Corona has already delivered a punishing blow in Germany. In developing countries, it’s hitting like a Tsunami. The economy has been brought to its knees. Half a billion people could slip deeper into poverty. Social businesses are part of the solution.
Alive and Kicking is a social business producing footballs, and employs over 1,000 people in Kenya, Ghana and Zambia. Mutinta Mwangi*, for example, is a mother of three who has been making footballs for fair wages for seven years. As Mutinta is deaf, finding stable work is near-impossible for her. Now, due to the Corona crisis, she is at risk of losing her hard-earned income.
After just one Corona case was registered in Kenya, the country cancelled all events, closed the borders, cancelled all flights and enforced home office. The region had learned from Ebola to act quickly. From one day to the next, Alive and Kicking, along with thousands of other small African businesses, lost its revenues.
To fight off bankruptcies in Germany, finance minister Olaf Scholz is employing a financial “bazuka.” And even that doesn’t make it into the hands of every SME. By comparison, African Heads of State with limited financial means can offer at most a “fly-swatter.” In Europe, we worry about the poorly protected 35 million newly unemployed Americans. For street traders and small farmers in Africa, words like “furlough” or “unemployment benefits” are alien concepts. 85 percent of the workforce in sub-Saharan Africa are informal workers. Anyone who loses their income falls into a void.
On top of the health crisis, an economic super-crisis threatens, which will hit developing countries especially hard. According to estimates by the UN, 500 million people could slip further into poverty; 250 million people could die of starvation.
So what is the solution? Social businesses can contribute in a very targeted way. These are companies that, through generating income, solve a problem. They are the social net that exists where governments fail. They create incomes for the poorest and provide them with essential services such as health care, education, drinking water, etc. Fleximedical, for example, provides “doctor practices on wheels,” with medical advice, diagnoses and important operations in poor rural areas of Brazil where the state health service fails. The company is now itself in need, as the necessary investments into Corona tests and respirators have led them to acute liquidity pressures.
These life-savers now need a safety net themselves. That’s why my organisation Yunus Social Business this month co-initiated, together with the World Economic Forum, a global alliance of 40+ organisations to support social enterprises through this crisis. This group represents 15,000 social enterprises that reach 1.5 billion people in 190 countries. On the growing list of organisations are: Ashoka, Bertelsmann Foundation, Ikea Foundation, SAP, Schwab Foundation. Skoll Foundation, USAID. The goal is to mobilise bridge liquidity for social enterprises and efficiently coordinate support programmes. Over 75 million dollars were already disbursed by the members of the alliance in the last four weeks, partly in the form of a simplified furlough scheme. The alliance is also providing access to contacts and helping to adapting business models as part of its support.
However, private aid can only ever be the beginning. Government funds, both from donor countries and the affected developing countries, must be urgently paid to social enterprises in a targeted, and thus cost-efficient, way. The American development agency USAID is already doing so. Over the course of the refugee crisis, Germany recognised that it is in its own self-interest to invest in Africa. The Corona crisis is only exacerbating this.
The survival of companies such as Alive & Kicking is essential for the poor demographic groups that they serve. What’s more, they are a prime example of the better post-Corona capitalism which we all desire. Fortunately, they are receiving funding from Yunus Social Business and can continue to deliver their important work. The world is currently at a cross-roads which will decide how our planet will look for the next generation. We cannot afford to lose the businesses of the future.
Originally published in German in Capital Magazine. Written by Yunus Social Business Co-founder & CEO Saskia Bruysten.
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