Indian, African social enterprises need to share more new services, products

by Nita Bhalla | @nitabhalla | Thomson Reuters Foundation
Monday, 14 April 2014 14:24 GMT

Vendors use solar powered lights, now spreading to rural regions hampered by lack of electricity, at an evening market in the western Indian city of Ahmedabad. Picture September 10, 2009, REUTERS/Amit Dave

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Essential for social enterprises in India and Africa to exchange new ideas and products, to bring the benefits of economic growth more quickly to their millions of poor, social venture capitalist says

NEW DELHI (Thomson Reuters Foundation) - Indian and African social enterprises are not fulfilling their potential and should do more to share new products and services to help improve the lives of the poor, the head of a multi-million dollar social venture capital fund in India said.

India has the largest number of social enterprises in the world, many of which are finding new ways to solve development problems in sectors such as agriculture, health, education, water and sanitation and housing.

Experts say the historical and cultural links between many African nations and India mean there is great scope for social businesses on opposite sides of the Arabian Sea to join forces to tackle similar social problems.

"The exciting thing about both India and Africa is the number of young people who want to be social entrepreneurs,” said Sachin Rudra, India director of Acumen, a major impact investor in Africa and India.

“Twenty years ago, young educated people would choose to go into traditional government jobs, or the usual professions. That is changing," he said. "However, the number of Indian social entrepreneurs going to Africa and vice versa is still small. I don't think it's a steady, well-oiled flow of these ideas which is happening."

Development experts say that both India and many African nations have found it difficult spread their strong economic growth to their millions of poor. Social enterprises have the potential to help the poor benefit from such growth.

Rudra, whose capital fund has invested over $70 million in social enterprises in both regions, said social enterprises faced numerous challenges when moving into new territory, including a lack of understanding of the new markets, with different consumers, languages and ways of doing business, and different regulatory systems.

Rudra was speaking on the sidelines of the Sankalp Unconvention Summit in Mumbai, where hundreds of social entrepreneurs gathered last week to showcase products such as clean cooking stoves, solar lanterns, and more efficient irrigation tools for low-income rural and urban communities.

Experts say there are currently more Indian entrepreneurs working in Africa than vice versa, largely because entrepreneurship is much more established in India and this makes it easier for investors like Acumen to find firms that can use the funds they provide.

But Rudra said Africans have many new ideas and products that India could learn from.

"To say that innovation is a monopoly of India in this sector would be very short-sighted," he said, citing African companies which focus on financial inclusion, like Kenya's M-Pesa and Nigeria's Pagatech . "They do outstandingly good work and that doesn't exist in India pretty much at the moment. You could well have a company like M-Pesa which could bring that innovation here."

Organisations like the Britain's Department for International Development (DFID) and USAID have set up the "Millennium Alliance" which aims to help Indian social enterprises expand their networks at home and abroad.

The alliance plans to provide innovators with technical assistance in the form of services such as seed funding, grants and networking opportunities, and to foster an exchange of knowledge with other firms in similar positions.

Rudra said he welcomed any support for social enterprises, adding it was essential that new development ideas be shared.

"Innovation needs to travel both ways and if funds like Acumen, which work in both geographies, can act as a bridge and cause the traffic to go both ways, we will have achieved what we hoped for."

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