Are bottom of the pyramid social enterprises sustainable?

A post published at the end of September on the Good Intentions are not Enough blog, questioned the viability of introduction of new bottom of the pyramid innovations such as the cook stoves hailed by Hillary Clinton during the recently ended MDG summit.

The gist of the post is that as benevolent a gesture the stoves are for the 1.2 billion people considered to live in poverty worldwide who will use them, the durability of the stoves is not as assured. This raises the question of whether the stoves and similar social innovations are in and of themselves a sustainable alternative to what is already being used.

Included in the Good Intentions post is also a quote from a vice president of the UN Foundation saying apart from distributing the stoves, “You’ll need a supply chain and business model that delivers them, not on a one-time basis, but as a continuing enterprise.”

And without such a supply chain, after the 2 to 5 years and without a steady supply channel, won’t the target beneficiaries just revert to the traditional kerosene and wood?

This is the oft neglected side of social enterprise. The question of how sustainable must the social entrepreneur’s efforts be? And does it mean that just because an enterprise is for profit that business effectiveness and value for money aside from other financial variables take second place to social impact?

The impetus to scrutinise the value of such socially-oriented innovative solutions has become more topical with the aid versus trade debate. Proponents for trade such as William Easterly have argued for business, being recently quoted in the Financial Times that: “current experience and history both speak loudly that the only real engine of growth out of poverty is private business ...”

And with such voices coupled with austerity measures among traditional donor countries (though the UK unexpectedly increased international aid), social business initiatives to mitigate government and market failures in developing countries are sure to claim the limelight.

Social entrepreneurship must include a strategy for achieving financial sustainability, and that includes ensuring that aside from the sentimental value of providing solar lighting, water pumps and eco-friendly stoves amongst other new technologies, that the nitty gritty business essentials such as supply chains and customer care are included in the package, from the outset.

Let’s remember that without the business model there can’t be a lasting and durable social impact.