Tuesday, October 6, 2015

Role of Government in Social Innovation Ecosystem?

There is general consensus that Government has a critical role to play in development of effective social enterprise ecosystem. However, there is less agreement on what that role should be. In my opinion, government should limit itself to coordinating activities for social enterprise ecosystem; it should be responsible for activities such as designing policies for sector, channeling funds and providing networking platform for supply and demand side players. Government should not be involved in managing actual operations of social enterprises which should be outsourced to 3rd party intermediaries who have expertise to produce best possible results in a cost effective manner.

Given the fragile social enterprise ecosystem in developing countries, there is a tendency for government entities to become involved in directly managing operations of social enterprises. This inevitably leads to suboptimal output for variety of reasons. Firstly governments do not have the required expertise to design, develop and deliver innovative social solutions to community in a manner that a professional social innovation focused organization would be able to do. Moreover, often taking over running of social enterprises means that government has to develop infrastructure and hire manpower to manage operations. Given the bureaucratic nature of governments, governments often end up spending well above the actually needed budget to achieve this. Lastly, government involvement inevitably leads to outcome of the project compromised by political influences that come to the fore due to government’s involvement in the project.

[1]Benazir Income Support program (BISP) in Pakistan is a cash transfer program on the same lines as [2] Bolsa Familia or Oportunidades in Brazil and Mexico respectively. Launched in July 2008, the program has expanded to cover 4.7 million beneficiaries across Pakistan with annual disbursements of around $650 million by 2014. Run directly by federal government, substantial investment has been made by the government to develop infrastructure and manpower for various units involved in running operations of the project. Under the program, selected households who are deemed to be making less than $60 per month are given around $15 each month in cash transfers to support their monthly budgets. The motivation behind launch of the program is the belief that cash transfers will allow the families to spend more on availing fundamental services such as health and education. However, today BISP is widely regarded as an inefficient program marred by government bureaucracy and corruption. There is no clarity on selection criteria used to select households as well any research on effectiveness of the program in reducing poverty. Critics of the program, and there are many inside Pakistan, claim that only 60% of BISP funds are going to deserving households. Rest of the funds are being diverted towards non-genuine households due to widespread corruption in government ranks.  


This is just one of many examples where government’s intervention in managing operations of social enterprises has severely compromised the effectiveness of the program.  Government’s core competency lies in coordinating resources for the economy and it should stick to that leaving specialized social focused entities to manage the operations of the social enterprises. What are your thoughts on this? 


 

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