Of social business ventures and Islamic principles

The Quran calls for the world’s resources to be used not only to meet individual needs but also moral obligations.

INTEREST in the area of social entrepreneurship has gained momentum in recent years. Many studies have been commissioned in this area, including comparative studies to clarify the concepts of conventional entrepreneurship and social entrepreneurship, and also social entrepreneurship with not-for-profit activities such as corporate social responsibility (CSR) initiatives, charity and voluntary work.

In recognising the vital role of social entrepreneurship in the economy and society at large, experts in the area of business and entrepreneurship have supported the view that social entrepreneurship is the force that will drive this world towards a better future.

We have seen successful conventional entrepreneurs establish business ventures, accumulate wealth through profits and contribute a significant portion of their wealth to charitable causes that benefit society. Undoubtedly, such deeds are noble and highly recognised by society.

Nevertheless, one may question whether such contributions are adequate in providing long-term and sustainable solutions for serious socio-economic problems, especially among the underprivileged.

This includes providing them with adequate education, healthcare, energy and water services.

In addition, there is also the need to address poverty, unemployment, housing, the environment and other problems in society.

Inevitably, a viable long-term solution is essential in solving these socio-economic problems, which has led to the emergence of social entrepreneurship as a possible alternative to conventional entrepreneurship in recent years.

The concept of social entrepreneurship is different from that of conventional entrepreneurship, and its scope is much wider than that of CSR initiatives, charity or voluntary work. The difference between conventional entrepreneurship and social entrepreneurship lies in their fundamental mission.

The fundamental mission of social entrepreneurship is to generate “social value”, whereas conventional entrepreneurship is mainly driven by profit.

Compared to not-for-profit organisations such as charity or voluntary foundations, the mission of social entrepreneurship is much wider because it does not only target immediate and small-scale effects but also sustainable and long-term impact.

Perhaps the best words to encapsulate the role of social entrepreneurship are those of Bill Drayton, CEO and founder of Ashoka, one of the world’s leading social entrepreneurship networks: “Social entrepreneurs are not content just to give fish or teach how to fish; they will not rest until they have revolutionised the fishing industry.”

Essentially, social entrepreneurship comprises business ventures initiated by social entrepreneurs. These are people who establish their businesses so that economic value and societal contributions can be realised at the same time.

They are highly motivated in identifying opportunities to solve the prevailing socio-economic problems that affect society such as education, healthcare, poverty, energy, water and the environment.

These entrepreneurs envisage the underprivileged as the solution instead of just passive beneficiaries or welfare recipients. In doing so, they do not wait for a massive profit before they can contribute to society.

The concept of social entrepreneurship can be aligned to the Islamic values and principles of development. There are verses in the Quran which state that all resources in this world are meant for the benefit of mankind.

Hence, we are enjoined to explore, utilise and mobilise them not only for individual needs but also to fulfil moral and social obligations. In the Islamic context, developing important sectors in the economy such as agriculture, industries, trade and commerce is actively supported.

For example, land should be used and cultivated for the benefit of society rather than leaving it forsaken. Furthermore, manufacturing and services should be developed to cater to the people’s needs.

Islam emphatically denounces poverty because it is detrimental to our ability to perform individual, social and moral obligations. Furthermore, Muslims are reminded to seek Allah’s protection from poverty.

As a form of motivation, those involved in entrepreneurship are accorded a prestigious status of being able to live with the Prophet in the hereafter.

What comes to mind in business ventures is the availability and cost of funding. For that matter, the Islamic-based finance concept offers many interest-free, risk-free and risk-sharing funding instruments that can be utilised by social entrepreneurs.

Such funds are available in the form of zakat (compulsory alms), waqaf (endowment fund), sadaqah (voluntary charity), hibah (gift), qardhu hassan (benevolent-interest free loan) and takaful (mutual guarantee and solidarity), mudaraba (profit sharing) and musharaka (partnership) contracts.

If these funds can be utilised effectively, we may see many social enterprises exist and contribute to society and the economy.

Given the important role that social entrepreneurs can play in the economy, it is therefore necessary to develop a conducive ecosystem for social entrepreneurship to thrive in Malaysia.

The essential parts of the ecosystem would require proper tools for nurturing social entrepreneurs with the right worldview and also to serve as a platform for catering to funding needs.

Perhaps the existence of many social entrepreneurs in the economy will bring about improvement in the domestic supply-chain activities and eventually, the benefits may be enjoyed by society.

Moving forward, social entrepreneurship may also be considered one of the areas in the already comprehensive and vibrant Islamic finance ecosystem, and could also be one of the components in the financial inclusion initiative.

> Mohamad Azhar Hashim is a Fellow at Ikim’s Centre for Economic And Social Studies. The views expressed here are entirely his own.

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