As many governments across the Middle East struggle with providing the basic services and necessities, entrepreneurs are stepping up to provide solutions for problems like water and electricity shortages and unemployment.
Known as social enterprises, these businesses focus on providing a positive impact on their sector and wider society. Nurturing such businesses is relatively difficult in the region, as the vast majority of investors have set their sights on high profits and quick turnover.
Anna-Liisa Goggs, along with her business partner Medea Nocentini decided to establish Consult and Coach for a Cause (C3), an incubator focused on social enterprises back in 2012, to help this section of enterprises flourish.
“Social entrepreneurs are no different to other entrepreneurs, they need to have customers, they need to be able to scale and have a good strategy,” says Ms Goggs.
The incubator is small, but buoyed by the plethora of enterprises across the region aiming to solve major social challenges at scale.
To date, C3 has had six iterations which includes workshops, mentorship and advice. The incubator is open to the entire Middle East and North Africa region (Mena) and has worked with the likes of Gaza Sky Geeks in Palestine as well as other accelerators and incubators in Oman and Egypt. It has worked with more than 250 entrepreneurs, 1000 experts and 10 corporate partners since its inception.
Applications for the latest edition have started with focus on enterprises in Oman, Kuwait, Egypt and the UAE. From these, 100 social entrepreneurs will be selected, 20 will be picked as finalists to attend the event in Dubai in February next year, with the remaining 80 receiving webinar support to help them improve. The applicants must be contributing to the UN’s Sustainable Development Goals.
The event, in partnership with HSBC, spans three days of workshops, board meeting simulation and pitching to impact investors for cash prizes. They will also receive 10 hours of one-on-one support from experts over a two-month period. The first-place winner will receive a cash prize of $10,000.
The social enterprise landscape differs across the region. Where some focus on access to clean water and basic education in places like Egypt or Palestine, other parts of the region focus more on improving skillset or tackling the issue of food security, as is the case in the GCC.
“In Egypt you have a huge population and grassroots where people are finding solutions that the government isn’t solving. It doesn’t mean there isn’t value in having a social enterprise in the GCC, but the problems will be different,” says Ms Goggs.
Last year, C3 worked with Democrance, an insurance technology company that makes insurance accessible to those who need it, which went round to raising $800,000 in investment. Roots Bistro, the first fully sustainable restaurant in the UAE is also a C3 graduate, as well as Evolvin’ Women, an enterprise that improves the employability of women from developing countries in the hospitality sector.
“The C3 Social Impact Accelerator gave me the courage to challenge my preconceived ideas, put aside my emotions and look hard at whether my theory of change held up under pressure,” says Assia Riccio, founder of Evolvin’ Women.
While the number of angel investors has flourished alongside private equity and venture capital firms focused on the technology and start up sector, there are few impact investors in the region.
“Some entrepreneurs could go to another market tomorrow and have millions thrown at them, but here, it is difficult to get a couple of hundred thousands dollars,” says Ms Goggs.
This lack of funding pushes social entrepreneurs to work harder from the very beginning to become financially sustainable.
“They don’t have the fall-back position to grow organically and have extra support. Those who do make it through are very likely to financially succeed,” she says.
According to a report by Wamda, good government relations are essential to a thriving social enterprise sector, but the latter can also be seen as a competitor to the state, often leading to interference that hinders scale and impact.
This is perhaps due to the fact that there is no definitive or legal registration status for social enterprises in many parts of the Middle East.
“There’s no regulatory environment or legislation that treats social enterprise differently and we’ve worked hard to find a way to open a dialogue with the government bodies – that’s the long-term aim,” says Ms Goggs.
Social enterprises are reluctant to set up as a charity due to the vast amount of regulations that need to be met.
“Typically, most of them end up setting up as a for-profit company, so all the senses apply, the disadvantage of that is it’s expensive, but on the other hand, they’re not reliant on grants and other forms of donations in kind,” says Ms Goggs. “The regulatory environment needs changing, we will see the impact that has on entrepreneurs but it may take a few more years to come through.”