Poll lists Nairobi as global hot spot for businesses looking to do good

Nairobi city Sky-line

Nairobi has emerged as a hot spot for business leaders seeking to drive social change. This is according to a new poll on the best countries for social entrepreneurs.

In the Thomson Reuters Foundation poll of nearly 900 experts in the world’s 45 largest economies, the capitals of Kenya and Chile (Santiago) were pinpointed as two of the five most exciting places for business leaders wanting to have a social impact.

The other major hot spots for social entrepreneurs were Berlin, London and Hong Kong.

Stephanie Koczela, the co-founder of Nairobi-based Penda Health, a for-profit medical clinic group, said in richer countries, like the United States, people often ignore or dismiss social issues and enterprises, but poorer nations see their impact.

“In Nairobi, they want to learn more and help to drive change .... Communities here are invested in social enterprises because they understand that they are striving to make the city a better place,” Ms Koczela told Thomson Reuters Foundation.

East Africa is one of the global centres of impact investing – the fledgling market in investing for social good – according to a 2015 report by the Global Impact Investing Network (GIIN).

This followed a major success in innovation by Kenya’s biggest communications operator, Safaricom, which pioneered mobile money service M-Pesa in 2007 that allows customers to pay bills or receive funds on the simplest of mobile phones, giving people a new way of accessing banking.

M-Pesa, which swept across the country and has been mimicked across Africa, ignited interest from foreign investors in Kenya as an emerging hub of tech and innovation, entrepreneurs say.

“Kenyans are receptive to new ideas, those that make a difference. Nairobi is a good city to test innovations,” said Kenyan social entrepreneur Fredrick Ouko, the founder of Riziki Source, a mobile phone app for disabled jobseekers.

Tax breaks

With English as its main language and rising numbers of socially-minded university graduates, Nairobi has established itself as a hub for social entrepreneurs.

But, like in many other countries, there is no formal recognition for the sector, depriving it of potential investment and incentives like tax breaks, experts said.

Access to finance remains the major challenge, according to Ashoka, a global network of social enterprises.

“Attracting capital and funding is especially difficult for social entrepreneurs in Nairobi, because investors tend to turn to regular businesses for quicker and bigger returns,” said Peris Wakesho, Ashoka’s regional director for East Africa.

In Chile, social entrepreneurs also find it hard to access investment, but receive support from the government, which has fuelled the recent, fast-growing trend in social enterprises in and outside Santiago, experts say.

Chile’s leading social entrepreneurs say access to government funding, the role of universities, a pool of well-educated Chileans, media interest and good Internet connection have all helped make Santiago a hotbed of social entrepreneurship.

They said TECHO, a Santiago-based non-profit organisation that tackles poverty and housing in slums, played a key role in raising awareness about doing social good after it was set up in 1997.

TECHO, with a large network of young volunteers and now one of the largest non-governmental organisations (NGOs) in Latin America, has served as a platform to launch future, leading social entrepreneurs and enterprises.

The Thomson Reuters Foundation poll, conducted in partnership with Deutsche Bank, the Global Social Entrepreneurship Network (GSEN) and UnLtd, the foundations for social entrepreneurs, found Chile came fifth in the ranking of nations where conditions favour social entrepreneurs.

The poll found Chile was joint third-best with France, behind South Korea and Singapore, for the country where government policy supports social entrepreneurs.

“I’m amazed a lot by how Chile has developed in the last six to 10 years. Just five years ago, most people didn’t understand the concept of social entrepreneurship,” said Maria Jose Montero, the head of Chile’s first impact investment fund, which raises funds for non-profit and for-profit social enterprises.

Santiago also hosts the annual International Festival of Social Innovation, now in its fourth year.

Government support

Government programmes offer selected local and foreign entrepreneurs, mainly in the tech business, some equity-free funding, co-working office spaces and mentoring opportunities.

Sebastian Salinas, a Chilean social entrepreneur who co-founded Balloon Chile to support and train local entrepreneurs in rural areas to develop their businesses, said government support had been important for the growth of the sector.

“You can raise money through central and local government funds and each region in Chile has its own competitions and sources of funding for social entrepreneurship,” he said.