It has already been noted, and it is a generally accepted fact and now a given that Social Entrepreneurship is part of what is called the social economy.
Social Entrepreneurship is gaining more and more footholds and drastically affects the development of the economy of many member states of the European Union, where it thrives.
At the same time, it makes a practical contribution to, among other things, the fight against poverty, and social exclusion, tackling the energy crisis and the digital transition.
The European Commission is convinced of the possibilities and prospects of the social economy; hence during the 2014-2020 programming period, it allocated around €2.5 bln through its budget to support the social economy, an amount which will increase further in 2021-2027.
According to the EC, around €2.8 mln social economy operators in Europe offer tangible and innovative solutions to key challenges, employing an estimated 13.6 million people.
Wage employment varies between 0.6% and 9.9% in the various member states.
For example, Spain has around 43,000 social enterprises, which directly and indirectly employ 2.2 million people.
As a result, the country’s social economy turnover corresponds to 10% of the country’s Gross Domestic Product (GDP).
Another example is cooperatives, which account for 83% of the agricultural market share in the Netherlands, 79% in Finland and 50% in France.
Understandably, social enterprises gain an even greater perspective given the economic uncertainties surrounding the EU and the Eurozone.
The EU recognises their potential to contribute to the “green” transition by developing sustainable practices, goods, and services, for example, in the areas of circular economy, organic agriculture, renewable energy, housing, and mobility.
Describing the main characteristics of social enterprises, the EC notes that the enterprises should be innovative through the goods or services they offer and employ the most vulnerable members of society, contributing to social cohesion, employment, and reducing inequalities.
The businesses also need to be independent, have inclusive governance and with limits on the distribution of profits and/or assets.
Things are moving somewhat slowly in Cyprus, and the concept of Social Enterprise is still at an early stage.
Even though all those components required for developing a social enterprise and social economy ecosystem, such as altruism and a sense of solidarity, are pervasive in society.
All this is recorded in the research conducted by the EC on social enterprises and their ecosystems in Europe published in 2020.
It specifically states that the sector in our country is underdeveloped and extremely small, as it consists of approximately 190 entities while pointing out the absence of a competent, relevant legal framework.
Nonetheless, in Cyprus, the process of forming the competent legislative framework governing the operation of Social Enterprises is underway and hopefully finalised within 2023.
Given this discussion, it is particularly important to point out the need to create an environment that will favour, through specific tax and other incentives, the attraction of interest in creating SEs in Cyprus.
The relevant operating regulations should be understandable and applicable, and the incentives granted should be economically attractive (business oriented), so the ecosystem of social entrepreneurship in Cyprus can be fully developed on the right basis even if its specifications at this stage are not completely consistent with the Cypriot reality.
By Nicole K. Phinopoulou, Corporate, Banking and Financial Services Lawyer, ESG, Sustainable Finance, LLB. LLM (UCL). LPC, CISL, University of Cambridge