Austrians Promote Social Entrepreneurship in Africa

Two Austrian-led organizations ask whether social entrepreneurs in Africa can combat the world’s “wicked problems” any better than development NGOs

Amaphiko Connect South Africa
Social entrepreneurs at Amaphiko Connect South Africa present their projects at the Johannesburg event on May 21, 2016. // © Wayne Reiche / Red Bull Content Pool

In the charming 2013 documentary Bring the Sun Home illiterate mothers and grandmothers leave their remote villages from South America to Nauru to train as solar engineers at the Barefoot College, an NGO in India. Their mission? To provide light back home. Empowered by their special knowledge, the women travel from village to village, installing lights in homes for years without electricity. “To see children happy, that makes me very happy,” says engineer Maura, grinning under her wide-brimmed Peruvian hat.

“Wicked problems,” coined in 1967 by social scientist C. West Churchman,  have been knotting brows at universities and think tanks for decades. Wealthier nations’ urge to help the less fortunate is equal parts altruism, defensive strategy and ex-colonial guilt. “If we can help create economic opportunities rather than investing in big boats to intercept migrants and send them back home, we can reduce not just the flow of migration, but also terrorism, youth unemployment, diseases, and much more,” said Marcello Schermer from his Seedstars World office in Johannesburg – the regional Africa office for the Swiss Seedstars investment group and Seedstars World Global startup competition co-founded by Alisée de Tonnac. “We can hit so many birds with one stone, rather than just battling the symptoms of the problem.”

In our new digital revolution, bearded and bright-eyed brains like Schermer’s are applying the same Silicon Valley enthusiasm to self-driving cars as they are to a growing aspect of development known variously as social entrepreneurship, social enterprise, micro-enterprise, social business, human-centered design, and social innovation – commercial businesses, often “grassroots”, that have social objectives such as community development, universal care, or eliminating diseases.

The Seedstars World fund contest offers 1,500 applicants from a network of 35 emerging markets the chance of five funding deals in return for up to 30% equity. The social entrepreneur vibe is, like its media, social and high energy. “On my first trip to Africa,” says Schermer, “when I saw the passion, the drive, and the real positive change that people across the continent were bringing to the table, I realized that entrepreneurship is the key to economic development.”

Thato Kgatlhaye’s project Rethaka was one of the crowd-pleasers when she presented in Cape Town in 2014. // © Luke Daniel / Red Bull Content pool

Baseball Caps over pith helmets

The 54 countries comprising Africa are seen as the next big thing in startups: After war, famine, disease and centuries of underdevelopment, the continent has the world’s  youngest average population Niger’s median age is 14.8 – half the global figure. A mass of young minds to turn in a more positive direction, retraining as coders or “agents of change.”

Universities like Harvard, Oxford and Stanford are churning out innovators eager to apply Post-it Notes and buzzwords to far-flung outposts, such as MEST in Ghana, and the ihub coworking space in Nairobi, one of many hubs raising around $200 million JV capital in 2015. Red Bull’s Amaphiko Academy web channel “promotes and uplifts people making a change in their communities, [and] helps connecting with others and shares inspiring stories about social change.” Amaphiko South Africa’s projects include Rethaka, founded by a 22-year-old entrepreneur who upcycles plastic into solar-powered backpacks.

Thato Kgatlhanye
Thato Kgatlhaye presented her solar-powered bag, upcycled from discarded plastic in 2014. The bags went into production and have been purchasable since 2015. // © Luke Daniel / Red Bull content pool

Growth in African Unstructured Supplementary Service Data (USSD) and Internet of Things (IoT) technology, such as sensor networks, combined with adapting to technological limitations, produces solutions that developed nations can learn from. Hello Tractor is a Nigerian startup that allows rural farmers to share essential equipment without an app, internet, smartphone or credit card. The fragmented market of Austrian farmers who also shun smartphones could learn from this setup for improving independent B2C sales, instead of relying on food co-ops, subsidies and supermarket pricing monopolies.

Disrupting the aid space was long overdue. Traditional NGOs’ six decades of struggling to meet their own lofty Sustainable Development Goals for endless human and natural disasters, led aid programs, such as Britain’s Department for International Development (DfID), to search elsewhere for solutions. The focus in development has shifted to encouraging joint private-public for-profit partnerships, and investing in local enterprise initiatives, which generate sustainable returns from the “fortune at the bottom of the pyramid.” Schermer adds: “Relying on subsidies and charities is not a business model. Subsidies sometimes destroy more markets than they create.” He offers the example of  clothing donations. “The flip side is that textile markets across Africa are flooded with free clothing, making it impossible to produce and sell locally, which destroys an entire industry and potentially thousands of jobs.”

Selam Kebede, associate for Africa Seedstars World, with attendees of the Seedstar Africa Regional Summit in Kigali. // © Seedstars World

Unfair, says Blake Mycoskie, founder of the sustainable shoe company Toms. The brand’s wider strategy strictly avoids disrupting local markets. “Our shoes are being given in very, very rural markets including Haiti and Ethiopia, where families are having to choose between shoes for the uniform or food on the table.” Toms also shifted 40% of its supply chain to emerging countries, such as Haiti and Ethiopia, and diversified into producing other products, such as coffee bags.

Sustainable insourcing

On the downside, a for-profit model – the DfID expects a minimum 12% return – edges dangerously close to allowing governments to cede non-profit, regulated, public development to free-marketeers working more independently in niche markets. The impact investment pioneer Antony Bugg-Levine calls social enterprises “second-best solutions” that exist only where public programs, for instance for clean drinking water, electricity or WiFi, have failed or never took root. Innovators should be proof-of-concept pioneers, encouraging local governments to produce public models.

Attendees pose for a photo op after three days of talks, pitching, networking and finding customers and funding. // © Seedstars World

William Easterly, in The Tyranny of Experts, warns of prioritizing technological over much-needed social change, in human rights, gender equality, fair working conditions and wages. Development statisticians like the late Hans Rosling have encouraged the view that the world is becoming more equal, which some social entrepreneurs have seized on to shift focus away from aid and empowerment. But rebranding the developing world as “emerging markets” will not prettify children earning 12 cents an hour – no matter how hip or innovative the product.

Classic development, based on aid strategies, and big bank deals, such as the new Chinese-backed $4 billion electric railway from Djibouti to Addis Ababa, has its place, as does social entrepreneurship, reframing the development debate from aiding victims to self-actualizing new players in the global market. Training the women of the Barefoot College with technical knowhow normally reserved for men, spreads know-how at the most basic grassroots level, and required no apps, boot camps or Y Combinators, and changed gender power structures for the better. People, not profit, solved a “wicked problem” for themselves.

Critical to truly sustainable development, success may be tempering the tech investors’ zeal to produce incremental innovations that are faster, better, cheaper, to a truly fundamental shift toward smarter, kinder, lasting.

Andrew Standen-Raz
Following studies in Anthropology at UCL, Film at NYU Tisch School of the Arts, and Law at Loyola, Andrew worked for Miramax Films, 20th Century Fox Studios, and won two awards as a public relations counsel at Ruder Finn. After seeing the US political system from the inside while working for the VOA at a Democratic & a Republican political convention, Andrew returned to Europe to make documentary films, including "Vinyl: Tales from the Vienna Underground", which premiered at Karlovy Vary. He is currently curating for a film festival, developing new film projects, and developing an organic food app

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