Balkans summer of 2007

During the summer of 2007 I spent seven weeks travelling in the nine Balkan countries to meet with and learn from the best social enterprises and social businesses and celebrate their achievements.  I set out on this excursion for many reasons, but primary among them was the fact that Catalyst, our company, is focused solely on helping social businesses to succeed, and we were celebrating our 10th anniversary.  Also, and perhaps even more importantly, I was celebrating my 50th birthday this year and wanted some special way to mark these milestones.  Visiting this war-torn region, and focusing on the best coming out of it, seemed the right way for Catalyst and me to celebrate.

My attraction to the region began four years ago when I first visited Sarajevo.  I did not however make any local contacts, so my trip began without any “locals” to visit.  On the advice of a very good friend I drafted a two-page note, which described what I was doing, what I hope to get out of the trip and what I hope to give back to the region.  I then sent out and received several hundred e-mails.  The result was over 100 meetings, a wonderful summer, a fantastic education and an experience that will last a lifetime.  My Catalyst colleagues and I sometimes muse that this business of “engaged tourism” is a potentially interesting one in and of itself.  And since this trip, we have had offers from many parties looking to be “catalysts in” (the name we gave to these journeys—for more information see http://www.catfund.com/catalyst_in.htm) in other regions.

The political, economic and social context of the Balkans is a particularly challenging one.  Without going into a lengthy historical analysis, this adds a degree of complexity western entrepreneurs can only imagine.  It is only in Bulgaria and Romania, which have been rebuilding since 1989 and have just entered the EU, where the governments are relatively stable and lack a sort of “wild-west” feel.  Elsewhere, in the countries most affected by the aftermath of the bloody 1990s war, there exists a “kleptocracy” of sorts, unsurprising in light of the widespread trauma.  This will take years to fix.  Corruption is widespread and influences much of economic activity.  Furthermore, in several countries, borders imposed by Western powers do not command broad popular support and create an eerie tenuousness.  The uncertainty over Kosovo in the aftermath of the recent election is perhaps the best known example.  Much less appreciated, but much more worrying in terms of long-term regional impact is Bosnia-Herzegovina, a patchwork of quasi-autonomous regions and the result of an unhappy and unsatisfying compromise still without a final resolution.  Yet there is no guarantee that such a resolution will be peaceful.

On a more mundane level, transport links between countries and within countries are appalling.  Getting around this mountainous region is extremely difficult, as is getting in and out.  Regular flights to and from the major capitals are not frequent and relatively recent.  Finally, the international aid picture is highly problematic.  The Balkans has been highly dependent on international aid, creating a dependency culture.  My non-expert judgment, from the brief encounters I have had with various agencies, is that only some of this aid has been put to good use.  In many cases it has been subject to political agendas or the same governmental “influences” which plague the rest of the economy.  Furthermore, aid flows are drying up now that the crisis has passed.  It is not clear that a sustainable economy is ready to take up the slack.

There exist some large domestic businesses which owe their allegiance to certain politicians.  They provide jobs, but their sustainability is unclear as they remain immune from normal market forces.  International firms have arrived, taking advantage of cheap, skilful labour and this has made a difference.  Many also practice some form of corporate social responsibility, and this has been a positive force in the domestic economies.

Social businesses and social enterprises have sprung up and in many cases have prospered.  I found quite a few in the organic food sector.  This is unsurprising, as the Mediterranean climate and large tracts of arable land make this a highly suitable industry.   Organic farming has been practiced here for centuries because, as the locals point note, “we could not even afford the chemicals if we wanted them.”

SMS, based near Split, Croatia, is a very good example of such an organization.  Although they are only now completing the process of organic certification to qualify for certain Western markets, they have been involved in organic food production since 1989, when they were founded by Srdjan Mladinic.  The company combines attractive packaging with high-quality food products and has developed increasingly loyal following in Western markets and has just established a relationship with one of Croatia’s largest food companies, Podravka.  (All the companies mentioned can be found via www.catfund.com/balkans).

