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Social Entrepreneurship – Helping rural communities decide for themselves how to generate income from small businesses

Social Entrepreneurship – Helping rural communities decide for themselves how to generate income from small businesses

By Florence Nisabwe, Ph.D. Chief Executive of OLAI & Co-Founder of Fondation-LAB in Burundi. www.florencenisabwe.com .

The challenge of the countryside:

Despite decades of net migration to urban and peri-urban areas, African still has a majority rural population. In sub-Saharan Africa, an estimated 63% of people live in rural areas – that’s two in three of the population. In some countries, the percentage is far higher. For example, in Burundi, 87.64% of the population lived in rural areas in 2016.

Large rural populations present unique challenges both to policymakers and to rural citizens themselves. In this article, I’ll consider these challenges, and propose a new approach to overcoming them.

Almost by definition, rural populations are more widespread than people living in cities. Lower population densities make infrastructure provision much less efficient. Rural areas in Africa tend to experience a perfect storm of interlinked poverty-entrenching factors: high birth rate, high unemployment and outmigration of economically active adults.

Rural areas tend to have a limited tax base, which means that they generate less income for central government. This means that they are effectively subsidised by urban populations.

Environmental factors (increasingly driven by climate change) are also contributing to rural poverty through reduced crop yields and an increase in the frequency and severity of natural disasters.

In rural populations, many people are engaged in sub-optimal economic activities, such as smallholder farming. Even where a surplus above the subsistence threshold is achieved, there are significant barriers to economic activity. These include limited access to markets and finance, uncertainty over land ownership, and limited availability of inputs such as fertiliser, seeds and knowledge about new techniques.

Rural areas also tend to have lower-than-national-average provision of education, healthcare and basic services. This again restricts people’s potential to be economically active and leads to reduced incomes and limited community development.

Why it matters:

Although individual rural dwellers may not generate the same amount of income or tax as city people, rural areas remain economically and politically significant. Rural voters can easily outnumber urban voters, and as they are likely to be voting on different issues, they can easily sway the results of elections. Although more widely distributed, the sheer numbers of rural people in African countries make them statistically significant in every way.

Rural areas are also often culturally important – especially as for many Africans, their sense of identity and heritage is strongly intertwined with a sense of place.

What happens in the countryside directly impacts cities, too. While concentrated urban populations can be more cost-effectively provided with services and given access to markets, unplanned urban growth simply relocates a problem from rural areas to marginal urban areas.

Typically, it is young adults who are most susceptible to the “push-pull” factors that drive migration to cities. Each person that leaves a rural area, reduces its economic potential. Arriving in a strange city where they do not have the same network and support structure they enjoyed at home, they may find that they have exchanged a life of rural poverty for a deprived urban state.

Rural poverty can constrain economic growth hold back entire nations, as it keeps large numbers of people from being as economically productive as they could be. Workforces that are perceived as “unskilled” (in the context of modern services- and light manufacturing-based economies) are less likely to attract investment.

While most rural people are engaged in smallholder agriculture, their own incomes are limited, and they cannot actively engage in the market economy as they have little if any disposable cash.

Studies have shown that rural poverty can best be tackled by encouraging people to remain in the countryside. This requires additional support being provided to small-scale farmers, and efforts to diversify the local economy to create non-agrarian jobs and opportunities as part of a more balanced economic framework.

A stronger rural economy can do more than simply supply urban areas with food (although this is of course vital, and can reduce dependence on imports, which helps a country’s balance of payments).

Reduced rural poverty can promote a more peaceful society and reduce the strain on cities and their infrastructure through making outmigration less attractive (or compelling). This in turn can have indirect benefits such as reduced incidence of communicable diseases and lower crime rates.

Attempts at finding solutions for rural areas:

Given that there is a clear case for addressing rural poverty (to benefit individuals, families, communities and society as a whole), it is worth considering the approaches which have historically been taken to try and uplift rural people.

Ideologically motivated approaches, such as collectivisation of farms, have proven to be tragic failures on a grand scale. Equally, the application of undiluted capitalism (such as widespread switches to cash crops) tend to have unforeseen negative consequences such as uneven distribution of profits and less productive land. Where commercial farming is allowed to proceed unchecked, smallholder farms tend to lose out.

