IXL Social Enterprise Case Studies Chronic Diseases October, 2013 | Page 16

Improving Chronic Disease Care in Slums by 2019

However, building successful social
enterprises in slums will be difficult
All people are exposed to risk from unexpected changes in the environment, accidents, illnesses,
price increases or cash availability. Unfortunately, low income individuals have limited safety nets,
social networks and buffers to deal with unexpected change, particularly the major expenses
associated with chronic disease care. Social enterprises that target these types of customers will
have to work with value chain players who are also at a higher risk in an environment with limited
government support and infrastructure.
Social enterprise operations are difficult to manage
Finances must be efficient
Social enterprises need to operate with razor-thin margins in an environment of fluctuating demand
and supply. In informal business (which dominates the economic landscape in urban slums),
relationships with suppliers and customers are informal – the hierarchy of roles and work is flexible.87
There are few, if any, contracts. Contracts are irregular and hours of operation vary. Managing cash
collection, inventory and supplier payments is key to ensuring a healthy cash position. To reduce
cost, social enterprises will need to grow significantly to enjoy economies of scale. Both working
capital and scaling up can be managed through financing. Unfortunately, financing for companies
working in the slums or targeting poor slum dwellers is limited to a few microfinancing institutions.
Assets must be able to bear risk
Social enterprises working in slums are exposed to higher risk from supply chain inefficiency,
fire hazards, natural disasters, corruption and high crime rates.88 Most insurance organizations
are unable to assess the risk, claims and premiums accurately enough in slums to build a viable
business. Social enterprises have to manage their environment and assets to ensure business
continuity in the face of risk that most enterprises in wealthier regions have insurance for.
Employee training must be flexible and culturally appropriate
Social enterprises should hire from slums to increase social impact; however, these potential
employees may not have the appropriate skills and training for the job.89 Training and on-thejob skills development will put additional stress on management and operations. Additionally, it
is critical to work with local employees in a way that is culturally acceptable and considerate to