Countries to be a Social Entrepreneur 2016. Nigeria came first in sub-Saharan Africa (33 out of 44 nations worldwide), followed by South Africa in 37th place. Meanwhile Kenya’s capital Nairobi secured its place among the ‘Top Five Hot Spots of Social Entrepreneurs’ in the same survey, joining London, Berlin, Hong Kong and Santiago. While social entrepreneurship is gaining momentum in Kenya, South Africa and Nigeria, the survey confirms that access to finance (debt as well as equity) remains the biggest challenge.
In South Africa, there are several initiatives for social entrepreneurs to pitch their business ideas to get funding. The Google Impact Challenge ran in the country for the first time from 23 May to 4 July 2018. The awards were held later in the year, and rewarded each of the four most innovative solutions with a US$250 000 grant and Google business training.
Meanwhile The Chivas Venture is a global pitching event where finalists compete in a knock-out competition for a share of US$1 million prize funding. This year the five South African finalists included Solar Turtle (a greentech ‘business in a box’ that allows small kiosks with solar panels to provide communities with electricity); HearX Group (an organisation that created an app to conduct hearing tests on a smartphone); and Hands of Honour (which reconditions old furniture for use in under-resourced classrooms).
The SAB Foundation (SABF) Social Innovation Awards, now in their eighth year, target innovators, social entrepreneurs, institutions and social enterprises with prototypes or early-stage businesses that directly address social challenges. ‘We have been impressed with the quality and calibre of ideas and businesses that we have been presented with, over many fields and industries, including health, water, education, energy, rural livelihoods, community cohesion and more,’ said Ntandokazi Nodada, SABF social innovation specialist.
The foundation has also partnered with the Bertha Centre for Social Innovation and Entrepreneurship at the UCT Graduate School of Business, offering a seed fund to social innovators and entrepreneurs in order to catalyse and invest in ‘changemakers’.
‘We are seeing a growing interest in social entrepreneurship among the youth,’ says Bulelwa Ngewana, interim director of the Bertha Centre. She explains that the masses of unemployed young South Africans, who are angry and trapped in poverty, need a purposeful outlet for their creativity. ‘Many young people are starting to see that alternatives exist to the old way of doing things,’ she says. ‘You no longer have to wait around for a job; you can start something yourself that not only earns an income but solves the problems you see in the community. The youth are thirsty for this kind of approach.’
Ngewana adds: ‘When an invite goes out to entrepreneurs to apply for incubation through the Bertha Centre, we get up to 250 applications, each one as solid as the other. We can help only 20 but it shows how this field is growing.’
Among those assisted by the centre’s business incubator in Philippi is, for example, Lakheni, a bulk-buying grocery scheme for low-income households that has signed up more than 100 church groups, crèches and stokvels. Another success story, DiscoverIkasi, provides an online platform for township enterprises such as restaurants, B&Bs, coffee shops, bike-tour services and artists. It’s a vibrant, sustainable tourism alternative in which black-owned businesses, tourists and the DiscoverIkasi team benefit.
These examples show it’s possible for a new breed of socially minded entrepreneurs to make a living and create jobs while finding solutions for Africa’s problems – big and small, one ingenious idea at a time.
Activities and practices of SA’s social enterprises
• 73% engage in skills development
• 66% promote education and literacy
• 57% support women and 70% support youth
• 65% focus on developing the community in which they operate
Data based on a national sample of 453 social enterprises.
Source: GIBS report: Social Enterprises in South Africa (May 2018)