Alfie Othman On Growing The Social Enterprise Movement In South-East Asia
Alfie Othman has had a successful banking career of over twelve years. Alongside his private sector work, Alfie devoted significant time to the public sector and civil society.
Alfie is recognised as a Social Enterprise practitioner within Singapore. He initiated the formation and was the head of the first urban microcredit scheme in Singapore. The Micro Credit Business Scheme was launched in November 2011. He is an advisor to BMT Ventura, an investment venture company that manages a micro-finance co-operative with a membership base of 2.2 million people in Indonesia. In 2014, Alfie set up an industrial catering kitchen which provides jobs to workers from marginalised sectors, such as ex-offenders, single mothers, and persons with disability.
From 2013-2014, Alfie joined a four-member protem committee to set up the Social Enterprise Association and was the Executive Director. The Social Enterprise Association represented one of the important intermediaries in the social enterprise sector and has a membership base of close to 450 members. In April 2015, Alfie was appointed as the CEO of raiSE, Singapore Centre for Social Enterprise. Alfie is also a Fellow at the Singapore University of Social Science in the area of Financial Inclusion.
Alfie discusses the defining characteristics of social enterprises and opportunities for the impact led business movement to grow across South-East Asia.
Highlights from the interview (listen to the podcast for full details)
[Tom Allen] - To start off can you please share a bit about what led to your passion in social enterprise?
[Alfie Othman] - What led me to social enterprise was trying to solve a problem that my community faced. I came from a humble background and most of the people I grew up with are ex-offenders.
I gathered it was quite difficult for them to get a job, and was thinking to myself about 20 years ago, “why don't I set up my own business and hire these people?”
I know it's going to have an effect on my profitability or my financial bottom line, but my view was as long as the business is not losing money and I can employ a decent percentage of my workforce from this disadvantaged group, it should be a good business model to expand into. The concept of social enterprise then was still early and not talked about globally or even locally in Singapore. That was the starting point, and since I pushed that agenda, more gathered interest and wanted to know more about the concept of doing business, being sustainable and creating an impact. That pulled me in, and ever since I've had a strong belief that this is another avenue of solving the issues of inequality and equality as far as providing employment to society at large.
With experience in banking and investment, tell us more about your involvement with raiSE and the work you've been doing?
RaiSE is typically a sector developer. We started in 2015, and the work of raiSE is to raise awareness of social enterprises in Singapore and also the sustainability of social enterprises. It doesn't mean anything, it's an actionable word. We started in 2015, grew into 2020 for the first five years, then COVID hit globally. We pondered our progress and said that during the first five years, we did a very good job of developing the sector. We performed typical programs you see as a sector developer, built capacity, created awareness as a membership body and facilitated networking amongst our members and towards the business ecosystem. That is what we have done for the last first five years and continue to do as we move on. But, in the next five years we are quite sure we need to build an ecosystem. We need to pull in MNCs, big businesses, government, policy makers, higher learning institutions like universities, trade unions into the social enterprise sector.
Building a conducive playground really helps not just to build the sector, but also to create awareness, to bring in talent (which is very important these days to the sector) and also to bring private capital into the sector.
This is also just as key as social enterprises need to scale.
What is unique about the social enterprise movement in Singapore?
When we started this journey back in the year 2000, we looked at various models. We looked at the one in South Korea, and also particularly at the one in the UK. The sector seems to be a combination of a top down and bottom top approach of developing. Korea especially was quite heavy on the top down approach, where in the early days they set up a policy or legislation on what is and what is not a social enterprise. We decided to take the other approach, in terms of the community and the social enterprise sector itself defining who they are. That being said, we need to have a silhouette of characteristics a social enterprise must have. We don't define it from day one, but we encourage the characteristics of social entrepreneurship and social enterprise. Typically, there are three things we are looking for.
One, you have a revenue model that is fifty percent market driven, meaning you can't depend on more than fifty percent of donations or sponsorships.
Number two, twenty percent of your resources have to be intentionally allocated to creating an impact. I'll give you an example of this twenty percent. Assume you want to call yourself a social enterprise by providing jobs to a disadvantaged group, if you have a work force of one hundred people and you employ five, it's a good CSR program. But, this is not good enough to be considered a social enterprise member under raiSE. It has to be a twenty percent threshold of resources allocated for such things.
The third criteria is creating products and services deemed to be innovative at that point of time. This can cater to accessibility or affordability to a disadvantaged group. Say for example you develop a wheelchair with a washing machine on it, now it might not be useful, but it's something new. But what if it is needed? Now, raiSE is not a subject matter expert in disability, so we refer to higher institution learning or even non-profits, government agencies or experts in that social ecosystem. If they validate the product by saying, "yes, we need a wheelchair washing machine," then we will encourage that product to exist.