Across the region, in Sofia, Bulgaria, operates Gorichka.  Begun by a serial social entrepreneur, Lubomir Nokov, this is an organic marketing company, finding markets for Bulgaria’s many small organic food producers.  This is a relatively new company with enormous potential.  This is in no small part due to the fact that the principals have already built a commercially successful tennis club, with strong green credentials, and a high street fashion outlet.

Eco-tourism is also enjoying considerable growth in the region.  These companies offer sustainable tourist experiences largely to “green” Westerners.  The two best examples of these I came across were in Bosnia and Montenegro.  Operating out of Sarajevo, Tim Clancy and Thierry Joubert run Greenvisions.  This is an ecotourism company, which also provides summer camp opportunities for both local and foreign youth, is an advocacy group in the region for sustainable tourism and is in the process of developing appropriate and green tourist accommodation for Western visitors.  They are an extraordinary energetic company—and have embarked upon a project to create a pan-regional affiliation of ecotourism firms, who will create what they hope will become a new pilgrimage route—the “Via Dinarica”.  Montenegro Adventures, run by Slavica Vukcevic, was actually spawned by a development agency called CHF International.  They are successfully developing Montenegrin sustainable tourism and are working in partnership with Greenvisions to create the Via Dinarica.

I could mention more social enterprises—run by extraordinary individuals operating in very difficult circumstances.  They do exist and are thriving in the region.  They also may offer particularly useful solutions to the problems of the Balkans.  First and foremost, their social mission provides them with the purpose that keeps them going, helps offset the low wages they inevitably pay and is the “glue” that holds them together despite the most difficult circumstances.  Secondly, by being outspoken on social and ethical issues and practicing what they preach, such businesses are widely respected for not being part of a corrupt economic system—this greatly assists their visibility. Thirdly, they operate at a size which enables him to be very flexible and responsive to changing market circumstances and needs.  In addition to flexibility, being small means they tend to operate “below the radar” of government officials and thus remain relatively clear of the sort of influences which could subvert their purposes.  As time goes on, of course, and if they become very large and successful, their ability to continue to operate freely will come into question, although hopefully, political circumstances will have greatly changed by then.

Social businesses and social enterprises also benefit from what Nejira Nalic, of micro-finance firm Mi-Bospo describes as the “thoroughly liberating nature of commercial activity.”.  Having been largely dependent, as a small but rapidly growing firm in Tuzla, Bosnia, she despaired at all the “handouts” on which she relied to keep the business going.  As the organization grew and became increasingly professional in nature, and profitable, Nejira began to engage with large international funders, not as a recipient of aid, but as an equal partner in a commercial transaction.  Put simply, they could buy her profitable loan book or not.  If the price was right, she would sell and if not she would look for another purchaser.  To Nejira, this new feeling of economic empowerment has been immensely motivating, both for her and for her staff.

By far and away the most impressive, and most effective of the social businesses I encountered was the radio station and now media enterprise B-92, operating from Belgrade, Serbia.  A small, and relatively unknown commercial radio station found itself becoming the “conscience of the nation” during the Milosevic era.  Unwilling to “fly under the radar” of the government, Veran Matic and his colleagues flew directly into oncoming traffic, with nearly catastrophic results.  They received death threats, their equipment was destroyed several times, and yet they persevered and continue to broadcast throughout the war.  I did not meet anybody in the region who was not familiar with them, and nearly everyone noted that during the war, they provided hope and the truth to Serbians, and ultimately assisted in bringing down the government.  Today they have become a successful media business, but have not lost their edge, focusing on issues such as domestic violence, the need to give blood, and the importance of racial and ethnic tolerance.  They both highlight these issues, and act as a catalyst in fund raising efforts to support related causes.

So when observers wonder, what social enterprises or social businesses can actually achieve, I urge them to consider companies like B-92.

First Published in Alliance Magazine in November 2007.

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