Sustainable social entrepreneurship and social value creation applications for the financial sector in Swaziland

Dlamini, Phindile G
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Financial exclusion is a pervasive feature of developing countries that is viewed as a significant contributing factor to the socioeconomic ills of poverty and inequality. It results from market failure that creates deficit supply of financial services to sections of the population. Social enterprise finance institutions that include micro-finance organizations, development finance, cooperatives and informal groups, play an increasingly leading role as interventions to promote inclusion. The study examines the practices engaged by social enterprises in their mission to create social value using market interventions, to assess their capability in sustainably correcting for market failure. It probes the responsive strategies, actions and behaviour of these enterprises to the specific market failure conditions that exist in the financial sector. It also analyses the propensity of mission drift phenomenon among enterprises due to corporatization, and the conflict of missions faced by social enterprises. A qualitative empirical analysis of 9 financial sector social enterprises from 42 respondents in a combination of individual and focus group settings in Swaziland was conducted. The results show that social enterprises have become adept at alternative risk management strategies to ameliorate market failure conditions. Strategies include alternative collateral, exploitation of common bonds, relationship building, customer clusters, loan disbursements to suppliers and complementary support services. Social enterprises are evidently heterogeneous in their in their bias towards either sustainability or social objectives. They fall into a continuum between a commercial orientation at one extreme and a social one at the other. At the commercial end dwells enterprises that have adopted more conservative market failure mitigation strategies and a more aggressive self-sufficiency position. This is reflected in a stricter selection of customers, less directed demand led services, close to market related service charges, and investment choices in more financially rewarding activities. At the opposite end of the continuum are socially oriented enterprises that have a broader customer base, services strictly directed at specific segments of the population and subsidized service charges.
Thesis submitted for the Degree of Doctor of Philosophy