How corporate social investment in social enterprises can contribute towards alleviating the housing crisis

Ally, Naseerudin (2013-03)

Thesis (MBA)--Stellenbosch University, 2013.


Having inherited a huge housing shortage from the previous apartheid regime, the government of the newly liberated Republic of South Africa embarked on an ambitious programme to resolve the problem, as was required of it by its constitution. The government’s approach was (and is) to offer a once-off subsidy, which has become increasingly generous over the years, to qualifying households. Twenty years later, some three million dwelling units have been built, but there remains a shortfall of some two million houses, which is growing annually. Having regard to the size of the problem and the fact that it is growing despite Herculean efforts on the part of the government, it is clear that intervention by the private sector and civil society is required. The private sector, however, is constrained by the fact that profitability in the affordable housing market is small. In the absence of reasonable profit margins, and in the context of the fact that there is a dire need for adequate shelter, the question arises why corporations who have a long history of donating to social causes, do not allocate more of their corporate social investment budgets to organisations involved with the problem? The answer is that the need is for a private good that is already receiving significant government support, with the result that corporate social investment is crowded out. In addition, corporations are increasingly recognising the need to align their social investment strategies with their business strategies. This is not happening in the housing context partly because corporations are struggling to conceptualise the relationship between the two strategies, and partly because there is no framework within which to do so. Corporate social investment strategies are meaningful and justifiable when they open new markets and opportunities for the company. Successful human settlements exist where economic and social opportunities are integrated seamlessly. Should the government’s housing policy use the principle of integration as a point of departure, it could encourage corporations to channel moneys to social causes. The ideal vehicles for the corporations to employ in such endeavours are social enterprises, because these are non-profit organisations that are managed in a business-like manner. They bring focus to the investment and assurances that moneys are spent well, and their entrepreneurial approach makes them self-sustaining over time.

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