Press release from ENSIE, the European network of Social Integration Enterprises, an associate partner in the Social Economy in Higher Education project
EU Ministers for employment and social affairs have now started to see the importance of social economy. Discussions on social economy took place for the first time in July at an informal meeting in Milan of the EPSCO Council, under the Italian Presidency of the Council of the European Union.
The Council, the European Commission, Member States representatives, social partners and the Social Platform shared their points of view on the social economy, the opportunities it offers and how it needs to be developed.
Mr Poletti, Italy’s Minister for Labour and Social Policies, and Mr Andor, European Commissioner for Employment, Social Affairs and Inclusion both stressed the increasing importance of the social economy sector, especially in this period of crisis. They stated that social economy has positive effects on social cohesion, inclusive growth and on reaching the EU 2020 Strategy headline targets.
Several speakers thanked the Italian Presidency for having put social economy on the agenda. Currently, almost every Member State is working in order to create a ”favourable climate” for social economy enterprises. Nevertheless, challenges remain due to the lack of a clear definition for the social economy and little awareness of the sector in some countries. So some Member States are more advanced in the social economy development, but for others, the topic is quite new.
Patrizia Bussi, ENSIE’s coordinator, and member of the Social Platform delegation to Milan in tandem with Heater Roy, Social Platform’s President, underlined the urgent need to make a clear distinction between social economy and corporate social responsibility. They also stressed three other important messages:
· European Institutions must continue the work launched with the Social Business Initiative to support the recognition and development of social economy and social enterprises;
· Member States have to unlock the employment potential of social economy, in particular in the social and health services sector;
· An “ecosystem” for the development of social economy and social enterprise must be created at both EU and national level.
The prospects for the development of social economy at EU and at national level are good. The different European, national, regional and local stakeholders must continue to support this positive process.
This blog has now been running for 18 months It seems a good time to review the most visited posts – those which have received the greatest number of visits and re-tweets. It has been inspiring to receive guest posts from university students and staff and others working for social justice in economic affairs from around the world. Take a look at our visitor map to see where the articles are being read.
These are the top 4:
Charles Hanks report on the Institute of Work and Production (ITP) at the National University of Cuyo, who are on the axis of a growing social and solidarity economy in the Mendoza province of Argentina. In their efforts to make visible the workings of the third sector by drawing together its academic, professional and political elements, they are also managing to make the sector more credible.
As well as teaching and researching about social enterprise and cooperatives, it is important that universities explore ways of practicing the social economy. In the case of cooperatives, these lead to sharing of benefits among their members (students and staff) and the development of democratic decision-making and governance. Other forms of social enterprise can lead to more environmentally and/or socially just and sustainable outcomes. In this article we give some examples of the social economy operating on university campuses.
This post argues that universities can promote a new kind of economic development. It discusses the important role universities can play in supporting social enterprise through its procurement policy. It aims to address the issue of local social enterprises not having the capacity to provide what universities need.
This post draws attention to a social enterprise which offers employment and training to young people in a commercial environment on either a full or part-time basis. It was set up by former Children’s Services worker Gill Walker, who wants to help young people by preparing them for a more successful future. Since the article was posted, Labelled has gone from strength to strength and has opened a franchise shop in Newcastle. We hope to feature this on the blog soon.
We have also had a number of guest posts from students and staff at universities around the world.
Here is the latest from Nairobi, Kenya, where the Sujali Self Help Group (SSHG) are really moving on. It is a photo report from Mary Kiguru who co-ordinates the group and is doing a wonderful job. Regular readers will know that Jacinta bought a cow and pictures were provided recently. We recognize that Daisy is attracting all the attention (rumours that she wants her own television series are unfounded) but the achievements of the other women are also spectacular. They can be immensely proud of their achievements.
Report by Mary Kiguru, Co-ordinator of the SSHG
Click here for previous posts on the unfolding story of the SSHG and their use of microcredits to develop their businesses
Alice currently has 1200 chickens. She is expecting new chicks on August 11, 2014 to build the stock to 1800 chicken. Alice is currently unable to meet the demand for eggs. She is therefore collecting eggs from friends to ensure that she meets the demand. Alice demonstrates commitment to her own business.
Alice’s chickens and the new house for the new chicks
Susan’s stock has continued to grow to include beauty products and basins. She has one employee.
Jacinta in her grocery shop. She now has three businesses in one: the green grocery, the hotel (cafe) and selling milk.
Rispa’s organic chickens. Right photo in the far end is the on- going construction of the greenhouse.
Rispa is a committed farmer. She has been supplying seedlings to other farmers. She has planned to set up a greenhouse to grow tomatoes, spinach and kale targeting the Christmas season. She just took an overdraft of KES5,000 to complete the greenhouse.
