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Analysing Social Innovation and Economic Growth

Economists estimate that between 50 and 80 per cent of economic growth comes from innovation and new knowledge. In East Africa, for instance, the development of M-PESA (a mobile money payment system born out of social innovation) has become an avenue for 9 million people to gain access to secured financial exchange services.
This African success story has completely revolutionised the regional business terrain, at the same time empowering local users by providing an easy-to-use and readily available banking service that hitherto was impossible to access because of a poor banking infrastructure, and a strict regulatory framework.
Social innovation has become even more important for sustainable economic growth. This is partly because some of the barriers to lasting and sustainable economic growth (such as climate change, youth unemployment, ageing populations, and increased social conflicts) can be overcome only with the help of social innovation, and partly because of rising demands for alternative models of economic growth that enhance, rather than damage, human relationships and well-being.
Phrases such as inclusive green growth, a green economy, and decoupling economic growth from social and environmental impacts have become regular parlance in mainstream economics and global institutions, such as the World Bank and United Nations agencies, as emerging paradigms to push the sustainable development agenda. Getting these paradigms more widely adopted requires new public policy that addresses both social needs along with economic needs. Society can no longer use GDP alone as the barometer of progress.
Africa, and in many ways the entire global community, is transitioning to a phase where innovation will no longer be shaped by industries, but will rather be informed by markets and society’s demand for products, systems, and services focused on knowledge and learning. Against this backdrop, businesses are looking to social entrepreneurs and social enterprises who pursue financial sustainability and social principle for guidance and new techniques.
Ungana-Afrika for instance, is an NGO helping to catalyse the incubation of scalable enterprises. As a social enterprise, it leverages pioneering technologies for the benefit of emerging markets and under-served communities. Ungana Afrika operates on the premise that innovative technologies are not sufficient to transform the development landscape in Africa by themselves. They need to be sustained by innovative business models that are rooted in the social context of disadvantaged but vibrant communities.
Social innovations and enterprises such as Ungana-Afrika are playing pivotal roles in economic growth, by opening up new markets that require social solutions, expanding institutions that orchestrate and are focused on adapting social innovations, and by compelling the emergence of new innovations.
Other examples of social innovation can be found in fields as diverse as integrating marginalised populations into the formal economy, and involving citizens in public decision-making. The KiberaNet wireless information and communication network brings education, empowerment, and opportunities to more than 2 million slum dwellers in Kibera, Kenya, using fiber-optic cable and solar power. DadaabNet does the same for refugee camps. This is a model for empowering informal settlements (slums) and refugees to take control of their lives and to nurture sustainable development.
The rise of social entrepreneurs and social enterprises is not only contributing to the mobilisation of people in the innovation process, but also providing the impetus for economic growth and social equality.