South Korea is fast developing a social enterprise economy that could put it ahead of the rest of Asia, if not the world. I am recently back from giving a keynote talk at the Social Enterprise Leaders Forum 2016 in the city of Gwangju, about one hour south of Seoul by train. The Forum was organised by the Korea Social Enterprise Promotion Agency KoSEA, the government organisation set up to promote and support the social economy sector in Korea. Every year, the first week of July is Korea's Social Economy Week with a range of events taking place across the country including the Forum. This year the British Council were involved in partnership to promote case studies from the UK and elsewhere. KoSEA is backed by Article 20 of the Social Enterprise Promotion Act. The Act, that came in to being in 2007 and further enhanced in 2012 sets out an institutional framework for a social economy in a post credit crunch Asia.
KoSEA supports social enterprise in three ways: developing the market, enhancing self-support through competency and network building and awareness raising of the benefits social enterprise provides communities and society more broadly. One of its aims is to support start-ups in a way similar to that of UnLtd founded in 2000 with a £100m grant to champion social enterprise start-ups in the UK.
As of 2015 there were 1475 social enterprise companies in Korea that include NPOs and cooperatives comprising a wide and diverse sector ranging across education and healthcare to conservation and the arts, with plans to grow this to over 3000 by 2017. The size of this economy is smaller than the UK where in excess of 70,000 social enterprises contribute 4% to UK GDP. But it is hugely impressive given a starting point of near zero at the turn of the millennium. The same goes for the political support leveraged at the sector. South Korea, the World's 15th largest global economy, is the only country in East Asia to have a legal definition of social enterprise. Moreover, in 2011 the Korean Government opened up funding channels and contract bidding exclusive to the social enterprise sector. And individuals are stepping up - Won-Soon Park, Mayor of Seoul has been a key leader and influence in driving the social economy forwards.
Other innovations are also taking place. This year the Seoul Metropolitan Government commissioned the first ever Social Impact Bond (SIB) in Asia. Based on the SIB launched in 2010 by Social Finance in Peterborough, UK, the Bond aims to improve the independence and life chances of vulnerable young people. SIBs are complex financial instruments and the Korean Government has drawn extensively on the UK's experience in this area. The independent evaluator selected to measure the success of the project in terms of outcomes is Sungkyunkwan University. And this brings us to education. The British Council was closely involved in the Forum and has been championing the UK social enterprise sector, including universities across Asia. This provides opportunities for the UK to work in partnership with Korean Universities with common areas of expertise. In the UK the University of Northampton is recognised as the leading player in social impact and this month (July) was awarded Higher Education Institute of the Year at UnLtd's SEE Change Recognition Awards. Other Korean Universities working in this developing space include Pusan, Yonsei, Hanyang and Hoeso.
So what of the future? Building a socially enterprising economy requires three things as essential: a supportive and robust legal framework, demand from social entrepreneurs for resources to solve social problems and a supply of finance, or impact investors, who are prepared to trade off risk and reward in support of a social venture. The model also needs intermediaries, such as ClearlySo, who bridge the gap between supply and demand, supported by an active membership network such as Social Enterprise UK. This could help ease the still heavy reliance (close to 100% currently) on government funding. The legal rules used to define a social enterprise in Korea might also need relaxing if access to finance via wholesale social investment similar to that provided by Big Society Capital in the UK is to be maximised. In addition to excellent universities and a governance structure set up to promote social enterprise, Korea is also home to some large S&P Asia 50 companies including Hyundai and the SK Group. Their engagement via supply-side funding could be the fuel that launches Korea into the social economy stratosphere.