Social Entrepreneurship in Times of COVID-19

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Social Entrepreneurship in Times of Covid-19

In these troubled times social entrepreneurship can play a big role in mitigating the risks and damage made by COVID-19. From raising awareness activities to field work, social enterprises are always there to help the authorities if there is a need and if they are asked to. In North Macedonia, there are a few positive cases of social enterprises working with the authorities to help the citizens in time of COVID-19 when almost everything is in stagnation threating the economic and social security of the country. 

But let’s start from the beginning…

On a global scale, the G20 committed to injecting over $5 trillion into the global economy, as part of targeted fiscal policy, economic measures, and guarantee schemes to counteract the social, economic and financial impacts of the pandemic. The G20 asked the World Bank and the IMF to regularly update them on the impacts of the pandemic, their response, and policy recommendations. The G20 will continue to address risks of debt vulnerabilities in low-income countries due to the pandemic. The G20 also asked the International Labour Organization (ILO) and the Organisation for Economic Cooperation and Development (OECD) to monitor the pandemic’s impact on employment. 

On a regional level, the European Parliament backed two packages of financial support for countries affected by the coronavirus outbreak. The instruments include an investment initiative worth €37 billion and widening the scope of the EU Solidarity Fund by up to €800 million so that EU countries can draw from it in case of a public health emergency like the COVID-19 outbreak.

The countries have started to introduce economic measures to help the business owners and their employees and in order to more easily overcome and mitigate the negative effects of the crisis caused by the COVID-19 virus pandemic. The banks take special measures (based on government decision, not as good Samaritans) to facilitate the repayment of all credit exposures of legal entities and natural persons.

In North Macedonia, the government has put in place an initial set of measures for the most vulnerable sectors, such as tourism, hospitality and transport, to make it easier to deal with the aftermath of the Corona virus.

Very soon the business will have direct financial support of 5.7 million euros through the Development Bank of the Republic of North Macedonia. What is important here is that these loans are interest-free, with an interest rate of 0 percent! The grace period of these loans will be 6 months and the repayment period will be 2 years (Government of RNM, 2019). 

Each company, depending on the number of employees, can receive from 3 thousand to 30 thousand euros. Micro companies with up to 10 employees will be able to borrow from 3 to 5 thousand euros, small companies with 10 to 50 employees will be able to borrow from 10 to 15 thousand euros and medium-sized companies with 50 to 250 employees will be able to borrow from 15 to 30 thousand euros (Government of RNM, 2019).

Although there are many discussions and debates about the appropriateness of the measures, in this column I am focused on how these measures affect social entrepreneurship.

In North Macedonia, social entrepreneurship is not recognized as a separate category and form of enterprise since there is still no legal framework regulating this field. Thus, the first issue is the legal identity. Social enterprises in the country work under the Law on Trade Companies and Law on Associations and Foundations. They can be found mostly registered as trade companies, associations and foundation and cooperatives.

Consequently, social enterprises that are registered as trade companies can be a subject of the measures, but those who are registered as associations, foundations and cooperatives could not receive financial support from the government despite being victims of the same proportions and from the same perpetrator. This leaves social enterprises in the grey zone again.

 Another issue is the lack of institutional support for and collaboration with social enterprises on a national and local level over the years. The development of the field is crucial in addressing immediate and long-term social issues. Social enterprises can facilitate smoother transition, raise awareness and provide solutions for the contemporary issues.

One positive example is the collaboration of the Municipality of Centar (in the center of Skopje) and the social enterprise “HumanaS” lead by the Association “Humanost” (translation: Humanity).  They have formed a mobile team for the purpose of greater collective security and prevention of the COVID-19. Due to the emerging situation, and in order not to make direct contact with other persons and to expose themselves to additional danger, all adults over 60 years of age on the territory of the Municipality of Centar who are weak and in poor health can ask for help. Their mobile team, respecting all precautions, will come to their home, provide them with the necessary assistance and support, and provide them with the necessary food, hygiene and/or medication.

Such examples showcase the core of social entrepreneurship, but also an opportunity for social enterprise to reach their potential as change makers.

However, the current situation of social enterprises remains in the grey area with a multitude of questions and issues pertaining their legal identity, functioning, financing and other.

This situation should be recognized as a teaching moment, to learn from the previous mistakes and shortcomings and provide the suitable support to social enterprises to help the authorities in alleviating and mitigating the issues present in the society.

Professional photo_Stefan Chichevaliev2

Stefan Chichevaliev

The author is the Executive Director of the Social Entrepreneurship Observatory, Program Manager at the Sustainable Development Center and a Researcher in the area of sustainable development with the specific focus on economic and social domains, and markets that work for the society.