What is impact entrepreneurship?
Impact entrepreneurship refers to the organisation of factors of economic production- ideas, effort, networks, labour, capital, land, machinery- towards solving a social and/or environmental problem for a neglected population of people, animals or nature in a manner that generates measurable financial returns, social and/or environmental impact.
Examples of impact entrepreneurs include:
- Diwala: A blockchain platform that helps refugees validate the skills they have towards waged employment
- SheKab: A carpooling platform that enables women take safe rides especially in regions where rapes and abductions are high
- RxAll: An AI platform that enables patients in countries with high instances of fake medicines determine the quality of their medicines in order to avoid death
5 key features common across these examples and which is important in assessing if a venture is impact entrepreneurship include-
- Clear and stated impact objective: which is aimed at helping people, groups or populations (human, animal, plants) to achieve a better outcome than they currently face and which they cannot currently solve by themselves effectively, using exiting solutions
- Use of leverage to achieve cost-effective scale: including the use of any or all of technology, networks, public policies, capital etc. in order to catalyze a change in behavior in target groups that will lead to the desired impact objective
- Clear effort to ensure that target populations can access and afford the solution: using technology, capital, networks,innovative operations and scale economies in delivery that ensure affordability and access for the target beneficiaries
- Financial returns: that may be achieved at below, equal to or above market rates in a manner that ensures that the targeted beneficiary populations have access and can afford the solution while catalyzing reinvestment to achieve depth and breadth of impact.
- Measurable impact goals: tracking the depth and breadth of impact with actionable insights that can be implemented to achieve scale
Depth of impact: how much does the solution change the lives of those it is designed for Breath of impact: how many people are positively impacted by the solution
Why Impact Entrepreneurship is important in Africa
Africa has a population of ~1.2 billion people. Africa’s GDP (a measure of economic output) increased 5% between 1995-2005. The rate of this growth has slowed and is expected to be 3.2% in 2018 (WorldBank). Note that most of this growth is driven by services and commodities export. This type of growth essentially benefits the professional middle/upper classes, expatriate professionals, politicians, cronies of politicians and corporations- essentially the already privileged. With high levels of corruption, any benefits that should come in as income taxes to the government tends to be lost, making these groups even richer as a result and promoting social inequality. Witness the high number of people from Africa in these social groups in the Panamagate Papers and the stealing away of income tax by corporations of up to $68 Billion every year. Note that Africa receives $19 Billion in aid annually. As a result of these factors, Africa’s GDP growth is non-inclusive and there are more people living in poverty now than 30 years ago. Today, 430 million people live in extreme poverty in Africa versus 200 million people in 1981.
Compare this sorry state in Africa to China.
In 1978, China began to pursue market reforms focused on social impact. Their economic policies were aimed at providing waged employment to their large population. They pushed for localized investment especially in manufacturing (i.e. investment that traps technology and economic returns) and exports. China has a population of 1.3 billion people. Its GDP grew 10% annually from 1981 to 2017. It took 800 million people out of poverty. China met all the millennium development goals by 2015. In 1981, 88% of its population was in poverty. In 2018, 2% of its population (i.e. 30 million people) lives in poverty. By 2020, no Chinese is expected to be living in poverty.
Africa has prioritized financial focused market reforms. China prioritized social impact focused market reforms. The difference in poverty reduction is clear. With similar size in population, China has no one falling into extreme poverty, while Africa drops 5 people into extreme poverty every minute.
Because of state capture by foreign corporations and kleptocracy in government, Africa’s political system is not designed to solve social problems and the sad trajectory willnot end using current market oriented policies. Pure market interventions in Africa mostly aim to create local monopolies and enrich state cronies. Foreign aid on the other hand distorts local markets preventing commercial development of locally adapted solutions, offshoring the bulk of the aid value chain and making Africans into unemployed dependents. Even worse, it robs the African people of self belief in their ability to innovate their own solutions and makes them mental slaves always ‘extraverted’ for the next foreign intervention.
Given these unique factors, Impact Entrepreneurship or what we can define as capitalism with heart is what Africa needs to solve its myriad social problems. Africa’s young people need to begin to steer towards capitalism with conscience for the common people, their communities and environment. Africa’s youth should stop idolizing predatory capitalists who have made their wealth off state capture and promoting self-aggrandizing industrial policies. Africa’s youth should begin to work on social impact ventures that solve widespread social problems that have been neglected by the political elite.
