Are local businesses in Australia defacto social enterprises?

Business Queensland “Go Local, Grow Local” Logo

I often refer to the fact that I have never worked in the for profit. In my case, I have never worked in any kind of environment where transactions take place. I sometimes feel and express that this is some kind of deficit, one which needs rectification. In fact, on my last day at TQB in early 2017 I told the students that one of the things I was looking forward to in working in entrepreneurship development in Nepal was reconciling the for-profit and the non-profit and where the intersections are and how they occur. What I found in the developing world was an exercise in frustration, marketing masquerading as development work and endless acronyms and development buzzwords.

The government, corporate and private sector worlds are nowadays a labyrinth of social impact investing (S.I.I), corporate social responsibility (C.S.R) and social tendering/procurement. The latter idea was routinely floated in Nepal, that the Government, as the creator of the Micro-Enterprise Poverty Alleviatin project (after the Australian Government transition in July 2018) could also be a main procurer of micro-entrepreneur made products. I would often say ‘there should be micro entrepreneur products in every government office from here to Mt. Everest!’.

I now have a different belief, that S.I.I, C.S.R and social tendering procurement/tendering is only one part of a broader narrative about small and growing enterprises and indeed, the whole concept of enterprise development for poverty alleviation. The broader narrative is in the economics of local business as agents of community change in their local contexts. Perhaps, like many current flavours in both Australian and international community development, what we are starting to describe and establish evidence for are patterns of grassroots, place-based and community behaviour which we have known for a very long time.

The concept of enterprise development for poverty alleviation inherently flawed by a social systems problem. There is measurable, quantifiable benefits for encouraging micro, small and growing businesses, particularly bases on traditional livelihoods and skills, as a pathway out of poverty. This model has been extensively used in the developing world in particular in Bangladesh, India, the Phillipenes, Nepal, Tanzania and Zimbabwe. Regardless of whether it is a good development practice ( I tend to believe that it probably is and can be and as with everything, depends very much on the execution), it is inherently set up from the start against a social systems challenge. Essentially, these kinds of development intervention do little to nothing to actually change the economic and social systems which create and sustain poverty in the first place; this being our capitalist societies and the uneven distribution of wealth and financial resources. Entrepreneurship development doesn’t change this system itself, it offers an in-roads for those who are the poorest and those who have been excluded or would otherwise find it difficult or impossible to join the capitalist market system (because of gender, ethnicity, culture, caste, race etc). These programs give people an entry into the market place — they do little to change the market place in its own right. They do virtually nothing to disrupt the systems which create poverty in the first place.

The interesting thing is what happens once these entrepreneurs are created and supported and where they move their money around. My boss in Nepal and Executive Director of the National Micro Entrepreneurs Federation Nepal (NMEFEN) once shared with me a profound statement that I begin to consider being true of many entrepreneurs who are operating at the grassroots, local levels, particularly in systems of poverty and other forms of marginilization. My Boss, Chandra Kanta Adhikari said “Micro entrepreneurs are defacto social entrepreneurs, because they typically spend any profits or monies they make from their enterprise back in their local communities”. This was a very apt insight into a habit that I saw first hand, one that I say emerging in the Australian context now that I know what to look for.

We at NMEFEN understood anecdotally that micro-entrepreneurs in Nepal (who are primarily women) tend to spend any profits they make on the education and health care of their children and families, reinvest back into the communities and use to support, backstop and kickstart other enterprises or community activities, resources, systems etc, reinvest back into their businesses and enter into cooperative finance relationships. The last, cooperative finance, is very common, as community engagement we conduced with Tevel International and Nyayaik Sasar in Dolkha and Hilldevi districts revealed the ability of individual micro entrepreneurs to save on their own was very limited, verging non-existent. But as a cooperative savings and loans group, this capacity is greatly enhanced. This cooperative savings model is encouraged by a multitude of development actors in Nepal including Tevel, OxFam and Heifer International as well as NMEFEN and the United Nations Development Program (UNDP). Additionally, community outreach we conducted in partnership with Siddhi Memorial Hospital in Kavrepalanchowk and Banepa revealed that micro-entrepreneurs spend up to 50,000 Nepali Rupees per year on the health care of themselves and their extended families and in many cases this is up to half a yearly income for many entrepreneurs. Finally, we heard from women entrepreneurs on a multitude of occasions, that some of their profits and savings go into sponsoring local women’s groups which perform cultural functions as well as provide valuable support and information sharing to women in villages.

