lovesouthernsocial.com

Sector 2.5 encompasses innovative ways of entrepreneurship, designed with the objective of seeking ways to alleviate social problems arising from poverty

Sector 2.5 (or "sector two and a half") is the terminology adopted by some specialists to try to define a segment considered to be emerging and innovative in the economy. It is named after the intention to combine proposals from the second and third sectors, thus proposing a model that harmonizes an intelligent and efficient management of companies (relating to the second sector), with the main objective of ensuring an equivalent return in benefit social (purpose of the third sector).

In this way, the actions promoted by sector 2.5 are driven by social objectives, but they are also profit-oriented. The biggest advantage of these actions in relation to NGOs (third sector associations) is precisely the possibility of growing and receiving investments.

We live in a time marked by extreme inequality and, in addition to this, we also observe a spirit of competitiveness, constantly nurtured, especially in the business and private sectors. The competitiveness commonly generated by the second sector further encourages the aggravation of these social injustices.

In this context, it can either sound like a utopia or a necessity, to imagine profitable projects that invest their profits exclusively and integrally with the purpose of eradicating the adverse impacts caused by poverty.

In this article, we will explain how this concept emerged in the world and what its applications are. We will also discuss how it spreads and materializes, gaining prominence in different initiatives and governments.

Understand the origin of the concept

In the 70s, Muhammad Yunus, then a professor at the University of Dhaka - Bangladesh, was touched by the extreme poverty in which many families in the region lived and by their difficulty in receiving bank assistance.

Because they had no guarantees to offer in exchange for the transactions, most families and needy workers were left without protection, and those who managed to receive credit had to deal with high interest rates applied by banks as a condition for loans. Thus, local workers, mostly from rural areas, were unable to afford the purchase of materials and products that would boost their services and sales.

In this context, the idealist Yunus, who believes that every human being has a strong instinct for survival and self-preservation, capable of helping to get around the most diverse situations, defended that if resources were offered to these people, even in small amounts, it would result in a effectively improves their living conditions. Since, for him, the most effective way to help the poor would be to encourage what they already have strongest: their instinct.

Motivated by ideals of justice, this teacher carried out an experiment in which he granted a loan of a small amount of money to a group of women from the interior of Bangladesh, with the main objective of helping them to buy raw material for making handicrafts. . As a result, all the women who received the loan were able to pay their installments and interest within the agreed time frame, while still taking a small profit margin.

This experience proved to be very successful. It was the realization that it would be possible to reproduce this tested process indefinitely, proving that it is an advantageous system for both parties, opening doors for the emergence of innovative businesses of a social and inclusive nature. It was also a key moment marked by the emergence of new discussions and important concepts, such as the terms 'microcredit' and 'social enterprise'.

In the 1980s, as a result of Yunus' ideas and experiences, the ‘ was created.Grameen Bank’, essentially aimed at the poorest and recognized worldwide as a Rural Bank. It is based on the concept of microcredit ("grameencredit”) and maintains as its main objectives to guarantee the conception of credit as a basic human right (with low interest rates and little bureaucracy for the granting of loans) and to effectively help families in poverty.

Thus, the visionary proposal on behalf of these families was to create new 'self-employment' opportunities for the precarious unemployed in rural Bangladesh, providing activities that would generate continuous income. Bringing people together, especially poorer women, within a thriving organic system that they could understand and manage on their own.

Today the Grameen Bank is celebrated as a pioneering initiative in the sector 2.5 . And, through his work and because of his success in eradicating poverty in Bangladesh, Muhammad Yunus is recognized worldwide as the winner of the World Food Prize (1994) and winner of the Nobel Peace Prize (2006).

What is a social enterprise?

The term social enterprise (or business) is one of the most important concepts within the innovative model proposed by the sector 2.5 .

• What is social entrepreneurship?

They are organizations belonging to the second sector, but in which the main objective is to provide social benefit. The concept was conceived and founded by Muhammad Yunus, and is deeply related to at least three key issues: the human nature, poverty and self-sustainability of a business.

