Earlier this year, Meta and its largest content moderation partner in Africa, Sama, were accused of union busting, forced labor, and human trafficking. The lawsuit claims that “misleading job ads” lured potential employees from across Africa who, once realizing the true nature of the work, often had no means to get home. And when content moderator Daniel Motaung attempted to organize his colleagues for better working conditions and pay, Sama fired him.
A win for Motaung, who filed the lawsuit, could force social media companies to invest in their content moderation workers, even if they’re not direct employees. (In response to the lawsuit, Meta claims they never employed Motaung and are therefore “not liable for or privy to” any of the allegations. However, Motaung argues the moderators are Meta employees in a material and legal sense: they use Meta’s internal systems and guidelines, work closely with Meta staff and on a schedule of work set by Meta.) What hasn’t received as much attention, though, is what the lawsuit means for enterprises claiming to improve the developing world. Sama is a so-called social enterprise founded specifically to offer “decent work” to low-income people globally. Definitions of “social enterprise” vary, but most academics and entrepreneurs agree that they aim to maximize revenues and profits while contributing to a social or environmental goal—usually, by supporting a specific marginalized group. In Sama’s case, this is their employees, who often have little to no prior experience in the formal economy. A self-proclaimed “ethical AI” company, Sama has been lauded by Fast Company, B Corp, and Forbes, among others. The fact that Sama is now accused of abusing the very workers it tried to empower reveals the fundamental brokenness of the social enterprise model.
Legal context first: The lawsuit was lodged in Kenya, which has relatively weak labor protections that the government has often failed to enforce. Government workplace inspections remain rare, courts face significant backlogs, penalties tend to be incommensurate with the offense, and employers often fail to comply with court orders. For these reasons, it’s rare for employees to file complaints at all. Even if Motaung wins his lawsuit, prompting a new set of standards for content moderation work, there’s no telling if these standards will actually be implemented in Kenya.
Seen in that light, setting up a regional content moderation hub in a place with such weak labor protection seems almost strategic, or at least convenient, for Meta. Payroll savings aside, no Ministry of Labor official monitored what staff were actually moderating: usually highly disturbing content including beheadings and child sexual abuse, according to Motaung. Meta’s name didn’t even have to be on the door. As a contractor hired to moderate Meta’s content in Africa, it was Sama who recruited and technically employed the workers–approximately 240 in their Nairobi office. The company specializes in data annotation and digital microwork that can be performed by low-income people in the developing world. On top of content moderation, the company also offers image, video, and other product annotation services for clients including Google, Walmart and Getty Images.
Maybe Sama’s current problems began with a fundamental change in mission: Initially founded as the non-profit “SamaSource” in 2008, the company converted to a for-profit social enterprise structure in 2019. Making money became just as much, if not more, of a priority as providing decent work. Evidence of this internal mindshift can be seen in Sama’s documents: early SamaSource reports are filled with references to giving people “dignified” work and measuring impact in terms of changes in workers’ lives and communities. But fast forward to its transformation to a for-profit and its subsequent rebranding to “Sama,” and this focus on worker impact seems to have, if not disappeared, at least receded.
The company has always claimed to pay workers a “living wage,” which usually exceeds the minimum wage and ensures a decent standard of living for employees in a given country. During the early to mid 2010s, Sama workers in Kenya earned $8 a day, roughly in line with estimates of living wages for that time period. And a randomized control study found that Sama’s training and job referral program did have long-term benefits on workers’ employment and earnings, even after they left Sama. However, a recent TIME investigation found Sama’s lowest paid workers in Nairobi earned only $1.50 an hour–barely above Kenya’s current $1.15 minimum wage for cleaners, and well below the $2.61 an hour that cashiers must be paid. Finding “a workplace culture characterized by mental trauma, intimidation, and alleged suppression of the right to unionize,” with Sama workers numbering among the lowest-paid employees for Meta anywhere in the world, TIME’s investigation also calls the RCT findings into question.
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It’s likely, too, that Sama’s current problems were encoded in the organization’s DNA from the start. For any company, opening its doors in places where it has few personal, professional or cultural ties is risky. Headquartered in the Bay Area, Sama now has operations in Uganda, Kenya and India. Though the parents of founder Leila Janah are Indian immigrants, Janah herself has said that for most of her life, her “only exposure to the developing world was my parents telling me to eat all the food on my plate because there were starving children back home.” Nonetheless, she and other Sama executives were confident the enterprise could impact this world they didn’t know. “The best way to end poverty is to simply give people work,” Janah said.
This sort of confidence—bordering on hubris—is not unusual for social enterprises: in fact, it’s at the core of most foreign-owned social enterprises operating in the developing world. What else could explain founding a company in a place you don’t know and whose language you don’t speak, with the belief that you could not only solve that society’s social and economic ills, but also turn a profit while doing so?
