Opinion / Columnist
Can social financing help the Zimbabwean economy?
17 Jul 2014 at 09:41hrs | Views
The case of Zimbabwe's economy is rather precarious.
The country is operating a multi- foreign currency system, which give it no true control of its money supply. In addition, the country is a net importer, a position largely a consequence of its limping industry.
This limping industry has also influenced the hike in unemployment rates and further reduction in the standards of living the country over. Maybe this is the part where I also mention the words "poor governance and sanctions" (and leave it at that).
CLICK HERE TO VOTE FOR A ZIMBABWEAN
After all said and done, Zimbabwe is not only facing an economic slowdown due to the lack of investment and consequent collapse of industry and high unemployment but a looming liquidity crisis that could further deepen the hole the economy is falling in.
How can social finance help the situation then?
Social finance, as is understood by some of us, is the ordinary type of financing (or investing) that targets to achieve both a social goal and an economic return.
In other words, social financing is providing capital for businesses that will improve the standard of living of the community in which the businesses are set up. Therefore social finance investors set a goal for the companies in which they invest, and are willing to forfeit higher financial returns in exchange for the achievement of their social goal.
One of the major advantages of social financing to developing countries, especially when compared to the alternative donor funding of projects, is that it facilitates the establishment of sustainable businesses that will continue in existence and in service to the social goals.
Through social finance, developing countries have a chance to actually develop, and not just feed off a cloud that would soon fizzle away. Social finance can therefore provide the capital towards the achievement of specific social goals, like creation of employment.
Macroeconomic principles suggest that an economic recession needs an aggregate demand stimulus. However, the country and its government may not be in a position to stimulate a domestic demand before it creates jobs. Hence, the first priority for Zimbabwe (open to debate), would be to create employment. Hence, local companies, foreign investors and donors can provide social finance to promising businesses (mainly small to medium enterprises) with the main social goal of creating sustainable employment.
A business idea based on the above mentioned concept of social financing has been drafted and even nominated for the Youth Citizen Entrepreneurship Competition - an international contest launched by The Goi Peace Foundation, Stiftung Entrepreneurship (Berlin) and UNESCO.
"Economically Educate to Economically Empower", as it is called, is a project that sets out to assist micro, small to medium enterprises to raise capital, organise their businesses in order to operate efficiently and effectively with the ultimate goal of creating employment.
If you would like to read more, and give your comment and votes (since it is in a competition) visit: https://www.youth-competition.org/groups/entrepreneurship-competition-2013/contests/2/1359
The country is operating a multi- foreign currency system, which give it no true control of its money supply. In addition, the country is a net importer, a position largely a consequence of its limping industry.
This limping industry has also influenced the hike in unemployment rates and further reduction in the standards of living the country over. Maybe this is the part where I also mention the words "poor governance and sanctions" (and leave it at that).
CLICK HERE TO VOTE FOR A ZIMBABWEAN
After all said and done, Zimbabwe is not only facing an economic slowdown due to the lack of investment and consequent collapse of industry and high unemployment but a looming liquidity crisis that could further deepen the hole the economy is falling in.
How can social finance help the situation then?
Social finance, as is understood by some of us, is the ordinary type of financing (or investing) that targets to achieve both a social goal and an economic return.
One of the major advantages of social financing to developing countries, especially when compared to the alternative donor funding of projects, is that it facilitates the establishment of sustainable businesses that will continue in existence and in service to the social goals.
Through social finance, developing countries have a chance to actually develop, and not just feed off a cloud that would soon fizzle away. Social finance can therefore provide the capital towards the achievement of specific social goals, like creation of employment.
Macroeconomic principles suggest that an economic recession needs an aggregate demand stimulus. However, the country and its government may not be in a position to stimulate a domestic demand before it creates jobs. Hence, the first priority for Zimbabwe (open to debate), would be to create employment. Hence, local companies, foreign investors and donors can provide social finance to promising businesses (mainly small to medium enterprises) with the main social goal of creating sustainable employment.
A business idea based on the above mentioned concept of social financing has been drafted and even nominated for the Youth Citizen Entrepreneurship Competition - an international contest launched by The Goi Peace Foundation, Stiftung Entrepreneurship (Berlin) and UNESCO.
"Economically Educate to Economically Empower", as it is called, is a project that sets out to assist micro, small to medium enterprises to raise capital, organise their businesses in order to operate efficiently and effectively with the ultimate goal of creating employment.
If you would like to read more, and give your comment and votes (since it is in a competition) visit: https://www.youth-competition.org/groups/entrepreneurship-competition-2013/contests/2/1359
Source - Tafadzwa Chiganga
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