Where inequality persists, social entrepreneurs can step in to bridge the gap

In the face of Latin America’s challenges of ongoing inequality, stalling growth rates and corruption, there is a door of opportunity: enter social entrepreneurship as an engine for inclusive growth, sustainability, and transparency.

Social entrepreneurs promote inclusion and diversity in the region's economies through the wide range of goods and services they've conscientiously designed to meet the dire needs of poor communities in Latin America. In particular, prominent community members of the Schwab Foundation for Social Entrepreneurship have achieved great successes in education and skills, financial inclusion, governance, and sustainable solutions for the environment.

Ahead of the World Economic Forum on Latin America 2016 in Medellín, Colombia, here’s a closer look at some of the Schwab Foundation Social Entrepreneurs changing the face of the continent.

Education

In Colombia, Escuela Nueva came up with an innovative model that is child-centred and collaborative in its learning approach. As they significantly improved basic education in the country, their initiative was brought to the attention of policy-makers. They then effectively partnered with government to turn the model into national education policy, reaching 20,000 rural schools. The initiative has since impacted over 5 million children in the country and beyond.

Another pioneering model of education is Geekie in Brazil, which developed a ground-breaking online platform that integrates technology into the curriculum of over 650 schools in the country. It enables low-income students to access personalized study plans through apps, tablets and PCs. Through this agile technology, students can also monitor their own performance. Geekie Games, one facet of this online adaptive learning portal, has proven especially effective in preparing students for the most important national exam of the country. It features fun video lessons, exercises, exam simulations, and tips to motivate students towards excellence. Overall, Geekie has served more than 3 million registered users on their platform, tailoring technology to transform students’ lives.

Skills Training

In Mexico, where 69% of the population lacks access to the internet and computers, Enova trains young people in ICT skills through a network of educational centres in peripheral neighbourhoods. The initiative, thereby, goes a long way in bridging the digital divide and harnessing the region's demographic dividend by providing young trainees with access to the job market. Alongside information technology, Enova equips people to start their own small businesses in low-income communities. This combination is powerful in accelerating people in their entrepreneurial know-how and upward mobility. Since the initiative began, Enova has served almost 1 million people.

Financial inclusion

In Colombia, where inequality is one of the highest in the region with 60% of the population living under the poverty line, Fundación Social mobilizes thousands of poor workers to save money and build long term assets through an array of accessible financial services. The initiative is a major shareholder in Banca Caja Social Colombiana (BCSC), which builds the trust of historically marginalized communities to formally engage in their services that focus on savings, investment, credit, and mortgages. To encourage the poor's use of the banking system, BCSC offers financial incentives for people to save on a consistent basis, which led to a 9% increase in clients. Fundación Social now stands as the fifth largest private financial group in Colombia, holding about 6% of the banking market. Overall, 5 million low-income people benefit from their services, which substantially work to undermine the structural causes of poverty in the country.

While Fundación Social tackles financial inclusion through the banking system, Lumni approaches it by way of education in connecting students with limited means to feasible financial assistance to a university degree. Lumni's human capital contracts effectively offer an alternative to the crippling convention of a student's mandatory payment of the full principal, interest, and fees of a school loan, by allowing him or her to pay back the loan with only a percentage of their income when they secure a job after graduation. These loans are backed by Lumni's network of investors who are driven by a double bottom line approach of profit on one hand and gratification on the other in providing talented students with access to opportunity. The contracts create a win-win deal as the post-university income differential exceeds the amount each student needs to pay to the investor in return on investment. Lumni is considered a leader in innovative student financing and has funded over 7,000 students in Chile, Colombia, Mexico, Peru and the US.

Environment and sustainability

Moving towards the de-carbonization of economies, South Pole Carbon provides climate smart projects with access to finance through international carbon markets. To date, the company has enabled over 250 projects around the world to implement models for renewable energy, waste treatment, and forestry management. In Colombia, they collaborate with the Ministry of Environment to carry out reforestation interventions. Overall, South Pole Carbon has been instrumental in the reduction of millions of tons of CO2 and the creation of thousands of jobs worldwide.

Meanwhile, Envirofit has made its own substantial strides in reducing 15.3 million tons of CO2 emissions. The company produces high quality stoves with efficient combustion chambers that emit up to 60% less smoke while cooking food 50% faster. Such stoves save women in the developing world from the time-consuming and dangerous task of walking miles from their villages to gather wood. In addition to increasing end-user efficiency, the stoves are rigorously designed for easy use and fit in local cooking cultures such as the plancha model for tortilla making in Honduras. Since it began, Envirofit has sold 900,000 stoves and impacted over 5 million users.

Gaia Amazonas (FGA) contributes to the reduction of CO2 emission by taking care of the age-old ecosystems that clear and clean the air: forests. Over decades, FGA has collaborated with indigenous peoples to protect 25 million hectares of Amazon rainforest in Colombia. They have supported these communities in defending their land rights, conserving their territories, and strengthening their traditional practices of forest stewardship. FGA currently works with more than 45,000 people, which accounts for 50% of the Amazon population in Colombia.

Transparent Governance

As corruption among government and corporate entities remains a key concern in the region, Agenda Pública's response is to pave the way towards transparent governance. In the current economic crisis of Brazil, the initiative has stepped up to be highly relevant and timely in training public administrators to better manage the development of rural municipalities throughout the country.

They do this by partnering with local governments and private companies (pointedly from the mining industry, which has heavy interest in resource extraction in rural areas) to sponsor training programmes. In the drive towards transparent and effective governance, municipalities are called upon to implement solid public services, parameters for environmental safety, and the sustainable management of natural resources. To this end, Agenda Pública has trained more than 5,000 administrators in basic infrastructure, another 5,000 in policy development, and 600 municipal officials in working groups for the extractive industries.

At the core of all these social enterprises is the striking ability of their goods and services to empower the marginalized communities they serve. These entrepreneurs help to provide education, jobs and financial stability as well as care for the environment. They dare to shake up a region where severe inequality has been the norm for decades. And at the end of the day, they may just move Latin America towards something novel: humane growth.

The World Economic Forum on Latin America is taking place in Medellin, Colombia from 16 to 17 June.

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