There are a number of challenges that impact entrepreneurs can begin to solve on the continent as follows:
- Improving Africa’s GDP growth rate through vocational education in order to solve widespread unemployment:
Africa is human rich but capital poor. We need to empower our human resources so they can improve their productivity and localize more of the world’s wealth in form of wages. Some impact entrepreneurship ideas include-
- Training young Africans in tech and exporting manhours: Some impact entrepreneurs doing this include Andela and Gebeya
- Training young Africans in modern organic agriculture and exporting ‘collectivized’ produce
- Training and organizing mining communities to carry out sustainable small scale extraction activities while securing direct access to international end buyers to assure good prices
- Setting up vocational centers that train young people in cultural style textile and machine parts production for export and local markets
2. Improving Africa’s nutrition, healthcare and access to food:
There are too many hungry and undernourished people in Africa. Too many people die of trauma due to limited emergency care. Some impact entrepreneurship ideas include:
- Setting up food shelters where restaurants, farmers and people can donate excess food
- Teaching women and girls the nutrition pyramid and how they can cook and combine local meals to ensure that all nutritional classes are available to their families
- Mass education programs that teach people to reject western style diets of soda, sugared drinks and inactivity while emphasizing what is best of local cuisine and physical activity
- Setting up garden parks where young people can appreciate nature, socialise, play physical games and explore their innate creativity
- Teaching people to set up and farm home vegetable gardens and setting up community farmer markets where they can trade their surpluses
- Teaching public road safety officers and the general populace how to administer emergency care to accident victims
- Setting up a platform that enables passerby alert first responders and close by hospitals to accident victims in order to ensure help comes ASAP
- Setting up a platform to order ambulances
- Setting up network of emergency care clinics
- Setting up crowd sourcing platform that helps the destitute pay their medical bills
3. Improving Africa’s Physical Infrastructure:
Africa’s cities are growing and the continent is urbanizing at a rapid rate. Current physical infrastructure planning prioritizes those with wealth and who own their own cars and can afford to own property near the commercial centers. Some impact entrepreneurship ideas include:
- House pooling that enables working people rent rooms in apartment complexes close to the city center on a per day basis
- Redesigning houses close to the city centers into pods to enable the housing of more people who would pay rentals on a per day basis
- Developing new building materials such as mud-based inputs etc. that reduce the cost of property construction and enables more people afford their own homes
- Creating a platform that helps to crowdsource long term finance that can be offered to people as mortgages in order to improve access to home ownership
- Create a platform that reports infrastructure problems such as road potholes etc. to the appropriate government official and names and shames them based on their responsiveness
- International bond issuance platform that helps communities fund raise for local infrastructure development
- Car pooling so that people can afford mobile vehicular transit
- Mass transit pooling to enable people find and travel in mass transit vehicles
- Platform to help city planners crowd source ideas that improve pedestrian mobility
- Platform to report traffic rule offenders
- Platform that helps city planners rate the livability of their cities per district vs. global benchmarks
4. Making Africa’s Political Class accountable:
Corruption has been the bane of Africa. Africa’s type of corruption is especially damaging because it is built on the premise that the average African is dispensable. The political class perpetuates this notion in conjunction with its capitalist cronies- local and foreign. Unfortunately without a political system built to take of the people, Africa will remain in a state of perpetual extraction. Some impact entrepreneurship ideas include:
- Crowd sourcing platform that helps raise money for vetted political candidates with a community organizing track record
- Platform that helps the public track public income, allocation and distribution. Budgit does this.
- Platform that helps track public projects, amounts disbursed and the level of project performance vs expected in a way the names, glorifies or shames stakeholders
- Platform that enables anonymous reporting of public officers who abuse their position in whatever form
- Platform that tracks and reports private sector corruption of public office holders
- Platform that pools lawyers to sue public office holders for misconduct while crowdsourcing legal fees
These ideas are not exhaustive but they go to show that while Africa does have a lot of social problems, the continent needs a new type of capitalism and capitalist leaders. Africa’s social systems need to understand and promote impact entrepreneurship as against the current widespread predatory capitalism in practice. More young Africans need to become Impact Entrepreneurs, carrying out capitalism with heart and a focus on solving social problems.
Impact entrepreneurship will ensure a new generation of African business leaders who uplift their communities and in the process uplift themselves. A new Africa is possible through entrepreneurship with heart.