Solutions: Emerging technologies shaping the future of social enterprise

Solutions: Emerging technologies shaping the future of social enterprise

Written by
Azuar Zainuddin
The global impact of social enterprises is significant and transformative. As highlighted in “The State of Social Enterprise 2024”, developed with contributions from the Schwab Foundation’s Global Alliance for Social Entrepreneurship, there are about 10 million social enterprises globally, contributing US$2 trillion (RM9.4 trillion) annually to the world economy.

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These enterprises are economic powerhouses crucial in job creation, supporting about 200 million jobs. Notably, women lead half of these enterprises. Such statistics underscore the vital role social enterprises play in tackling a wide range of societal and environmental challenges, emphasising their importance on a global scale.

The Malaysian government’s vision for social enterprises, as outlined in the Malaysia Social Entrepreneurship Blueprint 2030, builds on the Malaysia Social Enterprise Blueprint 2015-2018 foundation. While the government’s support is evident, the sector is still developing towards its full potential.

The adoption of technology presents unparalleled opportunities for social enterprises. It enables the creation of innovative solutions that would not have been possible before, opening up new avenues for addressing societal issues. Technology also allows these enterprises to scale up their operations, efficiently reaching beneficiaries in more locations. This scaling is crucial for sustainability as it contributes to more efficient operations. Furthermore, the shift from a labour-intensive to a capital-intensive model spurs investment potential and attracts a broader range of stakeholders, diversifying funding and support.

Emerging technologies are transforming the social enterprise sector, similar to their influence in other industries. Innovations like artificial intelligence (AI), machine learning (ML), blockchain and the Internet of Things (IoT) are reshaping how social enterprises function.

Imagine a world where AI and ML are applied to enhance healthcare and education for marginalised communities. These technologies can offer custom solutions and insights, improving lives and decision-making processes. Blockchain technology could revolutionise supply chain transparency, assuring ethical and sustainable practices. Additionally, think about the IoT enabling real-time environmental monitoring and transforming agriculture into an innovative, data-driven industry. This blend of technology is not just theoretical — it’s a budding reality, opening new frontiers for social enterprises to address complex challenges more effectively.

SOLS Energy is a prime example of how a Malaysian social enterprise harnesses these technologies. SOLS Energy’s mission to transition homes to sustainable energy involves sophisticated solar technology and digital platforms for monitoring and managing energy usage. Their efforts extend beyond providing green energy solutions to addressing energy access in underprivileged communities.

Social enterprises globally, including those in Malaysia, are making significant progress but face challenges in adopting technology. The funding gap, highlighted by the World Economic Forum as a US$1.1 trillion shortfall, is a considerable barrier, restricting their capacity for technological advancement and scaling operations. In Malaysia, the relatively small size of many social enterprises poses additional challenges, leading to less attention from financial institutions and limited access to essential resources and technology. The scarcity of impact investors further accentuates these hurdles, restricting opportunities for tailored support and investment in the sector.

In Budget 2024, the government, with support from government-linked investment companies (GLICs) and government-linked companies (GLCs), displays its commitment to funding social enterprises. Initiatives such as the SME Bank Social Enterprise Financing Scheme, the Malaysia Co-Investment Fund (MyCIF) under the Securities Commission, and the Hasanah Social Enterprise Fund reinforce this commitment. Complementing these are programmes such as Shell LiveWIRE and Standard Chartered Futuremakers, which actively support early-stage social enterprises with funding, mentoring and market access. However, there is potential to bolster this growing sector further.

Effectively leveraging emerging technologies is crucial to further unleashing the potential of social enterprises. Policymakers can realise this goal by introducing policies that encourage technology transfer between social enterprises and universities, fostering a flow of innovation and expertise. Moreover, promoting open innovation between corporations and social enterprises can lead to more robust, sustainable solutions.

The government could also consider models like the Finnish Policy Framework and Action Plan for Demand and User-Driven Innovation Policy, which uses tools such as public procurement to foster innovation. Encouraging innovation through regulation and standardisation while tailoring policies to the unique needs of social enterprises can significantly enhance their efficiency and impact. This approach benefits social enterprises and contributes significantly to national development goals.

Enhancing support for impact investing and patient capital is essential and achievable through carefully crafted regulations and solid measurement standards. This approach ensures financial returns don’t undermine social value, encouraging long-term investments in socially and environmentally focused ventures. Carefully crafted regulations can attract more impact investors, align financial goals with tangible social benefits, and foster a sustainable social enterprise ecosystem.

In conclusion, integrating emerging technologies with Malaysia’s social enterprise sector heralds a transformative, sustainable impact and growth future. Echoing Albert Einstein’s quote, “We cannot solve our problems with the same thinking we used when we created them”, we stand at a crossroads. It’s time for innovative thinking and collaborative action.

The call to action here is to forge diverse partnerships through an ecosystem approach, support policies that stimulate inclusive growth, and invest in balancing social benefits with economic viability. As we embark on this journey, let’s leverage technology as a catalyst for creating a more equitable and sustainable world.

This article first appeared in Digital Edge, The Edge Malaysia Weekly on April 8, 2024 - April 14, 2024

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Azuar Zainuddin
Entrepreneurship