Locals 4 Locals Cost Benefit Infographic.

My question now is, are small businesses in Australia, particularly locally owned businesses in places and systems of endemic and systemic poverty, businesses where the entrepreneurship is a vehicle out of poverty and business which are owned by culturally and linguistically diverse groups with different experiences of community, such as and particular, Aboriginal and Torres Strait Islander peoples; are these businesses defacto social enterprises?

The anecdotal narrative would seem to support this. When I arrived in Ipswich, I went to buy “Magic the Gathering” cards from a local geek culture store and in chatting to the owner, I learned that they sponsor a range of events and programs in the community throughout the year, including a Medieval Festival and anti-bullying programs as well as gaming marathons with charitable components. Speaking the an Aboriginal business owner (of a market) on Macleay Island in South Moreton Bay, I asked her;

“Does it ever happen that people come and can’t afford to buy food?”

“Yes, all the time” she told me

“What do you do in those situations?” I asked

“We work something out, I give them a meal or enough groceries to last until when they will have money, I give out credit to the people in the community and if they really cant pay we work out something where they do some cleaning for me or some volunteer work in the community — I never let anyone leave empty handed because they have no money”.

When I told her that, in my opinion, I believed that this made her a social enterprise, she was surprised to hear that she could be characterized as such. For her, this was just how she does business. Recently, I was buying a pie from a local entrepreneur who has a pie van and his EFTPOS machine was broken, he offered it to me for free. I ended up going and getting money from an ATM and coming back to pay, but in his mind, it was not my fault that his machine was broken. I think the anecdotal evidence is mounting and the time to conduct extensive research into this area has arrived.

I also think it paints a picture of the full, complete and more realistic narrative around what is really going on when community development focuses on local and grassroots entrepreneurship, particularly in places and communities of need and where there is poverty. This goes far beyond the rhetoric we hear in politics that ‘local small businesses’ provide local employment — this is probably a true and a well established fact. The broader view of what is going is much bigger and much more compelling. Local businesses are positioned also to buy and sell from other local businesses on a more frequent basis. Additionally, there is this important establishing of everything they pour profit back into in the community and even ways of working that are important for strong community building, social connection and cohesion and place-making.

The level of in-kind, pro-bono and trading which is non-currency based is probably very high and what we know about it is that it is significant but we have only really scratched the surface of what we understand and can describe. There is an old man in my neighbourhood, who, in his retirement, makes some extra money by mowing the lawns. He does half of our lawn for free because my wife Carly asked if she could borrow his weed-wacker and rather than loan it or rent it to us, her just did the job himself, for no charge. We don’t fully yet understand phenomena like this, the level to which and the types of ways it manifests and takes place and the economic value of this activity. Further, from a perspective of considering what development interventions to try to encourage the awareness of local businesses and general population to use and buy from them, this kind of phenomena provides a compelling narrative. Again, this goes beyond the normal rhetoric of ‘when you buy local, the business owner can afford school uniforms etc’ which is nonetheless true and valuable but there is much more, there is everything that local business does for the local community, much of it for free, in kind or reinvesting their profits. To apply a strengths based approach, it is amplify how locally owned businesses who have a vested interest and stake in local identity and wellbeing, contribute to their communities.

Are locally owned businesses in Australia defacto social enterprises?

PhD. Multiple Award Winning Community Development Practitioner, scholar, author and educator. From Brisbane, QLD Australia. Currently in Kathmandu, Nepal.

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