Three of the 2010 Yale World Fellows, Shuba Chandran, Fares Mabrouk, and Ricardo Teran, shared their perspectives on entrepreneurship in developing countries. With collective business experience on five continents in industries ranging from high tech to agriculture, the Fellows offered their views on the variety of ways to find success and foster change through entrepreneurship and social enterprise.
Teran is co-founder and managing director of Agora Partnerships, a social enterprise that supports mission-driven entrepreneurs in Central America. He noted that the role of the social entrepreneur is to apply a business model to solve a social problem, a problem large enough that government alone cannot provide solutions. Agora improves entrepreneurs’ access to knowledge, capital and networks, thus strengthening firms and economies and providing opportunities for economic development in Latin America. Teran also spoke of how the Agora Venture Fund specifically provides financing to address the “missing middle” – the financing gap for companies too large for microfinance but not large enough to attract commercial investors.
Mabrouk is a successful Tunisia-based entrepreneur and co-founder of the Arab Policy Institute, which focuses on developing and promoting innovative policy solutions and reforms in the Middle East. Mabrouk echoed Teran’s concerns about the financing gap for entrepreneurs in developing countries, and discussed both the need and challenges of bridging microfinance and commercial lending. In Tunisia, one of the greatest obstacles for entrepreneurs is investor confidence in the region, assuring financing partners that the country offers a ripe and supportive business environment for them to grow their investments
Chandran, CEO of the Woodbriar Group and managing director of Tea Estates India, Ltd., discussed similar business challenges in India. She noted, for example, that India is currently 50 countries behind China on the United Nations’ “Ease of Doing Business” Index. However, she also highlighted a number of positive recent trends, such as the growing prevalence of entrepreneurship as a career choice among young people, over the more traditional, stable path of government employment. She highlighted one example of a success story in entrepreneurship in India – a rapidly growing company that uses mobile phones to allow migrant workers to easily deposit and transfer earnings. The 18-month-old company, which partners with local grocery stores and small shops, now has 180,000 customers and handles 7,000 transactions daily.
The Fellows discussed the challenges of blending financial and social goals. For Teran, the key strategy for a mission-driven business is to explicitly define the social/environmental goals of the organization from the outset. For example, with economic opportunity at the core of his own business model, he noted that his family business currently employs 16 single mothers who did not graduate from high school and who now, through training and their experience working for Agora, command much higher salaries than their peers. However, he also pointed out that his company is not carbon-neutral and thus does not have as positive an environmental impact as he would strive for.
The panel also raised questions about some long-established financing mechanisms for social enterprises in developing countries, such as microfinance. Chandran pointed out that while microfinance can certainly prove helpful to very small enterprises, it does not have a strong track record of enabling them to scale up.
The Fellows encouraged students interested in entrepreneurship and social entrepreneurship in developing countries to get involved with their organizations. Agora, for example, offers a summer internship program each year to graduate students, either at Agora’s office in Washington D.C. or in Nicaragua working directly with Agora entrepreneurs.
There is much work that still needs to be done to strengthen the environment for entrepreneurship in developing countries, as this is an important field for creating economic opportunity and social/environmental outcomes for citizens across the globe.
Written by Lindsey White
Edited by Lindsey Blumenthal and Lindsay Siegel