In extreme cases, they may be forced to sell their land out of economic distress, or land ownership issues can even result in violence or civil unrest.

It is self-evident that economic empowerment of rural populations can accelerate overall economic growth in African nations – as well as ensuring that such growth is more inclusive. By focusing on the “bottom of the pyramid” (by which I’m referring to the width of the base, rather than implying that it is any way less valuable than the pinnacle), more people can be helped out of poverty more quickly.

Top-down approaches to solving rural poverty do not always consider the specific wishes of the rural poor themselves. While it is a safe assumption that no one wishes to remain in poverty, proposed and/or adopted solutions need to be relevant and appropriate.

If they are simply imposed, they could in fact erode people’s inherent sense of self-worth and lead to people feeling culturally impoverished or disenfranchised. No opportunity to earn additional income can adequately compensate for this phenomenon.

With centrally managed attempts at rural development not always having a great track record of success, is there then a better way of increasing rural incomes and facilitating the entry of rural people into more economically productive activities?

Is there a better way?

I firmly believe that there is – and my experiences as a social entrepreneurship mentor have convinced me that encouraging people (through training and guidance) to take their own steps to alleviate poverty is the best approach.

Social entrepreneurship has been shown to be a sustainable way of reducing rural poverty through transforming the finances of families, communities and even regions.

Targeted workshops and training programmes can teach both the “hard” (i.e. business management) and “soft” skills (such as confidence) that people need to be able to unlock their entrepreneurial potential. Introducing them to relatable role models is one of the most effective ways of convincing reluctant or nervous candidates that they do have the aptitude to make a success of running their own business.

Social entrepreneurship helps to expand people’s conceptions of what is possible – and crucially, of what they themselves can achieve. It can also effect positive social change, such as helping to transform how women are perceived and valued.

This is particularly pertinent in rural communities which tend to be more traditional and/or conservative. By confining women purely to childcare and domestic work, immense revenue-generating potential is squandered.

In communities where women have a higher status (in the case of social entrepreneurship, through their own efforts) there is typically a reduction in gender violence.

This contributes to a virtuous circle whereby women feel both more liberated and safer, and therefore gain further in the self-confidence which is one of the defining characteristics of any successful entrepreneur.

Social entrepreneurship contributes to many of the sub-goals of rural poverty alleviation (and also to the achievement of the UN’s Sustainable Development Goals). By encouraging and enabling women in particular to become social entrepreneurs, rural economies can be diversified, and market linkages strengthened.

New job opportunities can be created, thereby helping to share and multiply the benefits of social entrepreneurship. This will increase the rural tax base, providing local authorities with greater revenue and reducing their reliance on federal assistance.

In this way, rural areas will become better integrated – and more integral – to the nation’s economy. This is the surest way to tackle both rural poverty and its long-term causes.

Conclusions:

Social entrepreneurship has the capacity to reduce rural unemployment through job creation and to lift more families out of poverty. Countless small enterprises – run by highly motivated social entrepreneurs who can see both direct and indirect benefits flowing from their efforts – create a more resilient rural economy and attract private sector investment. They also make a more compelling argument in favour of governments making rural infrastructure improvements.

This in turns improves quality of life, communications and access (to finance and markets) for rural populations. The local economic environment becomes more sympathetic to entrepreneurs, and more rural people will be inspired to run their own businesses.

Communities where social entrepreneurship becomes an established part of the economy (remembering that it is entirely compatible with smallholder farming) will experience improved family living standards. This will make healthcare and better nutrition more accessible, and in turn will change how rural people perceive their surroundings.

Living in a more economically productive area will reduce people’s incentives to move away in search of work or improved prospects. Social entrepreneurship can therefore contribute not just to rural development, but more cohesive, healthier and happier societies.

From relatively small beginnings, the multiplier effect of social entrepreneurship can have far-reaching, positive economic benefits. Ultimately, a more stable base to the pyramid can contribute to the national economic wellbeing – a very real harvest from just a few small seeds.


 

About The Author

Guest Contributor

A Guest Contributor is any of a number of experts who contribute articles and columns under their own respective names. They are regarded as authorities in their disciplines, and their work is usually published with limited editing only. They may also contribute to other publications. - Ed.

Following reverse listing, public can now acquire shareholding in Paratus Namibia

Promotion

20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.