Eunice in her tailoring shop. Eunice makes dresses for markets outside Nairobi and on demand. She supplies to such places as Eldoret and Kericho in Rift Valley. She therefore required a loan to meet the demand for her clothes. She has taken an overdraft twice to prepare clothes for the Christmas market.
To meet the demand, Eunice hires tailors from the area who are paid on piece work. This is more economical than having someone on full-time employment.
Elizabeth is the newest member: she owns a salon and would like to borrow KES30,000 to increase beauty products in her shop. Elizabeth joined the group during the August 9, 2014 meeting. The group recommended her based on her commitment to her business. She will have the money after one month – Sept 6, 2014.
But students still campaigning for socially-oriented economics education
The prospects of the social and solidarity economy in France were strengthened last month with the passing of a law that gives financial and political backing to the sector. Since his election in 2012, the country’s socialist President, Francois Hollande, has made such promotion of social enterprise a priority, beginning with the creation of the post of social and solidarity economy minister, until recently held by Benoit Hamon.
Hamon was the man charged with drawing up the new law, unanimously supported by the political left, with those on the right voting against it or abstaining. The law describes the social economy, made up of over 200,000 enterprises and responsible for 10% of the country’s GDP, as a “stable and resilient” business model and is mainly concerned with providing more reliable and greater funding, from both public and private sources. Covering what it sees as traditional forms of social enterprise – mutuals, cooperatives, other workers’ associations – as well as what are described as “new forms”, the law is composed of five key objectives:
1. To recognise the social and solidarity economy as a specific means of business, defining it specifically and legally and establishing a “legal base” for funding specifically targeted towards the sector. The text also makes reference to granting greater importance to social innovation rather than focusing solely on technological innovation.
2. To consolidate the sector’s network, governance and financing, including the creation of “good practice” guidelines.
3. To empower workers to act, including providing them with training in how to carry out a recovery takeover. Organisations will be obliged to inform workers of closure with at least two months’ notice and to try to find a takeover.
4. To prompt cooperative “impact”, essentially with a reinforcement of original cooperative principles in the governance of such organisations.
5. To reinforce the politics of local, sustainable development. The uniquely French PTCEs (Regional economic cooperation hubs) are groups of actors within the local economy working together and the law will encourage their development and give them official recognition in order to guarantee immovable jobs.
On this last point, the government accepts that it is playing catch-up, admitting that local economies have a 20-year head start on the state when it comes to the social economy and it recognises the importance of this experience.
The law makes no mention, however, of combining this backing of the sector with the introduction of more socially-oriented economics education. French pressure group PEPS-Économie (‘For pluralism in economics in higher education’) forms part of an international student campaign (http://www.isipe.net/) to provide a less homogenous approach to economics in higher education, particularly at undergraduate level. PEPS-Éco challenge the lack of “reflexive” teaching that would present students with a broader economic picture and they bemoan the fact that those in charge of the current model are the only ones satisfied with it. AFEP, an association of teachers and researchers, is also calling for more pluralism and even the introduction of new “Economics and society” discipline. It remains to be seen how the recent government steps will affect these appeals for a makeover of practices in higher education.
Microcredits continue to enable Kenyan women to build their businesses.
Thanks to Mike Calvert from York St John University for this update. Please click on the ‘Microcredits’ category on the right to see the previous entries from Nairobi
Readers of the last blog entry will have seen the news that the Kenya women entrepreneurs are going from strength to strength and I promised pictures of Jacinta’s cow. The photos arrived today and I am keen to share them (Daisy and Jacinta’s three boys). I am pleased to say that the funding is continuing to offer social, emotional and spiritual support as well as welcome economic capital to enable the women to fulfil their business potential.
The women report that that, as well as experiencing financial benefits, they are also more confident and sure of themselves. Their standard of living has improved and their partners’ perceptions have changed. The most striking example of a success story is Jacinta who is continuing to diversify from her shop and canteen by purchasing Daisy the cow (I must confess to interfering in the naming of the beast) whose milk is supplying the business, satisfying domestic consumption and is being offered for sale. Other successes include Alice who is currently having difficulty meeting the demand for eggs and is hoping to increase her brood to 1600 (from an original stock of about 500).
A fifth member, Rispa, has joined the group that now goes under the title of Sujali Self Help Group (SSHG) and she is being inducted into the group and hopes to borrow money to enter the organic egg production. Overdrafts are being taken up and this is providing additional short-term borrowing potential. Alice, Eunice, Jacinta and Rispa have all benefitted from these overdrafts and have paid back in full on time.
The key factors in their success appear to be low interest rates (5%), clear leadership from Mary, a strong internal support system and clear business goals.
