Social business: The new economic concept
Social business is a cause-driven business. In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. Purpose of the investment is purely to achieve one or more social objectives through the operation of the company; no personal gain is desired by the investors. Profits are used in a manner in which they may expand the company's reach and improve the product or service to a greater extent. The company must cover all costs and make profit, at the same time achieve the social objectives, such as, healthcare, housing, and financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way.
There are two basic types of social business. In the first method social business focuses on providing a product and/or service with a specific social, ethical or environmental goal. A prominent example is Grameen Danone. The other type social business is a profit-oriented business that is owned by the poor or other underprivileged parts of the society, who can gain through receiving direct dividends or by indirect benefits. Grameen Bank, being owned by the poor, is the prime example of this type.
Many of us may be confused with other closely related terms, like Non-profitorganisations and non-government organisations (NGOs). Theseorganisations mostly depend on donations and charity funds. They do not have any investor or owner. This is why these organisations are not sustainable. On the other hand social business is sustainable and can be expanded by itself, because money or capital invested here will be recycled in a continuous manner.
Social Entrepreneurship is the work of social entrepreneurs. A social entrepreneur recognises a social problem and uses entrepreneurial principles to organise, create and manage a venture to achieve social change. Social entrepreneurs are most commonly associated with the voluntary and not-for-profit sectors. So, the basic difference between social entrepreneurship and social business lies in its profit motive. Social business is allowed to earn a minimum profit after covering production and operating cost -- with the condition that the profit will stay with the company and will be used in expanding social benefits it provides.
Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public. To be very frank, CSR is a type of indirect advertisement done by the profit orientedorganisations with a view to creating a favourable image in the society.
Seven Principles of Social Business:
Prof Muhammad Yunus and the co-founder of Grameen Creative Lab
Hans Reitz developed seven principles of business objective. The objectives are overcoming poverty, or problems which threaten people and society; not profit maximisation; secondly, financial and economic sustainability. The third objective is that investors get back their investment amount only, no dividend is given beyond investment money; fourthly when investment amount is paid back, company profit stays with the company for expansion and improvement; fifthly environmentally conscious; sixthly, workforce gets market wage with better working conditions; and finally, …do it with joy.
Social Business and the Millennium Development Goals (MDGs): The eight goals set by the United Nations are: (1) eradication of extreme poverty and hunger, (2) achievement of universal primary education, (3)promoting gender equality and empowering women, (4)reduce child mortality, (5) improve maternal health; (6) combat HIV / AIDS, malaria and other diseases; (7) ensure environmental sustainability, and (8) develop a global partnership for development.
Social businesses operating in Bangladesh; and initiated jointly by Grameen and some other multinational organisations will give a clear understanding how social business will help us achieve the MDGs.
Grameen Danone: Grameen and Group Danone went into a joint venture to create a yogurt fortified with micro-nutrients to decrease malnutrition for the children of Bangladesh. The yogurt is sold in a very affordable price for poor and is produced with solar and bio gas energy and is served in environmentally friendly packaging. This initiative is serving goals 1, 4 and 7 at the same time.
Grameen Veolia Water Ltd: Due to geological reasons many of our groundwater source has been found to be contaminated with arsenic, very often at such levels that make it a heath hazard. Today, more than 30 million Bangladeshis have fallen victims to chronic arsenic poisoning and some have even died. Grameen Veolia, a joint venture between Grameen Health Care Services and Veolia Water AIM, has established a number of water treatment plants in some poorest villages in the center and south of Bangladesh. According to the social business model, drinking water will be sold at factory gate at Tk 1.0 per 10 litres. If implemented properly, this initiative will serve the Goals 4, 5 and 7.
Grameen BASF: Grameen and German company BASF went into joint venturebecause there are areas in Bangladesh where there is a high risk of malaria. The product manufactured is a mosquito net to protect against malaria. Half a million nets have already been produced. The idea of the joint venture was to develop affordable products for the poor that could protect them from deadly diseases. This social business is serving Goal number 6.
Grameen Intel: It wants to take Information Technology (IT) to the lower income people to improve the lives of people. Currently it is working on two basic streams: the first one is providing maternal health care to rural women which includes periodic check-up, diagnostics services and providing other necessary guidelines during pregnancy. The second one is providing agricultural support to the poor farmers which include soil testing, providing information to select appropriate fertiliser. This is clearly serving Goals 1and 5.
Grameen GC Eye Care Hospital: In 2001, as a social business Grameen Bank undertook the Prevention of Cataract Blindness Project, which has now become the Grameen Green Children Eye Care Hospital in Bogra. A second Eye Care Hospital has now been set up in Barisal, in southern Bangladesh, which began operating in April 2009. The Grameen Green Children Eye Hospital projected to perform 50,000 eye examinations and 10,000 cataract operations annually.
So far we have seen what social business actually is, how it operates and how a developing country like Bangladesh can achieve MDGs through social business. Every idea no matter how noble it is may have some criticisms. But critics should deliver them in a constructive manner, because "the more criticisms come forward the more opportunity for your idea to be stronger." But unfortunately some of our politicians and so called intellectuals criticise the concepts of micro credit and social business without knowing what actually they are. Prof Yunus is thus being criticised without being understood. There is a proverb 'A prophet is not recognised in his own land'. Unfortunately this is happening with Prof. Muhammad Yunus.
Md Nazmul Hossain
Lecturer of the Department of Marketing,University of Dhaka
email: nhossain01@yahoo.com
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