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My Say: Five spices to heat up the social enterprise scene

May 24, 2022
The Edge Markets
5 mins read

This article first appeared in Forum, The Edge Malaysia Weekly, on May 23, 2022 - May 29, 2022.

My Say: Five spices to heat up the social enterprise scene

I recall very clearly the sense of trepidation and shock I felt when I was forced to shut down the physical operations of Masala Wheels — the food and beverage social venture that I co-founded — at the start of the Covid-19 pandemic. My heart sank: there were so many people who relied on our restaurant and food truck for their livelihoods.

We lost 90% of our revenue — revenue we rely on as a social enterprise that empowers and provides support for underprivileged and underserved communities and at-risk youth.

The pandemic hit everyone hard, and social enterprises were not spared. But the reality is that even before the pandemic, social enterprises have been shunted aside in recent years by the push for technology, innovation and commercialisation.

Back in 2015, the Social Enterprise Blueprint (2015-2018) was aimed at raising awareness in Malaysia about social enterprises, leveraging them in a social innovation model that could address some of the country’s pressing socioeconomic issues.

At that time, the Malaysian Global Innovation and Creativity Centre (MaGIC) was the anchor agency that monitored the implementation of the Blueprint, allowing the social enterprise ecosystem to grow and flourish. However, with the recent merging of MaGIC with Technology Park Malaysia to form the Malaysian Research Accelerator for Technology and Innovation (MRANTI), there has been a greater focus on improving the country’s commercialisation rate, thus leaving a void in the development of the social enterprise ecosystem.

Commercialisation of technology is well and good, but what use is technology if it’s not accessible to all?

Enter the social enterprise: Social enterprises are cause-driven businesses that equally prioritise people and profit, channelling revenue and profit back into its cause so as to be sustainable, with a working business model that funds its initiatives for social good.

The spirit of the social enterprise, in my opinion, must be kept burning.

So, when the Social Enterprise Action Framework (SEAF) 2030 was launched recently by the prime minister, I had high hopes. The main theme of the SEAF is mainstreaming social enterprises and normalising social impact, contributing towards an inclusive, balanced and sustainable nation. In this regard, that is consistent with the 12th Malaysia Plan which also acknowledges the role of social enterprises in nation building.

With five strategic thrusts, 20 strategies and 45 initiatives, it is a hefty tome, one that I hope will see us through until 2030, but the reality is, there is still much wanting in this picture.

Spicing things up

The SEAF has, without a doubt, outlined good strategies and also key enablers to achieve these strategies, but there are five “spices” that will help social enterprises keep going, and help to enable social enterprises to contribute more effectively to social and economic growth in Malaysia.

First, there needs to be a follow-up process and attention to the accreditation of social enterprises. While this accreditation framework was initiated in the previous Blueprint, the enhancement of these accreditation measures was not addressed in the SEAF — not directly.

It is imperative, I feel, that this accreditation system be addressed quickly, as it would be critical for social enterprises to achieve social and economic equality among the beneficiaries that they impact. Currently, according to the Ministry of Entrepreneur Development and Cooperatives, there are 414 registered social enterprises in Malaysia, of which 48 are accredited, but this needs to be further scaled and accelerated to achieve the critical mass the SEAF promises in its objectives.

Secondly, the importance of a robust governance structure cannot be overstated. The details of this governance structure remain vague at this point of time; a Social Enterprise Council is said to be in the works to provide a transparent and systematic monitoring mechanism. Since 2018, there have been advocacy efforts for an independent council, equally represented by policymakers and practitioners, to be established and we hope it comes to fruition with the SEAF.

Third: Cross-ministerial collaboration with clear demarcation of the roles and responsibilities in achieving these goals would be needed as well. The role of key stakeholders and intermediaries, both from the public and private organisations, is equally important in building this ecosystem.

Fourth: There needs to be a clear impact measurement framework and constant gap assessments conducted on a year-to-year basis, with involvement from all stakeholders — both top down and bottom up — folding in feedback from social enterprises with good leadership from both the Prime Minister’s Office and also the minister’s office. In the United States, President Barack Obama established an Office for Social Innovation during his administration. Only with leadership from the highest office of the nation would we be able to see progress in both social and economic impact towards achieving the United Nations’ Sustainable Development Goals.

Fifth, but not least, is a central coordinating agency to bring all these “flavours” together.

In order for the SEAF to be a success, we need to acknowledge that for years, the ecosystem for social enterprises has been fragmented.

One of the key successes of the first Social Enterprise Blueprint (2015-2018) was that MaGIC was appointed the anchor coordinating agency. However, since 2019, and in the past three years, there has not been a clear “go-to” agency for social enterprises.

MaGIC itself had been placed under different ministries — first under the Ministry of Finance (in 2014), then the Ministry of Entrepreneur Development and Cooperatives, followed by the Ministry of Science, Technology and Innovation. Under Mosti, its purpose shifted to be more focused on technology and technical issues rather than on social entrepreneurship.

This is why having a central coordinating agency would be critical in achieving the goals, strategies and milestones identified in the SEAF. It would be even better if such an agency is operated independently by experienced social entrepreneurship practitioners and intermediaries while being supported by the government, with a proper governance structure.

What’s next?

The challenges facing social enterprises have been ongoing; many social enterprises lack support from financial institutions and sufficient security to scale their businesses, and there is little support for business development to go beyond local, regional or even to enter the international arena.

Social enterprises also tend not to have market access, offering equal opportunities just like any other small and medium enterprises, where social enterprises are able to tap into the full spectrum of the supply chain.

Social enterprises also do not get enough attention or help with the adoption of technology and innovation in terms of scaling the impact of social enterprises, unlike other profit-driven technology companies.

It is a good thing that the SEAF has acknowledged these challenges, and will strive to fix them.

But the goals are ambitious indeed.

The SEAF aims to have social enterprises provide 47,000 job opportunities by 2025, from 5,000 social enterprises. The government further intends to grow the social entrepreneurship ecosystem up to RM1.3 billion worth of procurement from government and industry by 2025.

It is no small feat to achieve this, and there is a long journey ahead. The first steps have already been taken, but it will take policy leadership, stamina and willpower if we are to truly help social enterprises burn brightly for the good of the people.

Kuhan Pathy is a multiple award-winning social entrepreneur, co-founder of the Chamber of Social Entrepreneur Development, chair of Catalyst 2030 Malaysia, and president of the Social Entrepreneur Development Association. He co-founded Masala Wheels — an integrated F&B social business to empower underserved communities — and led it through Malaysia’s first private acquisition of a social enterprise.

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