This kind of hubris can have dangerous results, as Sama’s story shows. But it’s not only employees who are at risk: consumers also stand to be harmed.
Tala, another social enterprise headquartered in California, has been celebrated by Forbes, CNBC, and Wired itself for offering digital loans to people without a formal credit history. Active in Kenya, Mexico, Philippines, and India, Tala has now made over $1 billion in microloans, all using its app. But in 2020, a Bloomberg investigation found that Tala was trapping clients in ballooning cycles of debt, charging its African borrowers—most of whom live below the poverty line—interest rates equivalent to 180% annualized, 10 times what Americans pay on their credit cards. At the same time, Tala staff deployed intense shaming tactics to pressure borrowers into repaying, including threats to show up at their offices to shame them in front of colleagues, or to come to their homes and seize their possessions.
Despite claiming to work with “traditionally underserved” clients, the case for Tala’s services, especially in Kenya, is weak. The market for digital credit in Kenya is incredibly robust, with more than 50 loan apps in existence. This is great for consumer choice but not necessarily for consumer protection: many people borrow from one app to repay a loan from another app, creating a vicious debt cycle that is hard to escape. What, then, is the added value of Tala in an already-saturated market?
Legislation in the developing world is starting to catch up to these threats. Late last year, the Central Bank of Kenya started requiring digital lenders to apply for digital credit provider licenses. (Previously, they only had to register to set up operations in the country.) The new legislation also mandates lenders to keep customer data confidential and allows the Central Bank to set pricing parameters for digital credit, putting an end to exorbitant interest rates.
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This is good news for consumers. Yet, in the bigger picture, the standards for establishing and operating a social enterprise remain low. A few documents and approximately $90 are all that’s needed to register a business in Kenya. Once established, the more successful the enterprise becomes, revenue-wise, and the more it manages to attract investor funding, the more likely it is to face difficult trade-offs between its social mission and its newly-relevant profit mandate. And while investors are likely to pay close attention to the company’s financials, most social benefits created by the enterprise—whether that’s women employed, trees planted, or communities with access to drinking water—are purely self-reported. What about the harms the enterprise might be causing or contributing to along the way? Who is monitoring those? In most cases, the answer is no one.
These enterprises continue to raise capital and grow, with relatively little scrutiny because not only are they social enterprises, but they’re female-owned and foreign social enterprises. Tala’s founder, Shivani Siroya, has become a star in both women’s empowerment and tech-for-good circles, speaking at Women Deliver and TechCrunch Disrupt among others. Both Siroya and Sama’s founder have given TED talks, and been named to countless “Women changing the world” and “Innovative start-ups to watch” lists. That kind of profile is hardly the typical target for watchdogs. It’s little wonder, then, that they’ve largely escaped scrutiny from activists and regulators.
The fact that they’re foreign-owned also makes them powerful: both Tala and Sama have raised venture capital funding from American investors, including PayPal, Google, and Salesforce. Money and influence, especially in a corruption-prone nation like Kenya, can keep even major infractions from reaching the media. On top of that, the power dynamics between Western executives and local employees strongly skew in the executives’ favor: In the summer of 2019, when Sama’s Nairobi-based content moderators threatened to strike unless they were given better pay and working conditions, Sama flew two highly-paid executives from San Francisco to deal with the uprising. Motaung, the attempted strike’s leader, was fired, and others were told that they, too, were expendable. It didn’t take long for workers to stand down. And after all that, there still was no pay increase.
The fact is that many of Africa’s most famous social enterprises are foreign-founded and largely foreign-led: OneAcre Fund, Water for People, Solar Sister, and so on. Even as American capital pours into foreign-owned businesses in Africa, Black Africans struggle to find funding for their start-ups. This disparity in who gets the capital to test out their ideas and who doesn’t means two things: First, solutions that are both innovative and contextually-appropriate may never see the light of day, and second, the enterprises that do get funded may end up harming the very people they claim to help.
Of course, this danger exists with locally-owned businesses, and businesses that make no claim of having a second, social purpose. But such businesses are likely to receive more scrutiny and less leeway from investors and regulators alike. Meanwhile, Western-owned social enterprises can hide behind the gloss of their “triple bottom lines,” “profit with a purpose” and “improving lives globally” missions. But these missions have rarely been realized.
What does that mean for Americans investors and regulators? For one, they could recognize the fundamental meaninglessness of “social enterprise” and approach any start-up claiming to seamlessly blend “doing good” and earning profits with abundant skepticism. For another, they can stop supporting and perhaps even allowing American “social enterprises” to operate in countries with weak (or weakly enforced) labor and consumer protection law. Instead, investors could give their money to the local Africans, Asians and South Americans who know the places they’re working in, the problems they’re trying to solve, and most of all, the people they claim to be helping.
Updated 7/21/2022 9 am ET: This story has been updated to clarify that social enterprises like OneAcre Fund, Water for People, and Solar Sister are largely foreign-led.