- Category: Yunus
- Published on Friday, 17 August 2012 10:07
Social Business: a new paradigm for Haiti
Both the Haitian government and international community recognize the important role that the private sector can play in Haiti’s economic recovery. Haiti needs a dynamic, efficient private sector that contributes to the country’s productive development, assumes the risk of generating economic activity, and creates jobs. Social Businesses -- businesses whose mission is to address a social or environmental need in a financially sustainable way -- can be the means to unlock Haiti's potential and eradicate poverty in the country. Nobel Prize Laureate Muhammad Yunus and YSB have made it their mission to empower Haitians to help themselves and to create employment for local citizens through Social Business. The Haiti Initiative was launched in 2010 by YSB's predecessor The Grameen Creative Lab with corporate partner SAP AG to foster prospective Social Businesses through financing and incubation.
“A charity dollar has only one life; a Social Business dollar can be invested over and over again” Professor Yunus
A Social Business is a business whose mission is to address a social or environmental need in a financially sustainable way. Its costs are covered by the revenues it generates. While investors in a Social Business may recoup their nominal investment amount, any additional surplus is reinvested into Social Business (either the original or another Social Business). Apart from these two pivotal differences, Social Businesses work just like traditional businesses. Yet, the concept of Social Business offers a new perspective to Haitian entrepreneurs and to the Haitian population.
Yunus Social Business' objectives are fourfold:
• Achieve long-term capital appreciation by investing in a diversified portfolio of Social Businesses in Haiti
• Foster entrepreneurship in three areas with the most pressing social and environmental needs: Education & Vocational Training, Agriculture & Environment, and Nutrition
• Enhance our portfolio businesses' core areas through hands-on management support from YSB staff, expert consultants, and local service providers, including financial and strategic planning, corporate governance, human resource management, marketing, supply chain management, and management information systems (MIS)
• Generate positive social impact by contributing to the reconstruction and sustainable development of Haiti’s economy
The primary criteria we look for in our investments are significant social impact, high likelihood of financial sustainability, and potential for scalability and replicability
YSB Haiti Fund seeks to invest in for-profit companies that have a strong commitment to bringing measurable and sustainable social and economic impact at the base of the economic pyramid (BoP). Investment alone is not enough to help a business succeed and scale, and therefore the YSB Haiti Fund partners closely with clients to connect them to the business expertise and training they need. This type of partnership requires that the businesses are enthusiastic to work in a close partnership with the staff at the YSB Haiti Fund The YSB Haiti fund works according to a set of investment criteria:
• Investments range between USD100,000 and USD300,000
• YSB Haiti Fund employs various investment structures including equity, quasi-equity, loans, and guarantees
• Loans have a typical repayment period between five and eight years
• All profit generated from investments are reinvested in other Social Businesses through the YSB Haiti Fund
Creating lasting social impact is the ultimate goal of the YSB Haiti Initiative
YSB Haiti Fund and its portfolio companies track and analyze financial, operational and social metrics. YSB Haiti provides technical assistance (Business Development Services) to clients so they are equipped to collect basic metrics, ensure data quality, create dashboards to visualize important metrics and analyze that information in order to make improved management decisions. YSB Haiti' is dedicated to measuring the financial, operational, social and environmental impact of its Social Businesses, and the Initiative itself
• YSB Haiti Fund collects and reports metrics that are aligned with the IRIS taxonomy. Collecting and classifying basic metrics using IRIS standards allows the YSB Haiti Fund to compare its results with the those of the impact investing industry
• YSB Haiti Fund works with its Social Businesses to determine the IRIS metrics relevant to their key business operations and desired social impact
• On top of frequent reporting, YSB requests or conducts field and survey-based studies to measuring community impact - answering questions such as "What has been the impact of increased elementary school attendance on the community?" and "To what extent has family wealth grown as a result of increased price stability of local produce from a packaging & distribution Social Business?Back
Yunus Social Business welcomes Social Business entrepreneurs with business plans (or business concepts) that address social problems in Haiti.
We also welcome those with an interest in solving Haiti’s problems but with no specific business idea. For each Social Business concept, we follow a strict process from initial review until funding, which requires intense cooperation between YSB and the prospective Social Business entrepreneur. This process is outlined above. If the entrepreneur submits a well-thought-through business plan, and all required paperwork is available, the process from initial contact to funding takes approximately 3 months. Prospective Entrepreneurs with a business idea can soon download our business plan template and financials template.Back
Through the YSB Haiti Fund you can get involved in eradicating poverty in Haiti, by building a strong, self-sufficient private sector
From vision to action, the YSB Haiti initiative incubates and finances small and medium-sized Social Businesses, with the ultimate goal of strengthening the private sector in Haiti to tackle the social needs of the country. We believe this is the best way to rebuild Haiti, as investments in Social Business have a multiplied effect. The YSB Haiti Fund together with the YSB Haiti Incubator selects Social Businesses that pass through an intense, comprehensive screening pipeline for investment. After investments, we continue to provide advisory and business development services to enable the Social Businesses to achieve maximum social impact in a financially sustainable way, thereby allowing for a positive social and financial return on investment for our funders.
The YSB Haiti Fund is open for contributions in the form of philanthropic investments and/or tax deductible donations. Investments in the YSB Fund Haiti are made as non-recourse, unsecured, non-interest-bearing loans with a requisite patient tenure which is usually eight to ten years. Repayments of investments usually are done from the proceeds of the particular Social Businesses invested in after the tenure elapses. Reinvestment opportunities also exist for monies contributed through investments at the discretion of the investor and according to terms agreed. 25% of the contributed amount will be set aside to provide Business Development Services, as well as management support, to the Social Business invested in over the entire period of investment. While we are making significant progress in Haiti, opportunities for development are widespread. We work with individuals, foundations, companies or international development agencies who share an interest in creating sustainable economic and social impact.
A key factor for the success of the YSB Haiti Initiative is the networks of partners it cooperates with. YSB's partners have brought a wealth of knowledge, skills and resources to bear on the initiatives work in Haiti. The YSB Haiti initiative has been showcased at the World Economic Forum, the Clinton Global Initiative, the Global Social Business Summit and the Artists for Haiti Gala.Back