The social enterprise standard, adopted with the Bank gramen in Bangladesh, it was transformative. Seeking to reach specific social goals, it demonstrated that a company does not need to have profit generation as its sole purpose.

• Solidarity Economy: what is it?

Therefore, to correctly understand this concept, it is necessary to take into account the complexity of the origin and social consequences of poverty, and take as a basis a multidimensional understanding of human nature, that is, different from that proposed by the current economic theory (in which the human happiness would be related to financial success).

The need for a social enterprise to be self-sustaining (capable of generating enough income to cover its own expenses) is also fundamental. So that a part of the income generated by these companies is invested in their own expansion and another part is set aside for occasional expenses. The company, therefore, generates profit, but investors do not appropriate it (except in the recovery of the original investment).

The principle of profit maximization (encouraged by the second sector) is then replaced by the principle of social benefit (encouraged by the third sector). Dealing with a self-sustaining project that enjoys great growth and expansion potential for the entrepreneur, since the profits remain in the company, and for society due to the benefits and services offered. Thus, these companies develop as true transforming agents in the world.

However, care must be taken not to confuse the concepts of 'social enterprise' and 'corporate social actions'. Social actions of an enterprise are characterized by the investment or allocation of part of the business profit to support social projects that benefit poor populations. A social enterprise, on the other hand, is an enterprise designed with the essential objective of ending a social problem arising from poverty, fully using the company's profit for this purpose.

• What are impact businesses

How did these concepts stand out around the world?

Between the 1990s and the beginning of the 2000s, different countries launched business models designed along the lines of social enterprise and the sector 2.5 .

Founded in 1995, the Grameen Shakti (Grameen Energia), provides conditions for the production of more efficient stoves, solar energy, biogas and organic fertilizer for the rural population of Bangladesh.

The first experience reported in a developed country took place in the United Kingdom, in 2002, and it involved two organizations: the “Social Enterprise Coalition”, a research incentive organization, and the “Social Enterprise Unit”, which sought to promote social businesses.

In 2004, the UK Ministry of Industry and Commerce established the legal forms associated with the English concept of social business, called Community Interest Company (CICs).

In the United States, the best known experience took place in 2007. It was the unfolding of Grameen Bank, founded by Yunus in Bangladesh. O 'Grameen America’ opened in Queens to provide small, unsecured loans to local women who wanted to start modest businesses or expand existing ones.

Another remarkable experience occurred with the Grameen Danone, founded in 2006. This company produces a type of yogurt fortified with all the micronutrients necessary for the healthy development of a child. The product is sold at a different price, which allows access to the poorest population. Interestingly, since owners cannot withdraw dividends, the profit of Grameen Danone it is fully evaluated by the number of children who have overcome malnutrition in a given year.

Gaining strength in Brazil

In Brazil, experiences are still a little more contained.

The greatest example is the company Artemísia, founded in 2004, a pioneer in social business in the country. It was created with the objective of attracting and training qualified people to work in the development of this new business model, offering practical training and supporting social businesses. In this way, it actively contributes to the articulation of critical mass and the development of social businesses in Brazil.

However, despite efforts and positive results, this model still generates some mistakes when treated in Brazil.

As already mentioned, there is the possibility of confusing the concepts of social business with the companies' commitment to incorporating socially and environmentally correct actions, the latter being a key element in the quest for sustainability. And, since sustainability, in turn, is a mandatory subject in the business world these days, this generates a rush of companies to adapt to the new requirements imposed by all stakeholders. Often, in this race, competitiveness between companies ends up predominating and activities can end up being carried out without an alignment of concepts, planning and prior studies of impacts and effective results.

Furthermore, the national business and social context are historically different from the European and American context. Therefore, for the implementation of this innovative model, proposed by the ‘ sector two and a half ’, it is necessary to identify the possible difficulties and potentialities of the Brazilian business scenario.

Check out the video originally published by the joint venture Danone-Grameen. In it Muhammad Yunus explains in a simple and clear way the ideals and objectives proposed by a social enterprise.