What key opportunities are you observing when it comes to growing the social enterprise movement in Singapore? What are you prioritising?
The low hanging fruit is in creating employment for disadvantaged groups. Now, this is part of the inequality or inclusive movement that almost every society, community and economy needs to address. But unfortunately, that impact has a big effect on conducting business. We have data to also show that typically employing a disadvantaged group means training costs are slightly higher. Because of this type of employment creation business model, the scalability function of that model makes it quite tough to attract capital. Therefore, the challenge, although it's a low lying fruit, means you can basically achieve impact easily by setting up a cafe and employing maybe five staff members from disadvantaged groups. But, to scale up a cafe is quite tough, because it's heavy on the capital expenses.
Although getting that impact is quite ‘low lying fruit’, in the business side of things it is a challenge. On the flip side, we see more social enterprises creating products and services using technology, especially through wellness apps and so forth.
Now these are scalable businesses, and typically the capital expenditure is a onetime heavy investment. But in terms of expanding, it is cheap. To measure that impact as you scale itself is the challenge. Because you can't see or measure those impacts as easily as say when you are creating an employment model.
What advice would you give to organisations who are out there operating businesses, but are seeking to embed impact into the core of their work?
You have to be balanced. Impact is a given, because that is what drives you to do this in the first place. Of course, you talk about measurement, that is very important as well. But find collective understanding and agree on how you measure impact with your key stakeholders, investors, staff, colleagues, your own internal organisation, board members and the disadvantaged group you're trying to help. If you find reaching a consensus and making an agreement that, "this is the way we will measure impact," is difficult, then put it aside and focus on your business model.
People get fixated on how to measure impact and then try to get buy-in from people who are outside your business or ecosystem. I think that there's no way we can have a global measurement or standard for measuring impact in the next 20 to 30 years.
We are so far out in terms of establishing a universal approach to measuring impact. Try not to focus on that for the time being. Look internally, get consensus from your stakeholders, and then just focus on a business model that is sustainable.
What social enterprises from Singapore are doing inspiring work and embedding impact deeply within the businesses they operate?
I've been asked this question many times; how do you define success and what are the interesting social enterprises in Singapore? To be honest, raiSE has a membership of about 350 members, all legal business entities in Singapore. I see them as the same, even if you are a small cafe hiring two blind men opposed to a tech social enterprise that just became acquired by a listed company in Singapore, I see both as very interesting. I don't differentiate in terms of the impact they create or the profitability they have enjoyed over the last few years of their journey. I do not see any difference.
Do you see a growing interest and strong momentum being gained in the area? Do you see this as a growing movement?
Yes, it's very exciting. The profile and founders of social enterprises have changed over the last few years, maybe across a decade or so. Additionally, 10 years ago, if you talked about social entrepreneurs in Singapore, you would see more or less midlife crisis people who have worked for ten years in the business world trying to step out and do good, therefore adopting a business model we call a social enterprise.
Now, you see younger founders, maybe in their mid to late twenties, who work a few years after they pass university and are quite sure that meaning and purpose is the key to the way they're going to lead their life. Setting up a social enterprise will be one of their first options.
The fact they are younger founders means they are more likely than not going to use technology as a tool and want to achieve scalable impact beyond Singapore.
When we look more broadly at Southeast Asia, where are you seeing other really strong examples of social enterprises raising up as a movement?
The traditional five countries in South-East Asia, Thailand, Vietnam, Indonesia, Malaysia and The Philippines are quite exciting. Thailand has early legislation arising and a definition model more or less similar to Singapore’s model. The Philippines has always been very focused on microfinance and disaster relief. Indonesia is very exciting; across the 300 million people it has a very young population and a vibrant social enterprise ecosystem. But the challenge is the same. Indonesia is very large; you can't have an equivalent of raiSE because they are well spread across the archipelago. Vietnam offers the same excitement as Indonesia. What we hope to gain from all this is that Singapore has always been the financial hub of ASEAN, and this is where the capital is. We are focusing more on impact investment with the funds based in Singapore. Hopefully with that movement, we have a commonality of what we are trying to achieve as an ecosystem from an ASEAN perspective.
To finish off then, what books or resources would you recommend to our listeners?
It depends on the stage of your life. If you're someone that is young, continue to read books and acquire technical knowledge that gives you an ability to execute. I discourage people from reading self-help, because it takes away from your own personality and views. If you are someone in your thirties onwards, stop reading books! Now is the time for you to write your own books, to act and leave a legacy behind. It’s a different perspective, but I don't recommend reading books if you are at the stage of your life where you should be doing something. What COVID-19 has taught us is life can be short, and you don't want to be reading books and acquiring knowledge but not doing things. There's so much joy in doing things. If it's a success, you're going to get all the commendations and rewards. If it's a failure, you learn and become stronger for next time. Life is short, we know that.
