It’s scalable! It’s revenue generating! . . . So is it a social enterprise?

Running the social entrepreneurship check on Zoona

Try this: Google the words “Zoona” and “social enterprise” together. What do you get? Some 305,000 results. From the United Nations Development Programme to the Skoll Centre for Social Entrepreneurship, it seems everyone is raring to apply the industry buzzword to Zoona.

zoona screengrab

Yet, after 10 weeks of interning, I can tell you the number of times I’ve heard my Zambian colleagues call Zoona a social enterprise: zero.

If Zoona looks, feels, and smells like a social enterprise, why doesn’t it just claim the title and call it a day? I decided to investigate, and what I learned was both surprising and intellectually refreshing.

In my social entrepreneurship course, my professor Dr. Sara Minard defined social enterprise as “a hybrid model for social value creation.” It is “created to achieve a stated vision and mission aiming to solve a state or market failure, where success is measured by both financial sustainability and social impact.”

From this definition, Zoona does fit the milieu of social entrepreneurship well.

  • It serves a double bottom line: Social enterprises thrive on “blended value”, the ability to create both financial and social value. On the financial side, Zoona generates a steady revenue stream through fees for service. Through those same earnings, Zoona invests in its agents to help their businesses and SMEs grow.
  • It’s scalable: Zoona employs a sustainable business model, akin to franchising, to quickly grow its strategic footprint of agents. A new initiative called “Zoona in a Box” further streamlines the startup process.
  • It’s local: Often, social enterprises pride themselves on being able to empathize with their customers, providing human-centered solutions that fit the target population. Portlandia and development wonks can rest knowing Zoona was started by two Zambian brothers, Brad and Brett Magrath, who recognized the demand for financial services in a country where an estimated 86% of the population is unbanked (source).
  • It has learned from failure: Like any hardy business, Zoona has gone through its share of re-prototyping to improve and refine its value proposition. (At one point, a stalwart colleague tells me, the company had only 250 kwacha in the coffers—less than $50 USD.) After some ups and downs, Zoona raised the first international investment in a Zambian company in 2012: over $3 million USD in Series A funding from Accion’s Frontier Investment Group, along with Omidyar Network and Sarona Asset Management.

I spoke with Lelemba Phiri, Managing Director for Zoona Zambia, and Keith Davies, Head of Data Analytics, to find out Zoona’s perspective. Both agreed that Zoona is first and foremost a business. And while both acknowledge that Zoona could be considered a social enterprise, neither Phiri and Davies are completely comfortable with the buzzword’s fuzziness.

“The connotation of social enterprise Zoona would like to avoid is that the term is often used for non-profits that are trying to factor in some sustainable business model to ‘one day become sustainable,’ but aren’t quite there yet,” Phiri says. Zoona’s interests are undoubtedly financial—the company is both cash-flow and EBIDTA positive—but Davies doesn’t think there needs to be a trade-off between profit and social benefit. He explains that if a company builds social concern into its business model, then doing well can be a conduit to doing good. Moreover, Davies thinks over-reliance on social impact can become a constraint: to hold Zoona solely accountable to social benefit would attenuate its capabilities to excel as a company. Thus, by deeming itself more a company than a social enterprise, it seems Zoona raises the bar for itself, holding itself to higher goals and scale than a social enterprise necessarily has to.

Even so, Phiri knows there is work ahead in articulating Zoona’s social bottom line. One of the company’s core business beliefs is impact—maximizing Zoona’s positive contributions worldwide. Phiri recently completed her master’s degree in international development finance, and through her research, she found that “through [Zoona’s] model, it is clear we impact economic and personal development of our agents and their immediate families. What is not clear is whether this is necessarily resulting in much social development of those around them or their communities.” As a result, Zoona will be using training to extend the company’s values from agents to their tellers and beyond.  Davies adds that Zoona is now reframing its mobile money agents as “Zoona Entrepreneurs.” “We believe in the potential of small business owners in Africa. We don’t just see them as agents to sell our products,” he says. With dual charges of entrepreneurship and impact, it will be interesting to see how Zoona approaches its social bottom line as a direct goal or byproduct of business in coming years.

Mercy Mukandawire is part of Zoona’s new Aggregator pilot, in which existing successful agents recruit and manage a tier of new ambitious entrepreneurs. In this case, Mercy’s sister Misozi recruited her. Mercy works under Misozi, one of Zoona’s most successful agents.

Mercy Mukandawire is part of Zoona’s new Aggregator pilot, in which existing successful agents recruit and manage a tier of new ambitious entrepreneurs. In this case, Mercy’s sister Misozi recruited her. Mercy works under Misozi, one of Zoona’s most successful agents.

As I discussed in my last post, Zoona could be creating uncharted positive externalities in workforce development and women’s empowerment. It could be expending resources to run rigorous impact evaluations. It could be whiling away at donor and grant reports. But for the moment, Zoona is a business—one that can service its own growth with a sustainable revenue stream, respond to market changes with agility, and still serve a huge proportion of Zambia’s unbanked population.

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