Social Entrepreneurship Can Reduce Welfare Costs In ME

Middle Eastern governments must consider social entrepreneurship as a viable business model, as doing so will help deal with rising social costs in the region, said Ahmad Ashkar, CEO of the Hult Prize.

In an exclusive interview with Gulf Business, he said: “You have to be prepared for population growth and if you don’t have instruments like this [social enterprises] built into your economy then you are going to be in trouble, regardless of how many resources you have.”

Ashkar, who is the founder of the Hult Prize – a prestigious start-up award for social entrepreneurs – said that the concept is still muted in the Middle East.

Ashoka, an association of global social entrepreneurs, defines social entrepreneurs as individuals with innovative solutions to society’s most pressing social problems. Rather than leaving societal needs to the government or business sectors, social entrepreneurs discover what’s not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new steps.

Social entrepreneurship business models are targeted towards people at the bottom of the economic pyramid.

“We look at markets that make $2 to $3 a day on average per person and that actually defines the bottom of the economic pyramid. If a person earns only that much a day and wakes up broke the next morning, then you are at the bottom of economic pyramid (according to our definition),” explained Ashkar.

Social Entrepreneurship In the Middle East

A 2012 Stanford University report titled ‘Social Entrepreneurship: Why It Is Important After the Arab Spring’, stated that protests in the region have the potential to boost the scope of social entrepreneurship.

In a detailed analysis of the situation in the region, the report surmised that social entrepreneurship “can be a powerful pathway to social, economic, and political inclusion, particularly of youth, while also creating jobs in the region.”

Some of the key challenges that Middle Eastern social entrepreneurs face are lack of financing, bureaucratic hurdles and unclear regulations, said the report.

One way to overcome those issues is to tailor social entrepreneurship models specifically for the Middle East region, stated Ashkar.

“There is excellent government spending in the region and we can adapt business models to fields like social housing, social capital and social finance,” he explained.

Encouraging social entrepreneurship in this part of the world will also help to reduce the expenses incurred by GCC governments in generating employment locally, he added.