Yunus Social Business Incubates Social Businesses in Haiti

Summary

In 2011, in response to the 2010 earthquake in Haiti, Professor Muhammad Yunus, the Grameen Creative Lab (GCL), and SAP AG committed to launch Yunus and You Haiti (YY Haiti), a fund which identifies and invests in social businesses with a high social and ecological impact. YY Haiti provides business development services and investment opportunities so that selected social entrepreneurs can develop their businesses. Over the next two years, GCL aims to raise at least $4 million for the YY Haiti Social Business Fund (YSB Haiti) and fund at least 12 social businesses in Haiti.

Approach

APPROACH AND METHODOLOGY
Following the earthquake, Nobel Peace Laureate Professor Muhammad Yunus, the Grameen Creative Lab (GCL), and SAP AG decided to promote social business by fostering the development of small and medium enterprises, with the ultimate goal of strengthening the private sector in Haiti. Historically, Haiti has experienced many traditional charity projects that are often implemented without a sustainable impact. In contrast, social businesses can offer a new approach to generating sustainable income. According to Professor Yunus, ‘Social business unites the dynamism of traditional business with the social conscience of charity.’ GCL’s goal is to demonstrate that Haiti can create an environment of successful social business.
The commitment – launching Yunus and You (YY) Haiti – clusters its social business activities into three areas including education, environment and agriculture, and nutrition.
The initiative has four main objectives: 1) establish the YY Haiti Social Business Fund to provide investments for social businesses 2) provide support to set up social businesses especially to the poorest in Haiti 3) establish long-term and self-sustainable businesses for Haiti’s development; 4) address relevant social needs and strengthen private sector and entrepreneurship rather than relying on donations.
All potential social business entrepreneurs go through a four-step due diligence process prior to GCL taking an investment decision. The GCL investment criteria do not only include financial sustainability and the ability to repay the investment but also – and especially – social and environmental impact. Only the entrepreneurs who are really committed to the principles of social business and who present a well thought-out business plan will receive an investment. Unrealistic or unattractive projects are weeded out while promising social business models are further checked in process. After the investment decision has been made by the Investment Committee, the fund manager provides the entrepreneurs with business development services to support their long-lasting success and ability to pay the investment back after a certain period of time.
In order to raise awareness about the YY Haiti Fund, the GCL Haiti team markets to social business throughout Haiti via intense networking, workshops, on-site visits, and various marketing and communication measures, such as a GCL homepage, brochures, and informative sessions in the GCL Haiti office. As a result, many potential Haitian entrepreneurs approach GCL to learn more about the social business approach. Instead of making one-time payments like donations, GCL supports these Haitian businesses with long-term investments, approximately eight to ten years.
GCL Haiti offers investments, coaching, and business development services via the Fund Manager’s expertise as well as taking advantage of the great network of social business experts and functional experts within the Grameen family of organizations.
The YY Haiti initiative supports any kind of social business that addresses a social need. The entrepreneur needs to be committed to Professor Yunus’s definition of social business and needs a convincing business plan – independent from the entrepreneur’s financial situation. Furthermore, GCL’s approach particularly targets the poor, who are unable to access collateral, as well as young people. As Haiti’s future and biggest asset, GCL will put a special focus on social businesses addressing young people’s needs. One example of an investment decision GCL has already made is in the establishment of an entrepreneurship training center for local high-school graduates, entrepreneurs, and managers. The center provides practical training in entrepreneurship, business development, and social business and creates a thriving small-business environment that will have a significant positive impact on the local Haitian community.
IMPLEMENTATION, TIMELINE, AND DELIVERABLES
In 2010, an in-depth needs analysis was completed in Haiti, including the initial set-up of the YY Haiti team and GCL Haiti office. YY Haiti developed a business plan according to the social business methodology as defined by Professor Yunus, as took the first steps to acquire funding. In addition, leadership defined a project management team, as well as the team’s roles, responsibilities, deliverables, and milestones. The team aligns with the Accenture Management Consulting methodology: the company has supported the YY Haiti initiative on a pro bono basis by covering the project lead’s role with an Accenture consultant from mid-2010 until the end of 2011.
During the final months of 2010 and in 2011, the implementation phase started. Two employees were hired, the office officially opened, and two Social Business Labs took place in Port-au-Prince. Potential social business entrepreneurs, NGO’s, students, as well as interested individuals, were given an opportunity to learn about social business, the Grameen family of organizations, the Grameen Creative Lab and the YY Haiti team’s work in Haiti. Professor Yunus will visit Haiti for the first time in October 2011.
Through the end of 2012, GCL Haiti aims to invest in 12 social businesses in Haiti. Beyond 2012, GCL hopes to continue to assist social businesses, as well as create joint ventures with international partners.

Background

Haiti is one of the poorest countries in the western hemisphere and furthermore, it was devastated by a disastrous earthquake on January 12th, 2010. The country has a long history of international aid organizations’ support and ongoing engagement to solve social, political, economic, and ecological problems. However, until 2010, a Social Business Fund had not yet reached Haiti.

Progress Update

November 2015

In 2014, Yunus Social Business Haiti (YSBH) continued to develop a pipeline and invest in social businesses in Haiti. YSBH receives and analyses on average 100 business plans per year. To date, YSBH has invested in nine social businesses, with four more investments to be completed by the end of 2015. The amount invested by YSBH in the social businesses is $1.8m, in the form of below-market long terms loans or equity participation.
The three latest investments include: Pain O Quotidien, a bakery in the town of Saint-Marc; DIGO Distribution, distributing locally produced essential cleaning products at 1/3 of the market price to the bottom of the pyramid; and Kreyol Essence, producing cosmetic products based on traditional black castor oil, creating stable jobs for Haitian farmers.
Regular events are organized by YSBH to explain the model and offer an opportunity to the public to participate in the social business movement in Haiti. In early 2015, Professor Yunus came to Haiti for three days and held a conference on social business with more than 400+ attendants, which the Prime of Minister of Haiti attended. In addition, Professor Yunus met all of the YSBH entrepreneurs and visited several YSBH portfolio businesses on site.
In 2014, YSB formed a strategic partnership with USAID as part of the Global Development Alliance, and secured $1.5m to support operations and continue develop more social businesses in Haiti.
The accelerator has launched in several other YSB countries (Tunisia, Albania, Brazil, Uganda) over the last two years, and has proven to be a very efficient way to attract and develop entrepreneurs who are passionate about social business, some of which are great investment opportunities. YSB has adapted the accelerator format to the Haitian context, but the philosophy stays the same.

Partnership Opportunities

Yunus Social Business (YSB) accelerates and finances social businesses, enabling entrepreneurs to solve social problems in a financially self-sustainable way. After a successful first experience in Haiti, YSB is now active in seven countries where local country offices source, coach and mentor entrepreneurs through structured accelerator programs. Most promising social businesses are financed and provided with post-investment support.
YSB is now looking for new partners to develop this approach to more countries.