1. Could you tell us about yourself? How did you get involved in the social economy?While working in the non-profit sector, I couldn’t figure out why organizations were constantly struggling under severe pressure and in a seemingly constant state of financial insecurity. This led me to explore different models for social change, and after studying social entrepreneurship I was appointed to lead the team at the Network of Social Entrepreneurs at the Gordon Institute of Business Science in South Africa.
During my time there, the team published a book on social entrepreneurs, initiated the country’s first mapping study of social enterprises, increased the reach and impact of our social entrepreneurship training programme, and worked hard to connect conversations between business, government and civil society. The support of the Government of Flanders has been instrumental in developing the social entrepreneurship conversation in South Africa. The next step was into the ILO to assist in the development of a social economy policy for South Africa, where this work continues.
2. What is the state of the social economy in South Africa?The government of South Africa recognizes the importance of social economy organizations, such as co-operatives, foundations and social enterprises that produce goods, services and knowledge in pursuit of social goals, with income generating mechanisms. In 2017, with technical assistance from the ILO and support from the Government of Flanders South Africa’s Economic Development Department (EDD) took steps to develop a policy for the social economy in South Africa.
Since then we have held a series of discussions, consultations and focus groups to understand what is needed to stimulate the social economy ecosystem. In each of our consultations, we asked participants different questions around the same topic: what questions do they have, what would they like the policy to achieve? Where did they see the gaps? From this, we were able to develop our draft Green Paper, which was launched by Minister Patel and ILO DG Guy Ryder in February 2019 as a foundation of consultations from mid-2019.
3. Could you tell us about the key insights emerging from the responses to these questions?a) The need for clarity on the definition of social economy that is most suited for South Africa
There was a strong call to have an agreed upon definition on what the social economy is, and to use this as the springboard to the broader national conversation on why it is important, and the value it brings. In the National Consultation in February 2019, a definition was put forward and included in the draft Green Paper. It is a reminder that the policy development process is as important as the final policy recommendation, as it is through these discussions that consensus is created, and with it legitimacy. The policy process is an opportunity to bring clarity – to understand what we mean when we use the phrase social economy, its partnership with the green economy, and how we can incentivise and stimulate these new sectors of growth.
b) The need for policy cohesion
There is a growing call for policy cohesion, recognizing that South Africa has great frameworks that focus on social change, transformation and upliftment. Practitioners are frustrated by the need to work across policies that are contradictory to each other, each requiring different sets of paperwork and institutional requirements. Examples given include the contradictions in South Africa’s industrialization versus its green-growth goals, or the burden for small enterprises of complying with Broad-Based Black Economic Empowerment (B-BBEE), non-profit and public benefit requirements. The social economy is a highly inclusive concept because it operates across social and economic spheres. The policy development process is an opportunity to integrate existing policies, aligning the country’s inclusive and transformation agenda.
c) The need for support that stimulates a conducive ecosystem for the social economy
Instead of a singular focus on financing, there is a broader call for sector stimulation, and a series of recommendations on how this can happen. This tackles the long held assumption that more funding equals growth, which can minimize the package of supports for individual businesses to be sustainable. Yes, some of the recommendations are financial – such as incentive schemes, subsidies, tax breaks, and additional resources within the support agencies – but these are put forward together with recommendations for capacity building and training and, interestingly networks. The call for partnerships and networks dominates, giving insight into the entrepreneurial nature of the social economy, and its need to create an identity through togetherness. This could also be a sign of one of the strengths of the social economy, with its inherent focus on collaboration over competition.
d) The need to strengthen access to markets and impact investing
There is a call to strengthen access to markets – making it easier for smaller players to participate and collaborate equally in the procurement systems of bigger organizations. This call can be seen against the growing conversation on impact investing: shifting the focus from financial returns to include social and environmental returns. These shifts have profound consequences, as they reshape and revalue our concept of what a successful business looks like. South Africa has a good track record here, with a number of companies listing Green Bonds, and the launch of the first social impact bond in 2018. This shows that there is a growing movement away from traditional models of funding social services, which is typically done through subsidy, grants, gifts and philanthropy. We are starting to see innovation in the system, patient capital and a change in what constitutes risk. In the long term, it allows social economy organizations to access funds that are suited to both their impact and income needs.
e) The need for principles and a guiding document on social economy
The most prominent call is for a set of guiding principles which maps out the social economy in South Africa, its principles, goals and values. By naming it, we legitimise it, bringing normality to the model that social and economic value can be created simultaneously, rather than being different functions of for profit and not for profit companies. Having a framework also allows us to measure social value. By creating the conversation, and agreeing simple measures that allow us to frame and name social development and its purpose, we can track and measure our progress, deepening our understanding of our context. By measuring success, social economy organizations can move from the frontier to mainstream models within the broader system.
4. So what happens now?By enabling the social economy, we see a long-term picture where businesses exist to deliver high social value, together with financial returns – a vital step in our goal of achieving an inclusive society and economy for all. From mid-2019, the Green Paper will be widely shared as a foundation of consultations across the country, where we hope for rich discussion, debate, disagreement and consensus. If you would like to know more or access a copy of the Green Paper, please get in touch with the social economy policy team at: