Start me up - social enterprise in the Middle East

Social enterprise – applying business tenets to a social mission – is an evolving concept with few defined parameters. We speak to a handful of social entrepreneurs for whom it’s all about the double-bottom line: generating revenue that allows them to keep on creating long-term social value

David Munir Nabti, AltCity (2011)

As AltCity’s CEO or ‘mayor’, David Munir Nabti presides over an Alternative City of entrepreneurs, innovators and start-up enthusiasts who convene at Beirut’s only socially-focused start-up hub.

“One of the most common complaints in the region and Lebanon is that people who are trying to do innovative, entrepreneurial things don’t have a community of like-minded people to share with or support as work partners,” he says. With up to 60 people a day using AltCity’s café alone, the hub provides rooms for events, meetings and workshops at discounted rates for entrepreneurs who pay anything from $20 a month for café membership, to $200 a month for a locker, internet access and desk from which to work from 9am to midnight. Events and membership fees generate income for AltCity, with grants supporting the rest of their work.

Around 20 people use AltCity as their primary workspace on a daily basis, people who otherwise would not have the infrastructure to run their business. “We try to provide a good, solid place for people to work that has consistent internet and electricity,” notes Nabti. “Which is difficult for us because those things are challenging here.”

AltCity has held more than 700 start-up support programmes since 2011, helping businesses to become more competitive regionally or globally. Providing support services to any business starting out in Lebanon is a valuable contribution, says Nabti, because of the lack of job opportunities and subsequent brain drain.

“Beyond that, we provide additional support to those start-ups that have a social impact. We help with legal registration, business development and connect people to investors or possible funders,” he explains.

And it doesn’t stop at helping businesses to get off the ground – social enterprises that are scaling up often need different support services, he explains. “Frequently there are issues around internal governance and management,” says Nabti. “Accounting can be done very simply at the small stage – using Excel or online spreadsheets – but when you start scaling-up and preparing for investment or loans, you need a more robust method for monitoring finance and cash flow.”

Now, AltCity is looking beyond Lebanon at partnerships between start-up hubs across the region, to boost learning and draw on particular strengths in each country. Nabti believes AltCity’s services would be just as valuable in Dubai and Doha as in Beirut or Cairo. “We see great opportunity for social impact start-ups coming out of Egypt, but there is less in terms of financial resources than in Qatar, for example,” he explains. “But in Dubai or Qatar, they also need the creative and business development support.”

Curt Rhodes, Questscope (1988)

Curt Rhodes knows a little about the challenges facing young people in the Middle East and North Africa (MENA). Since arriving in the region more than three decades ago, the veteran social entrepreneur has helped more than 200,000 school dropouts and disadvantaged youth in MENA find educational opportunities and a place in society, through alternative schooling and youth engagement programmes.

“When I withdrew from my academic responsibilities [in 1981] I couldn’t find an organisation that I wanted to work for, so I founded Questscope,” explains Rhodes. “Our motto is putting the last, first. I want to join people in their journey to make their own lives better.”

Questscope has worked with many partners to fund its youth and education programmes, from the Jordanian Ministry of Education and UN agencies to private benefactors. The organisation takes a slice – from 10 to 25 per cent – of the project’s funding as its revenue, to keep Questscope sustainable as a social business.

Speaking the same language as investors, however, is a challenge for social entrepreneurs when all they want to do is start solving a societal problem, says Rhodes. “A good social entrepreneur generally needs a good translator. Social entrepreneurs look at a concrete wall and think, ‘There needs to be a hole in that wall’ and then push their heads through it. Not everyone is willing to push their head through a wall. I work harder at each stage to attract people by the evidence of success. The biggest underlying factor is that investors are looking to benefit too; you need to pull them into a conversation.”

Based in Amman, Jordan, Rhodes and his 41 staff now work across the region, including with youth in Lebanon, Syria, Iraq and Yemen. Since 2004, his dedicated team have given 10,000 Jordanian school dropouts a second chance to reach end of secondary school-level education.

Rhodes sounds a warning about the scale of the education crisis ahead that will have an impact on employment and social inclusion, particularly in Syria. “Social entrepreneurs can survive; we can create enough of a business to do a nice project. But the scale of what has to be addressed is way beyond the capacity of any one group of 10 or 100 people,” he explains.

Rhodes advocates collaboration and a fresh approach to solutions as the only way to foster the social returns necessary in the region. “It’s like Arab Idol with entrepreneurship – competing to win a little slice of the pie for that problem. It’s the wrong atmosphere for social entrepreneurship; it has got to be inclusive, not competitive,” he says. “If social, high impact investors don’t have the breadth of vision that matches the size of the issue, then we will continue to do tiny little things. The thinking and awareness of scale needs to be different. What worked for the 20th century won’t work for the 21st century.”

Khalid Al-Khudair, Glowork (2011)

Few took Khalid Al-Khudair seriously when he announced that he planned to launch a website that would help women find jobs in Saudi Arabia. Three years later and it is the former KPMG man – and the 11,000 women he has so far helped to find employment – who are having the last laugh.

His company, Glowork, now has a database of more than 1 million women and is endeavouring to bridge the yawning gap between highly educated females, and the labour market. “The most important thing for me was getting the employers on board,” explains Al-Khudair. From 30 companies in the first few months, General Electric, Shell, IBM and Cisco are now among the 180 firms hiring Saudi women through Glowork.

Last year Glowork secured investment worth $16m from Saudi telco SAS Holding. Al-Khudair says that he and his fellow founder, Jamal Al-Mansour, turned down several approaches before accepting the SAS deal. Other would-be suitors were not the right fit, he explains, with one wanting to make Glowork a purely for-profit business. “I am totally against charging the end-user, our job seekers. We don’t charge the women, that would kill the social aspect of it.”

Yet making a profit is still an integral part of this social enterprise. Glowork gets SR5,000 ($1,333) per hire from companies and a further SR2,800 ($745) from the Ministry of Labour, an ultimate saving for the government which spends $10bn a year on the unemployed. “We incur a lot of fees as an organisation. We went from three employees to over 35 and we expect to hire another 40 by the end of the year. We couldn’t do this if we weren’t generating proper revenue,” Al-Khudair notes.

The SAS deal gave the investor a 51 per cent stake, but the social vision is a fundamental pillar of the agreement, says Al-Khudair. “You have to make sure you keep to your vision. For me, that is: how many women am I going to get into the labour market this year? This is the ultimate goal, not the financial one.”

Al-Khudair advises other budding social entrepreneurs to think long-term, and to think big from day one. “My definition of an entrepreneur is someone who looks at a gap in the market and tries to fill it,” he suggests. “A social entrepreneur, on the other hand, is someone who looks at an obstacle in the market, and makes it into an opportunity.”

Kamal Mouzawak, Souk el Tayeb (2004)

It started small, with just 10 farmers selling their produce at a garden show in Lebanon. Ten years later, the small seed of a social enterprise has grown into Souk el Tayeb, which helps around 100 stakeholders – farmers, families and cooperatives – to combine food and farming, generating income for producers and preserving the dignity and cuisine of Palestinian and Syrian refugees in Lebanon.

Tayeb, meaning good, tasty or good-hearted in Arabic, is the brainchild of Kamal Mouzawak, himself a farmer’s son. The organisation has evolved from its early roots as a place for rural producers to reach a bigger, urban consumer market, to a human development project. There are weekly markets, food festivals, a shop and a restaurant. “It was never a planned expansion,” says Mouzawak. “We started asking farmers to do more and better in terms of food quality, taste or packaging. This is when we really understood the importance of capacity building.”

Souk el Tayeb generates income from the $25 fee that each farmer pays per day for his or her stand at a weekly farmers’ market, a fee that has remained unchanged in 10 years. This covers the cost of the market and some of the organisation’s capacity building efforts, which include workshops open to all members, and one-on-one consultancies to tackle farmers’ specific problems. Guidance is given either by a member of the Souk el Tayeb team, or an outside consultant, and donors such as the ILO and UNHCR, make up the rest of the programme’s funding.

The initiative has expanded to train women from Palestine, Syria, Sri Lanka, Madagascar and Cameroon, so that they may cook and sell their traditional dishes in Lebanon.

“We are a people-to-people project and enhancing people’s skills is the most important part,” says Mouzawak. “That’s the difference between being a supermarket and a development partner. For us, capacity building is at the core of what we do.”

As well as increasing economic returns for the farmers by selling more of their produce, Mouzawak notes there are social returns too in terms of boosting self-esteem. “It is important for producers to be in direct contact with, and recognised by, consumers. It’s about understanding that they are as important to society as anyone else, not at the bottom of the social pyramid.”

Najla Al Midfa, Khayarat (2014)

After stints at Shell, Google and McKinsey & Company, Najla Al Midfa decided in autumn last year that she was ready to take the plunge into social entrepreneurship. There are just 20,000 Emiratis employed in the private sector out of a possible 4 million jobs in the UAE, Al Midfa says, and with 30,000 unemployed Emiratis she recognised a gap that needed to be bridged.

She has since established Khayarat, an online platform dedicated to raising awareness of non-government job opportunities among promising, young Emirati graduates, and to training those young people in the skills they need to work and succeed in the private sector. Still in the pilot phase of her business, training 10 Emirati students, Al Midfa hopes to launch fully this coming summer.

Leaving a well paid, senior job was a difficult decision. Al Midfa’s family, too, was sceptical. “I found myself having to justify my position over and over again,” she says. “It’s a social enterprise – not a business you can physically see, like a restaurant – and for them it’s a noble cause, but they said ‘Why don’t you do it on the side? Don’t leave your job for it’. But I kept thinking to myself, if not me, then who?”

With her parents on board, Al Midfa has already recognised the need to adapt her initial business plan to overcome unforeseen hurdles. “My initial thought was that it would be supported by venture philanthropy or CSR,” she explains. “But actually it’s about talent acquisition and management. So I moved from there to wanting to do it as a for-profit business.”

Investment in social businesses has lagged behind funding for purely for-profit enterprises, says Al Midfa, although it is only in the last five years that people in the region have started to even consider entrepreneurship as a viable career option. From her perspective, while early stage investment is available to entrepreneurs in the region, growth capital is harder to come by.

The commercial viability of the enterprise is important for sustainability. “I’m hoping that companies will pay to have a page on the platform knowing that it will attract a lot of Emirati eyeballs,” says Al Midfa. Fees from multinational companies will form the primary income stream; students will not pay. Khayarat will provide ‘soft skills’ services such as help writing CVs, preparing for interviews and, importantly, helping students engage their parents on the realities of working in the private sector: for example, late nights or foreign travel.

Running the business on her own is tough. “It helps to have a team,” notes Al Midfa. “I have friends I can brainstorm with, but it’s different if you have a full-time co-founder with complementary skills who can add value.” And she has a warning for potential start-ups: “You have to be obsessed by the idea. It’s only when you start the journey that you realise how difficult it is.”