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Growing Businesses and Making Impact: The Social Enterprise Vehicle

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Social enterprise

Social enterprises are businesses that simultaneously have two goals; to create social impact and to make a profit.

The British Council in a research carried out for social enterprises in Sub Saharan Africa (SSA) defined social enterprise as a business that combines entrepreneurial activity with a social purpose. Its main aim is to have a social impact, rather than maximize profit for owners or shareholders.

The Ghana Social Enterprise Draft Policy defines social enterprise as an organization that applies business strategy and practices to achieve social and environmental goals
There are three key attributes that generally define a social enterprise. These are the objectives, entrepreneurship and governance of the business.

The objective should be to produce goods for public benefit centered on social needs.
The social objective should in turn be sufficient to motivate entrepreneurial ventures and these ventures should be able to achieve economic independence and sustainability of the business.

Finally, for a business to qualify as SE, it should have inclusive and participatory governance because the focus is the interest of the parties and beneficiaries involved and not the single interest of the owner or shareholders.

It is estimated that there are approximately 11 million social enterprises across the world. The enterprise ecosystem have made significant contributions to the social, economic and environmental development of the country.

Based on a recent survey conducted by Social Enterprise Ghana with funding from GIZ, it is estimated that there are 115,500 social enterprises in Ghana of which 54.8% operate in the agribusiness subsector. This means that the social enterprise prevalence rate among Ghanaian micro, small and medium enterprises (MSMEs) is estimated to be 5.5%.

The Social enterprise sector contributes approximately GHS 23.1 billion (USD$ 2.6 billion) to the Ghanaian economy representing 3.35% of the Gross Domestic Product of Ghana.
In addition, the sector is estimated to have created 808,500 direct jobs constituting about 3.4% of total employment in the country.

Comparing this findings to previous studies, it means the social enterprise grew by an average of 8.4% annually created an average of 80,000 jobs of which more than 80% of those employed are youth.

The social enterprise sector contributes significantly in countries with policies and regulatory environments. For instance, social enterprise account for an annual economic turnover of EUR 2.3 billion in Hungary, EUR 37.3 billion in Italy, EUR 3.5 billion in the Netherlands, and EUR 3.3 billion in Portugal In the United Kingdom, social enterprises employed roughly 5% of the national workforce in 2017 and contributed GBP 60 billion to the economy and 3 % of GDP.

Despite the immense contribution of the social enterprise sector and the potential to contribute significantly to the Ghanaian economy, the sector has challenges that are mostly policy-related and finance in nature. The absence of a policy on Social Enterprises hinders the sector’s development.

Social Enterprise Ghana and the Ministry of Trade and Industry have been working on Social Enterprise Policy since 2017. This makes it difficult to identify social enterprises in Ghana. There is also no distinct legal form or registration process for social enterprises under Ghanaian Law. Different businesses register as entities that they believe best suits their purpose but regard themselves as social enterprises based on their mission and vision.

In a survey conducted by Social Enterprise Ghana this year, 96.8% of the social enterprises are of the opinion that the Company’s Act and relevant laws or policies should have provisions for the registration of social enterprises so that social enterprises could be easily recognized per their registration.

This will also enable the government to apply the appropriate tax to social enterprises so that businesses that are social enterprises in nature will not register as NGOs but will appropriately register as social enterprises.

1. There is an urgent need for the Ghana Social Enterprise Policy which started in 2017 and is at the Draft stage to be approved . This has the potential to increase investment in the sector and enhance its contribution from the current USD$ 2.6 billion (3.35%) of GDP to USD$ 5 billion annually based on recent survey by Social Enterprise Ghana.

2. There should be an amendment to the Companies Act, 2019, Act 992 to allow companies whose objective is to create social and environmental impact first before profit to register as Social Enterprises.

3.There is need to set up Social Enterprise and Innovation Fund in Ghana to support businesses and innovations geared towards using business principles to solve social end environmental challenges of the country whiles creating jobs and making money.

Writer : Prof. Ernest Ofori Asamoah

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