Excerpt Four From A Recent Interview With University College London | State Of Social Enterprises Ecosystems In Kenya

Earlier this year, The Youth Café was interviewed by Eliana Summer-Galai, a Masters student with the Institute of Global Prosperity at University College London (UCL). This interview was to provide insight into her research on the Kenyan Social Enterprise Ecosystem. The research explores the actors across the ecosystem, looking at stakeholders from four stages of the entrepreneurial life cycle (entrepreneurial education, idea generation, funding, and growth), and the opportunities and challenges for local social entrepreneurs.

The questions asked and our responses form a series of 8 blog posts dissecting important issues with regard to the Social Enterprise Ecosystem in Kenya. This is the fourth post of the series on How do you see the SEE funding landscape?

Due to Social Enterprises being structured differently, they may obtain funding from grants, investments, or a combination of both. Reducing funding challenges for Social Enterprises requires diligence from all ecosystem stakeholders. It is an endeavor well worth the effort, especially if more Social Enterprises get funded to the full extent of their potential, fueling them to achieve meaningful impact toward creating a better world. To be able to navigate the funding landscape, learning by doing is encouraged and finding ways to effectively combine impact, commercial, venture and philanthropic capital is important as well. Making mistakes is allowed as one gets to learn and better themselves. It is important to think big when it comes to funding.  

Additionally, established foundations are willing to fund Social Enterprises based on their areas of focus. Most foundations offer small to medium grants to start-up organizations enabling them to scale their operations. Several Social Enterprises have generated considerable profits, making them attractive targets for equity and investment funding.  Most donors focus on working with the private sector, thus making Kenya a magnet for grant-giving organizations. Financing schemes such as mobile payment schemes have influenced Kenyan Social Enterprises to be among the most developed in Africa.

The Social Enterprise financing dimension in Kenya comes in grant funding, consumer finance, and commercial funding. Grant funding is often interested in Return On Investments where they are not exclusive to social outcomes. It is a win-win situation in terms of financial and social output. Most grant funding is urban-based and unpopular to local social enterprises. It is recommended that there should be capacity development on applications and development to increase its popularity at the grassroots level. Commercial funding is a financial dimension in the Social Enterprises Ecosystem. Despite its attractive features, high collateral and interest rates remain a challenge for Social Enterprises.  Consumer financing modules are under development where social enterprises have adopted mobile financing schemes.

Social Enterprises funding is faced with several challenges, among them being cases of corruption within the government, which have significantly impacted donors hence reducing the amount of funding to Social Enterprises. Devolution has further influenced the funding of Social Enterprises where the current Social Enterprise environment is quite complex. As such, donors refrain from funding Social Enterprises due to inadequate regulatory frameworks. In addition, the banking sector is yet to establish a uniform and refined tool to monitor loans and grants issued to Social Enterprises regardless of their size.

The Youth Café works with young men and women around Africa as a trailblazer in advancing youth-led approaches toward achieving sustainable development, social equity, innovative solutions, community resilience and transformative change.

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