The British Council has published a report entitled A Review of Social Enterprise Activity in the Philippines which finds that social enterprise is vibrant and growing in the Philippines, awareness is rising, and the country is on the cusp of important policy changes that could see social enterprise have a much wider presence and impact in coming years.
The Philippines is a populous (107 million people) geographically dispersed (7,107 islands) and youthful country (34% of the population under 14 years old), where more than a quarter of the population lives below the poverty line. It has a strong entrepreneurial culture, with one million Medium and Small Enterprises, which account for 99% of all businesses in the country.
A survey taken in 2007 established that there were 30,000 social enterprises in the country, a majority of which were cooperative or associations of some form. Few of these operate at scale, though there are some notable exceptions.
Maria Angela Flores, who leads the British Council’s social enterprise programme in the Philippines, said, “it seems that the overwhelming majority of formal social enterprises in the country are product or commodity-based. This suggests that there are vast opportunities for social entrepreneurs to address unmet demand by moving into new sectors such as health and education.”
Legislative and funding support
While there is no social enterprise-specific legislation in the Philippines yet, two Bills are currently being debated which could provide substantial support for the sector. These bills were introduced by policy makers such as Senator Bam Aquino who met with leaders of the social enterprise movement in Europe during a visit organised by the British Council.
One of these is the Philippines Social Value Bill, modelled on the UK Social Value Act, which would include ‘social value’ in all government procurement – meaning that bids for any government contract put out to competitive tender would have to be evaluated on the social benefit to society they would deliver as well as on their value for money and product or service quality. This social benefit might include “support for poor communities or marginalized groups, advancement of human rights and social justice, protection of the environment, and community development.”
Funding for social enterprises is available from microfinance lenders, foundations, donors such as the Asia Development Bank (ADB) and from social impact investors such as LGT Venture Philanthropy and IIX (Impact Investment Exchange Asia). Another source of funding is the Filipino ‘diaspora.’ The Philippines has one of the largest diasporas in the world, with around 12 million Filipinos living abroad, and the economy is heavily reliant on the remittances they send home. Some overseas workers have invested in a fund which provides capital to social enterprises alongside business skills support.
Challenges: geography, scale and skills
That said, few social enterprises are sufficiently large or scalable to absorb significant amounts of capital, and they struggle to reach minimum investor thresholds. The geography of the Philippines creates particular problems for achieving economies of scale to attract finance and for replicating and scaling success.
Moreover, there is a skills gap in terms of knowledge of the commercial side of social enterprise operations – business development and management, accounting and legal and fiscal processes as well as marketing, logistics and distribution.
A growing number of support structures are emerging to support the sector. These include an increasing number of universities and business schools that provide social enterprise undergraduate and post-graduate programmes, or social enterprise modules as part of other programmes. Other sources of support include chambers of commerce and some corporations. Support seems to work best when targeted to the needs of individual enterprises, or accessible to enterprises as and when they require it.
Looking ahead, the British Council’s Maria Angela Flores said, “We hope that this report will be a useful resource for all stakeholders helping to build the movement here and expect that it will greatly inform our future work in embedding social enterprise in the development agenda."
A Review of Social Enterprise Activity in the Philippines was prepared for the British Council by the Overseas Development Institute (ODI), one of the UK’s leading independent think tank on policy and practice for international sustainable development. ODI has worked with the British Council to implement studies on the social enterprise landscape in Ghana, Bangladesh and, now, the Philippines.