The social economy, which refers to economic activities in which social and environmental benefit, rather than individual benefit, is intentionally prioritised, is recognised by the South African Government as an important economic sector. Kerryn Krige, chief technical adviser for the Social Economy Policy Project, provides an update on the draft policy document which aims to support the growth and sustainability of the social economy in the country
What is the social economy?
The social economy includes all economic activities that prioritise social and environmental outcomes. It is easiest to understand the social economy by looking at the organisations that constitute it – non-profit organisations (NPOs), cooperatives, stokvels and social enterprises. Government’s work is to strengthen this sector so that we have a vibrant mix of organisations that focus on both social and economic value creation.
What is the role of business – and corporate social investment (CSI) in particular – in the social economy?
The business of the future operates in the social economy, recognising that it is connected to and works with its community. The social economy is a collaborative, rather than a competitive economy. This is a big shift, which I believe will take time. This is where CSI funding has an important role to play as a catalytic funder that takes risks by supporting new and innovative ideas to facilitate social progress and allows us to figure out what works – and what doesn’t – so that the institutional ecosystem can follow.
What does South Africa’s draft social economy policy aim to achieve?
The Social Economy Green Paper is currently being consulted on and makes a number of proposals around recognising social enterprises, streamlining funding so that it reaches communities, agreeing on definitions and setting up systems of reporting so that we have a metric-based picture of what the social economy looks like: How much money is generated? How many people volunteer or are employed within it? What are the barriers? This all comes from setting up regular reporting mechanisms.
What are the key components of the draft policy?
There are four main pillars: legal and regulatory, access to markets, new economies and finance mechanisms for the sector. But, as is usual in our space, these pillars overlap. The legal and regulatory pillar looks at what changes we can make to laws, for example, do we legislate social enterprises? Access to markets makes recommendations around how we legitimise the goods and services that social organisations produce, such as by introducing a social enterprise trademark.
Finance looks at what we can introduce to the system that mobilises funding to the social economy, and new economies introduces a focus on measuring our economy past GDP and how we can maximise technology to streamline processes for example, to minimise red tape.
What is the status of the draft policy?
We complete the first round of provincial consultations at the end of 2019. We will then collate all the information that we have received, make changes to the Green Paper, and begin a second round of consultations in early 2020. The goal is to have the final policy recommendations to Parliament by the middle of 2020.
How has the business community responded to the draft policy?
All sectors have responded positively and we have had excellent responses from big business, small business, cooperatives, social enterprises and NPOs. We hosted a specialist session for CSI managers, to get their feedback on the Green Paper, and continue to liaise closely with the National Economic Development and Labour Council.
How can we innovate existing mechanisms to better fund and resource the social economy?
This is a big question! But it really is the question. South Africa has excellent mechanisms and policies, so the focus is on how we work with what is already in place, and make these relevant to people working in our cities, towns and villages. For example, one of our recommendations is that we do not believe that the social economy requires additional funding, but that there is clearly a problem with existing funding not reaching communities outside of the main centres.
So how can we make this happen – through community foundations? By strengthening the cooperative banking model? By encouraging impact investing that has specific flows to rural areas? This is what we are still working on.
KERRYN KRIGE – Chief technical adviser, Social Economy Policy Project International Labour Organisation; firstname.lastname@example.org