Well known by adventure travellers for its Inca ruins and amazing food, Peru is a country rich in natural resources and one of the region’s fastest growing economies in the past decade with an average growth rate of 6%. Even though the GDP has slowed to 3% in recent years due mainly to falling commodity prices, the Peruvian economy is rebounding. Entrepreneurs abound in this country with micro, small and medium enterprises (MSMEs) contributing 20% of the GDP.
Recently, we had the pleasure of attending “Change Makers: Supporting Social Entrepreneurs in Peru”, an event organized by the Asia Pacific Foundation of Canada (APF) in Lima, Peru. The event was part of the APEC- Canada Partnership initiative funded by the Government of Canada, which involved conducting a study of MSMEs in four APEC developing economies including Peru. To that end, a few organizations, including Deetken Impact, conducted research studies of the social entrepreneurship ecosystem in Peru to develop a better understanding of their needs and provide recommendations. Some of the findings of that extensive research were discussed at the event.
It was inspiring to sit among a diverse and engaged group of individuals eager to learn how social entrepreneurs can be better supported in the country. Existing initiatives in Peru support entrepreneurs in general with limited focus on those with social goals. For example, Innovate Peru is an important initiative which aims to increase the productivity of the entrepreneurial sector by directly supporting companies and entrepreneurs, and also fostering the ecosystem, including incubators and accelerators such as USIL Ventures.
Researchers found that Peruvian MSMEs remain largely concentrated in urban areas with 48% of them based in Lima. This leaves many regions still very isolated and hard to reach. The majority of these businesses are micro, with 96% reporting having less than 5 employees, and 50% of them not being part of the formal economy. Additionally, a lack of financing is one of the main obstacles to entrepreneurship and the main reason for the failure of start-ups in the country.
With all of these challenges, it is no wonder that over half of the companies interviewed did not consider the environment or sustainability as a top priority. And those who did consider social and environmental goals important found it difficult not only to measure but also to communicate their impact.
The fact is that there is tremendous potential for social entrepreneurship in Peru. Many companies already implement sustainability practices and have a social and environmental impact without measuring it. Women are particularly motivated to undertake projects with a social goal as 60% of MSMEs are women-led. Plus, the country is rich in natural resources and agriculture with healthy and nutritious crops bring grown mostly in remote areas by poor, vulnerable populations. By implementing the right support, networks, and financing, these
We are encouraged by the recent growth of organizations that aim to specifically support social entrepreneurship in Peru. For instance, NESsT supports the growth of social enterprises through their training programs, one-on-one business development support, and financing; Kunan is a network and platform that fosters, integrates, and inspires social entrepreneurs in Peru; and the Global Reporting Initiative (GRI) provides standards to measure impact. The efforts of these and other organizations, combined with increased access to financing from local and international impact funds like Deetken Impact, will set the stage for many more success stories in the years to come.
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