Social businesses are supposed to address social and environmental issues. But when the social issue is resolved, the social business becomes a business like any other, according to Indian social entrepreneur Rajeev Kher.
Rajeev Kher is an Indian social entrepreneur. He started his sanitation company Saraplast in 1999. He’s a member of the Toilet board coalition (TBC) and will be the sponsor of the first Social Business Camp of the French development agency (AFD), which will take place in Marseille from 9 to 13 October.
You are the CEO and founder of a company specialised in sanitation. How did you start this business?
When I finished my MBA, I worked for a company in Canada and that’s where I discovered the concept of portable sanitation. At that time, I was working in finance. I was travelling a lot for my work, in Canada and the United States. During these travels, I discovered the portable sanitation system. I thought I could modify it and bring it back to India, where sanitation is a huge issue.
I decided that I wanted to do something for India, to create social impact with a company that could hire people, but also have an environmental impact, which is exactly what we did. Back in 1999, I started a small company with only 5000 rupees [less than 100 euros], which was the minimum amount required to start a company in India. Today, the company is close to 6 million dollars of revenue, and 360 employees.
I started slowly along with a friend from Germany who lent me two portable toilets. After a while, I was able to increase the number of toilets of the company. I realized there was larger potential for the sanitation business, including rental and cleaning of sanitation.
Which problems did you face to start your company?
The two most important issues I had to face when I started my business was the business idea itself. Sanitation is not glamorous and a lot of people in India, especially within the caste system, think that sanitation is not honourable.
The second issue was access to finance. Nobody was willing to give loans to a toilet company, mostly because it was not a sexy business. All the private money lenders I’ve contacted refused to grant me a loan. Finally, I had to turn to non-banking financial companies (NBFC), which are financial institutions that provide loans but do not hold a banking license. They accepted to grant me a loan but with a 26% interest.
Also, Internet had just started, so access to information on social businesses and sanitation was also very limited. I think things have changed a lot now.
The most important thing you need to start a social business is determination. You have to be determined to make a change, you have to be a dreamer and be passionate. You have to believe that your business, your work is going to change the life of some people down the line.
How would you define a social business?
A social business is a business that can create an impact on people, environment, employment and make reasonable profits that are invested back in the company. But a social business never remains a social business forever. Today, sanitation is a social business in India, but when the problem of open defecation will be solved and satisfactory sanitation facilities will be built, it will become a commercial business.
For example, in France, sanitation is not a social business because open defecation is not an issue.
Social businesses seek to overcome a big societal issue. But when the social problem is resolved, the social business becomes a business like any other.
So the difference between social business and traditional business is just a matter of market development?
Social business is far more conscious of the impact on the environment and on people. Social entrepreneurs are always going to pay attention to invest the profits they made in a sustainable way. And they are more aware of their impact on development. But in the meantime, social business is still a business;
You can seek funding, you can have a sense of profit, and it’s not a bad word. Whether the profit is plugged back into the business, it’s a call made by the entrepreneur, and the social entrepreneur is always inclined to put the money back in the business to create more impact.
The most important thing is the determination to make a change to start a social business, that what you do is going to improve lives. If you are a social business, you are a private company like any other company that can seek funding, equity, venture capital funding, debt financing, it can get all these financial instruments.
Do you think social business is an answer for developing countries?
For sure. I think social business is a solution. As you have large companies, SMEs, I’m sure there is a place for social businesses. And I’m sure that the Indian government is going to bring a lot of incentive to social businesses. And some of the social entrepreneurs who have taken the lead would be there to create a blueprint for the government to make policy and legislation for social enterprise.
Now in India, there is a separate government department dedicated to social business: but when I started my company, it was not the case. Today it’s different.
You are participating in the Social Business Camp in Marseille with social entrepreneurs from Africa. How do you think it can help to build social businesses in Africa?
There is a lot of similarity in terms of development between India and Africa: poverty, sanitation, government policy. The other thing is that both India and Africa were colonized. You had a western influence in both places.
I believe that whatever knowledge we have in India, we want to share this information with the participants and give them the motivation to create a successful business and create a profit.
I’m also on the board of Toilet board coalition (TBC), which is trying to create sanitation business in other parts of the world: South-East Asia, Africa, India, etc. We are doing a lot to assist social businessmen in the field of sanitation.