The British Council experts held a survey of the social entrepreneurship sector in Ukraine. The experts found three promising regions, where Donetsk and Lviv oblasts belong, as well as the Autonomous Republic of Crimea. These are the regions where for three months (June through August) last year the British Council sponsored training in organization and management of social business for 80 entrepreneurs.
Quite soon afterwards, February through April this year, a contest was held for business plans of 20 social entrepreneurs from various areas of activity. There were four winners: Medical Rehabilitation Center Zdorovia (Novoazovsk), NGO Yevpatoria Center for Information and Consultations (Yevpatoria), NGO Mutual Aid Community Oselia (Lviv), and Training and Production Enterprise “Children’s Hope” (Brody). The Center Zdorovia got a loan from JSC Erste Bank at 12 percent annual interest rate for five years for the development of social business.
The masterminds of the project see the next step as the creation of integrated infrastructure of support of social entrepreneurship in Ukraine through the opening of new centers, the institutialization of social entrepreneurship at the legislative level, and the increase of loans available to it.
Entrepreneurship in the social sphere, aka business with a social mission, arose as far back as in the 1970s in the West. However, only two European countries have legally regulated it as of today. Notably, our eastern neighbor, the Russian Federation, has been actively developing social entrepreneurship over the recent years. Perhaps this is because social entrepreneurs solve those exactly problems state is unable to solve: they promote the development of economy and society, offer opportunities for the creation of new jobs, as well as for new forms of entrepreneurship and employment. Besides, they also help overcome social isolation by employing socially and psychically handicapped individuals, as well as those who have been long out of work, and the representatives of risk groups. Structures like these promote the development of a wide range of social services which are in demand in society, but which remain outside the scope of the interests of conventional business due to bringing little profit, being non-prestigious, or requiring specialist training.
Such entrepreneurship with a super-mission can aspire to employ the handicapped, to socially adapt the homeless or orphans, or implement new mechanisms of solving the existing social problems, like those of housing and communal services. At the same time, it has got to be “profitable,” otherwise it is a matter of charity. The proceeds from social business are mostly used for self-development and the solution of acute social problems. At the same time, a social business functions in full conformity with all business laws: goods and services have to be good enough to be sold in the competitive market.
Today the notion of social entrepreneurship is not fixed in Ukraine’s legislation. Yet despite this, a lot of enterprises are working to solve burning social issues. Most of them produce goods or services for the domestic market and thus create new jobs, train people, or offer other social services. The proceeds are re-invested in order to achieve definite social goals. So such a platform could become a ground for the formation of a new class of entrepreneurs in Ukraine, social innovators. At this stage, state merely has to find and support people who want to do this.
COMMENTARIES
Viktor LIAKH, executive director, East Europe Foundation:
“The idea of steady economic growth sprang up in Ukraine 20 years ago. In order to have steady managed long-term development, one must take three major aspects into consideration, social, economic, and ecological. Focus on only one of them, say, economic, will not allow to guarantee steady development for a certain territorial unit.
“Besides, the concept of social entrepreneurship implies that everyone has a chance for economic and social growth. On the other hand, we are all aware that in today’s society, the notion of social is always associated with subsidies. Almost all social programs are subsidized from the budget, either local or national. Can social programs be self-sustainable? Can one combine the approach to business, in which business generates ideas which are later implemented in some sort of income, with social ideas? As a matter of fact, this concept has existed globally for years. A number of countries can already appreciate the effect from social entrepreneurship on the development of the community and economy; and of course, it works.”
Natalia VASYLIUK, deputy director, the British Council:
“In the United Kingdom, social entrepreneurship has existed for over 30 years, so we thought that Ukraine, too, might benefit from it.
“Social entrepreneurship is in the first place genuine business, which earns money not for sharing between the holders and the owners, but for addressing social challenges. Consequently, this business must have a social goal. All profit should be reinvested mainly into the continuation of the activities, or into the implementation of the community’s goals or needs.
“We know that there are a lot of social enterprises in Ukraine, and we realize that we must go to a higher level, a dialog with authorities, and prove that social entrepreneurship can be profitable.”
Yaryna LUKAN, director, administration for communications, JSC Erste Bank:
“At present, NGOs are used to getting grants in Ukraine. However, it is becoming harder and harder to get this sort of financial support, but still you won’t do without the financing. Therefore, our bank first decided to try crediting social enterprises. When we started working on that we saw that small loans were necessary, from 10,000 to 50,000 hryvnias. Of course, there are more ambitious, large-scale projects worth several hundred thousand hryvnias, or even several million. We treat such projects very carefully.”
