The rise of the social entrepreneur

Emirati businessman Badr Jafar makes the business case for socially responsible investing, and its role in the future of the Arab world

The Arab world is going through a period of unprecedented change. A lack of economic opportunities for millions of young Arabs has resulted in a youth unemployment rate of close to 40 per cent. Compounding this problem is the region’s bulging population, 65 per cent of which is under 30. The population of the Arab world has expanded by about 50 per cent since the 1990s, and is set to grow the same again by 2030.

Research has shown that most new, net job creation in developed countries is driven by small businesses, which generate between 60 and 80 per cent of positions. By contrast, small and medium enterprises (SMEs) in the Arab world create less than 20 per cent of jobs. This makes investing in the SME sector paramount, particularly when we consider that simply to halt the rise of youth unemployment, the region must create more than 120 million new jobs over the next 20 years. That’s more than we have succeeded in creating over the past century.

Social responsibility is a multi-stakeholder process, which must be promoted from the home to the school, and from the government to the wider business community. Through socially responsible investment, we can begin to tackle our region’s socio-economic challenges head on. This is social entrepreneurship, and it can be achieved by one and all.

Public-private-people partnerships have proven that the transfer of skills and knowledge to youth can be systematic, institutionalised and successful, when led by the private sector and enabled by the public sector. When this is combined with a triple-bottom-line approach to business – targeting profits, people and the planet – we potentially have the recipe for a truly successful and sustainable regional Arab economy.

So what is social entrepreneurship? It is the act of utilising the private sector –through incentive-based partnerships with the public sector – global agencies and the non-profit sector, to embrace the many issues that face our increasingly globalised society, and integrating this approach into the fabric of our business models.

Across the global community, the days of defining a successful business as simply a profitable business are rapidly coming to an end. Business models are increasingly ranked not only by profit, but also by their positive and measurable impact on society and the environment.

The days of either/or thinking, or the belief that there is a zero-sum calculation to be made while investing in business, are over. We are in a world now where businesses can do good, while doing well. Impact investing, which is key to driving social entrepreneurship, means the two can co-exist within a shared framework of returns and broader community impact.

The emerging model is one where community benefit and sustainability are what drives the value creation required by investors to achieve their profit demands. This is the repackaging of capitalism into what is now being referred to as creative capitalism; or the reorganisation of our marketplace to reconcile our financial interests with the need to deliver on our responsibilities to our societies and to our environment.

Already the opportunities for this model are growing rapidly. A recent report from consultancy group Monitor Deloitte estimates the impact investing industry will swell from $50bn in assets, to more than $500bn within the next decade.

Ashoka: Innovators for the Public, is a case in point. Founded in 1981, the company promotes global social entrepreneurship, a term first coined by its founder, Bill Drayton. Since its launch, Ashoka has been one of the world’s leading facilitators of business-led innovation focused on social impact. Ashoka Arab World, which launched in 2003, has already nurtured social enterprises ranging from microfinance institutions and online education platforms for the poor, to low-cost sewerage systems in congested rural communities and job placement platforms for the disabled. Its sustainable and scalable business models have directly affected the lives of more than 10 million people across seven countries in the Arab world.

For the GCC states, this is a time of opportunity. Business leaders across the six Gulf countries have worked unceasingly to ensure that our markets play a vital role in the global economy, and that the cornerstones of this vision embrace the values which from time immemorial have been part of our collective consciousness: respect for life, human dignity and worth; responsibility towards future generations; and protection of our habitat.

The time is now ideal for the GCC’s uniquely placed markets to lead this new business culture across the wider Arab world. Our domestic talent pool, our exposure to international standards of best practice, and the vision of our leadership are ideally qualified to drive positive change within our business communities, and across the region.

About the writer

Badr Jafar, managing director of Crescent Group, is a leading Emirati businessman and philanthropist. His charitable projects include founding the Pearl Initiative, a venture with the UN Office for Partnerships to promote corporate accountability in the Middle East, and launching the non-profit Middle East Theatre Academy with the US actor Kevin Spacey.