Self Actualization for All

The first “Cotton made in Africa Salon Matinée” in Berlin

In the last analysis, the organizers could have skimped on breakfast. The buffet stands virtually untouched at the back of a ballroom in Hamburg’s city-state delegation to the federal government in Berlin. The attendees are clearly more interested in discussion and networking: It is November 9, 2009, the 20th anniversary of the fall of the Berlin wall, and an exclusive group of representatives from industry, NGOs, and African embassies have gathered at the invitation of the Aid by Trade Foundation to meet with Nobel laureate Prof. Muhammad Yunus and philanthropist Dr. Michael Otto at the first “Cotton Made in Africa Salon Matinée.” The event kicks off a series of regular evening get-togethers slated to begin in 2010.

The topic this time: “social business.” Yunus explains that a company is a “social business” when it furthers a positive social purpose and reinvests its earnings either in the company itself, or in the goal it serves. Instead of relying on charitable donations, a social business generates revenues to cover costs, just like a commercial enterprise. Another term Yunus likes to use is “no losses, no dividends company.”

Ambassador Chalwe Lombe from the Republic of Zambia nods. He finds the criteria apt. Investment in such companies should bring tangible benefits and clear marginal effects: “It is very important for companies that they do not pour their money into a bottomless pit, but into a closed circulatory system.”

Unicef chairman Jürgen Heraeus names an additional reason why social businesses should get by without outside financial support. “The minute they’re subsidized, they can be accused of unfair competition.”

And how does Cotton Made in Africa fit those criteria? After all, its financial backbone is a charitable foundation that, by definition, expects no return on its investment. On the other hand, the foundation leverages the Cotton Made in Africa brand to open European markets to African small farmers who comply with its quality standards at prices slightly above market. Beyond training to raise cotton yield and quality, farmers receive dividend payments, and they benefit from local initiatives such as educational projects. Michael Otto, for one, contends that Cotton Made in Africa “is a social business, because we link entrepreneurial action and development cooperation in an optimal way and to the benefit of all involved.”

The question is not only whether business, “social business,” and charity can always be precisely delineated. It is also whether the three models can coexist at close quarters. Stefan Scholtisek of the consulting firm Accenture defines the borders of the three fields as follows: Charity is appropriate where nothing is yet present. Social business can begin with people who are poor but have possessions. And where there is prosperity, there is room for commercial enterprise. Thus the three economic models can thrive in parallel, and “everyone can realize his own potential.”

Yunus likewise feels that direct charity has its place in reaching certain goals such as getting new systems up and running. “We don’t give farmers alms to put their kids in school,” he says, defining charity. “We give them startup money so they will be able to help themselves.“ The sheer number of the poor is simply too large for any other approach. “You can’t change the world all at once,” he says. “But if you move one step at a time, you can get to a better starting point.”

Text: Annegret Nill
Photos: Nasir ali Mamun, Dhaka