The study finds that social enterprise development remains stymied by lack of policy reform, investor disinterest as well as limited access to social entrepreneurship ecosystems for low-income and rural populations.

BEIRUT (Triangle News) — The development of social enterprises across countries in West Asia and North Africa is being hindered by a lack of serious policy reform, investor disinterest, as well as limited access to social entrepreneurship ecosystems for lower-income and rural populations, a new study says. The study entitled “Social Enterprise Development in the Middle East and North Africa,” was published by the entrepreneurship platform Wamda and conducted by Triangle Research, a subsidiary of Triangle. The study covers Lebanon, Jordan, Egypt and Palestine and consists of interviews, case studies a mapping of social enterprises in each country. A total of 22 enterprises with financially sustainable models and work in education, healthcare and environmental sustainability where interviewed, in addition 9 enterprise development support organizations.

“Our study shows that beyond a small segment of mainly urban entrepreneurs that have access to capital, higher education and support infrastructure, there remains limited scope for enterprises with a social mission to succeed,” said Sami Halabi, Director of Knowledge at Triangle and lead author of the study. “This reality is but a by-product of the interplay between government inaction over enterprise development reform as well as the preference of investors and support organizations to focus on more traditional or established sectors.”

The study finds that lack of a coherent legal regime to encourage growth among social enterprises means those enterprises must compete directly with purely profit-oriented businesses that need not generate social returns on the one hand (beyond tax revenue and employment), and non-governmental organizations (NGOs) that need not generate financial returns on the other. Accordingly, this overarching context is compounded by the challenges ranging from access to talent, lack of entrepreneurial awareness, narrow pathways to funding, and difficulties around registering enterprises.

For their part, the majority of social enterprises which took part in the study did not have concrete mechanisms to define, track and measure social im­pact, due to a lack of resource capacity or skills. The lack of interest in social enterprises among many institutional investors also means many these enterprises are becoming dependent on donor revenue, agendas, as well as funding and reporting priorities. In turn, donor dependence is brewing a lack of sustainability because social enterprises focus on “achieving shorter-term objectives rather than invest­ing in longer-term sustainability, performance and efficiency,” the study states.

Enterprise development support organizations were also found to be even more dependent on donor funding and agendas. Relatively few report placing particular focus on social enterprise development, and rather treat social enterprises much like other enterprises they work with. In addition, “coordination of support services and the establishment of candidate pools to share access to potential entre­preneurs did not appear to be in place during the re­search,” the study states. “SE support organizations complain that some members of the support ecosystem are territorial about the candidates and SEs they support.”

“While there is a need to reform the regulations and support mechanisms, social entrepreneurs should not merely wait for these to come to fruition,” said Halabi. “So they may productively contribute to the alleviation of social ills across the West Asia and North Africa region, aspiring social entrepreneurs need to become their own advocates through lobbying government, donors and support organizations to implement a holistic social enterprise development infrastructure that addresses the issues highlighted in our report.”

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