Social entrepreneurship in Latin America

07/24/2021

Social entrepreneurship is gaining momentum, as entrepreneurs are increasingly interested in transforming the reality of their communities through the development of projects that help mitigate the social problems facing the planet.

Promoting women's empowerment, the development of rural communities, the care of ecosystems and the fight against climate change, among others, are the causes that are driving the efforts of entrepreneurs in different parts of the world.

Latin America is no exception, since in recent years great projects have emerged that seek to promote the economic, social and sustainable development of their communities. This is all the more relevant given that the region is marked by profound social inequality.

According to reports from the United Nations (UN), in 2020 poverty reached one of its highest levels in the last 20 years, due to the effects caused by the pandemic. In this year, a level of 12.5% of people in extreme poverty was reached, which represents about 78 million people and adds up to 8 million more than in 2019.

Analyzing the situation of social entrepreneurship in Latin America is not an easy task, since there are not enough studies to have comparative data of what happens in this region and in other parts of the world. However, recently Andrea Prado, from INCAE Business School, examined the available information.

Among the data found is that the Special Report on Social Entrepreneurship of the Global Entrepreneurship Monitor (GEM) divides social entrepreneurship into two groups: nascent projects and projects in the operational stage. In the case of Latin America, this study indicates that most ventures are in their nascent stage.

Other interesting data on Latin American social entrepreneurship is that 58% of the projects are led by men, while 42% are led by women. In addition, it is estimated that 40% of social enterprises in the region generate more than 5 jobs, 63% have volunteer staff and 67% have growth expectations.

Regarding the issue of economic capital to carry out these projects, the GEM study shows that social entrepreneurs in Latin America usually finance their initiatives with their own resources, or with the support of their close circle, such as family and friends.

External financing is sought until more advanced stages of the project and the main challenge they face is accessing bank loans, since these financial institutions do not consider projects with a social focus to be attractive. Therefore, entrepreneurs look for other alternatives, such as impact investments whose purpose is to contribute to social or environmental causes and see in them a financial return.

On the other hand, VIVA Idea's report on social entrepreneurship in Latin America indicates that around 30% of organizations do not have impact indicators. This, of course, represents a problem for the promotion and growth of projects.

Despite the problems and challenges of promoting social entrepreneurship, many have been strengthened and achieved great achievements, even obtaining recognition and support in platforms such as the Cemex - Tec Award. For 11 years, this space has given entrepreneurs from around the world the opportunity to present their ideas and projects with which they seek to transform the world.

Many of the winners have been established projects operating in Latin America, and have achieved great changes in the social, economic, ecological and even food of communities and regions. Today, more than ever, social entrepreneurship is essential to reduce the effects that Covid-19 has left, especially among the most vulnerable groups.

If you are an entrepreneur, do not miss the opportunity to be part of the call for the next Cemex - Tec Award, because you can be part of the entrepreneurs who will continue to drive real change on the planet and promote collaboration between sectors to find solutions to the problems of society.


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