More than 1 million SMEs have closed their businesses due to the pandemic in Mexico. Millions of jobs have been lost and informality and poverty have grown. In response, the one everyone seems to agree on: it’s time to rethink the system to make it more inclusive and benefit more people. But beyond these beautiful words and repeating the usual clichés – such as that “a crisis is also an opportunity” – how can you take the next step and make it happen?
One of the ways is obvious: with laws. This is what various civil organizations propose that are promoting the approval in the country of a law of social and personal entrepreneurship. This month, representatives of the Association of Entrepreneurs of Mexico (ASEM), Sistema B México, the Alliance for Impact Investment and Impact Hub met with the Ministry of Economy to promote this new legal framework.
“Part of what was discussed is what are the challenges that exist in Mexico to be able to present a proposal of law and regulations related to social enterprises,” says Mario Romero, director of the Impact Hub in Mexico City, a global organization that works to promote entrepreneurship and innovation with a social focus.
And what are those challenges? According to Romero, in the dialogue – which took place in the framework of the ‘Road to Innovate 2021’ event held by the Friedrich Naumann Foundation for Freedom and The Alliance for Central America – three main ones emerged: define what characteristics a company must have to be considered “social”, establish how this “social impact” is going to be measured and which entity is going to certify that measurement, and finally, agree on what benefits are going to be offered to these companies.
“This is where the discussion got much more extensive and there was no consensus,” says Romero. “One of the benefits they have in other countries, such as Colombia, Ecuador and Peru, where there are already social enterprise laws, are fiscal benefits, support through taxes. Another measure has to do with access to public purchases That there are sustainable or impactful public procurement processes. And there are benefits such as access to preferential or public loans so that they can stay afloat. Those are the paths that are being explored and discussed. “
According to the Ibero-American General Secretariat, in the region there are about 170,000 companies that already meet the characteristics to be considered social. A new law will not only allow them to be supported through various measures, but it can also facilitate their access to private financing for investors and funds. “This is what has been seen in countries where these laws already exist,” says Romero. “Before, funds that wanted to enter a company with social impact had to trust their data or see if they were certified by an organization such as Sistema B But once there is a legal framework and regulations for them, shareholders and impact investors seeking sustainable solutions have an easier time identifying these companies and approaching them to inject capital into them. “
Will the law go ahead? That is the expectation of the civil organizations that met with the Ministry of Economy. Romero comments that “the objective is to present it as soon as possible, we hope that in months or a year these proposals will be presented with decision makers, promoted by specific groups or by a political leader or the citizens themselves.” And he ends: “There are challenges, but there is a lot of willingness and it is important to join forces to advance in this transition to a system that not only generates economic value, but also social value.”