It is important to note, however, that they recognise the challenges that they face. First of all, they need to stay on track and not over-diversify. Secondly, they must borrow and use the money for their businesses and not be tempted to use the money to address any non-business-related pressures (such as school fees, medical fees or other expenditure). Thirdly, they need to be more sophisticated in their financial management and recordkeeping.
In late August, the women are going to receive training in bookkeeping and financial management so that they can record their earnings and identify where the money is coming from and going to. The women have also drawn up some protocols governing their behaviour and interaction. It even includes fines for late arrival and non-attendance at meetings.
I will visit the businesses in October and report back. In the meantime, if anyone is interested in providing additional funding for the women, I would love to hear from you.
Mike Calvert firstname.lastname@example.org
Research shatters the myth that social enterprises are more likely to fail than traditional start ups
Download full report ‘Who lives the longest?’ by Professor Simon Denny from Northampton University, associate partner in the Social Economy in Higher Education project
The following article is by Abbie Rumbold and is taken from The Guardian
There is a lazy but persistent myth that social enterprises should be viewed with suspicion as deliverers of public services or vehicles for new investment because they are inherently unstable, and risky and on the verge of bankruptcy.
Just how pervasive this myth is was brought home to me when I was negotiating, on behalf of a social enterprise client, with a large private sector provider of public services. The company wanted copious payment guarantees in the contract, because, “social enterprises go bust all the time and we have to protect ourselves”.
My initial reaction was that this was a ridiculous assertion for which there is no hard evidence. One very successful social enterprise, the London Early Years Foundation, has been around for more than 100 years, for example, and now boasts a trading income of £10.4m. But I wanted to test the “conventional wisdom” that social enterprises are innately more precarious business ventures than their private sector equivalents. So I asked Professor Simon Denny, director of enterprise, development and social impact at Northampton University, to compare the longevity of FTSE 100 companies and the top social ventures.
Denny’s research looked at the survival rates, for the period from 1984 until 2014, of the 100 top social enterprises and trading charities in comparison with the top 100 PLCs. He found that the social ventures were not more likely than the PLCs to cease operating or fail to repay investments. In fact, overall, 41% of these ‘competitive third sector organisations’ have endured, compared with 33% of the PLCs.
When you take out the 40 trading charities in the list, and just look at the remaining 60 social enterprises, there was a small but not significant difference between their percentage survivability and that of the PLCS – 31.6% and 33% respectively.
No one is claiming that being a social enterprise or trading charity is plain sailing. There will always be those that fail. But this research shows that giving social ventures tougher contracts than traditional businesses on the grounds that they are inherently riskier, is unjustified and unfair.
The research also found that PLCs are significantly more likely to be acquired by other companies than social enterprises. If a company is bought out, it can affect the focus of the organisation and its ability to fulfil a public sector contract. Social enterprises are far less likely to merge or be acquired by a competitor. It does happen sometimes, but it’s much less common. In that sense, social enterprises are significantly less risky as deliverers of public services.
I hope public sector commissioners will examine this research and lose some of their nervousness about commissioning from social enterprises. This nervousness is reflected in qualification criteria that demand huge financial reserves, thus excluding many social enterprises. As a National Audit Office report last autumn showed, government relies far too much on four big private sector suppliers to deliver public services. This research demonstrates that there are reasons why there should be much more diversity among providers.
Abbie Rumbold is a partner in Bates Wells Braithwaites’s Charity and Social Enterprise Department.
Update by Mike Calvert on the group of women from Nairobi who are expanding their businesses with micro-finance
Those of you who are interested in the fortunes of the Nairobi women entrepreneurs (see earlier posts), will be pleased to hear that things are going well. I thank the readers of the blog for their encouragement which I am sure means a lot to the women and those that support them.
The micro-finance initiative has attracted a fifth member, Rispa and she is following in Alice’s footsteps and rearing chickens and needed the KES20,000 (£150) to ensure continuity of laying by having a second batch of chicks in the wings (pun intended) for when one batch stops laying.
I mentioned last time that the women were considering offering overdrafts short term to maximise the value and usefulness of the money. Three women have taken overdrafts of KES38,000 in total (£250) to be paid back over two months. The women are also working on registering the group so that they do not have to pay taxes.
Jacinta (left) with her husband, Steve with a customer in the shop.
The big news is that Jacinta (who has got the shop and the café) has bought a cow! She did have grand plans for a top of the range model but must have settled for a more modest animal using the proceeds of her second loan. She will now have all the milk she needs and more and will be able to supply milk to others.
I have not got a picture of the cow – I could not go out to Nairobi last week due to the bombings but watch this space. Kenyans are not sentimental about their animals but I have suggested Daisy and this has been given preliminary approval.