State of Social Enterprise Africa 2025

D. Public finance and incentives Governments can: –Deploy targeted financial instruments such as seed grants82 and challenge funds to test new models, credit guarantees to de-risk bank lending and concessional loans via development finance institutions and microfinance institutions to address solvency and “missing middle” financing gaps. –Provide tax incentives for social enterprises that reinvest surpluses into their mission, rewarding organizations that prioritize impact over profit distribution.83 –Encourage corporate training investments by offering tax relief or credits to companies that provide certified training and apprenticeships, strengthening skills pipelines and employability. –Adopt outcome-based and results-based financing so that public resources are tied directly to verified results aligned with development priorities (e.g. households gaining sanitation access, students improving learning outcomes), while giving enterprises flexibility in how they deliver them. –Explore frontier innovations for financing, such as tradeable impact, to create a step-change in how social enterprises and impact in general are financed and incentivized. A detailed discussion of tradeable impact can be found in the Forum white paper Redefining Value: From Outcome- Based Funding to Tradeable Impact. Why it matters: Access to affordable capital and predictable cash flow are persistent barriers for social enterprises. Public instruments can reduce risk, attract private investment and link funding directly to verified outcomes that align with development priorities. E. On-ramps for informal social enterprises Governments can: –Acknowledge informality in the sector and recognize the contribution of informal social enterprises to the economy and societal issues, while continuing to create incentives for formalization. –Create low-barrier entry points such as provisional IDs or light-touch registration, giving informal enterprises access to services without imposing full compliance immediately. –Fund or require the inclusion of informal social enterprises in support programmes, ensuring enterprise support organizations (ESOs), municipalities and donor-funded projects open access to informal actors through micro-grants, bookkeeping kits and access to markets. –Align with national informal-to-formal strategies, linking on-ramps to decent work, youth and women’s empowerment priorities. Why it matters: Stepwise, incentive-based pathways allow informal enterprises to access support, expanding opportunities for women and youth who are disproportionately highly represented in the informal economy, while building a stronger pipeline for access to finance. F. Data, evidence and skills development Governments can: –Integrate social enterprise into existing surveys (business, SME, NGO) and, in partnership with universities and ministries, develop a public registry or dashboard that tracks jobs, revenue mix, inclusion and SDG-related outcomes. –Adopt a short, harmonized set of core indicators (with optional sector-specific add-ons) to make data useful for decision-making while keeping reporting requirements light.84 –Support research partnerships with universities and networks to generate evidence on barriers, opportunities and the wider contribution of social enterprises to national priorities. –Integrate social entrepreneurship, impact management and social procurement readiness into technical and vocational education and training (TVET) and university curricula.85 Why it matters: Reliable and comparable data legitimizes the sector, informs better policy and builds confidence among investors and buyers who need credible evidence to engage. Governments can adopt outcome-based and results-based financing so that public resources are tied directly to verified results aligned with development priorities. The State of Social Enterprise: Unlocking Inclusive Growth, Jobs and Development in Africa 49