This article first appeared in Africabusinesscommunities.com.
‘Impact investing’ – which refers to investments made with the specific objective of achieving positive social or environmental impact alongside a financial return – has been identified as an effective approach to address socio-economic challenges, such as poverty, inequality, and environmental degradation.
In the context of the African continent, some progress has already been made. South Africa has the largest amount of assets dedicated to one or more investing for impact (IFI) strategies, followed by Nigeria and Kenya.
Despite the promising sparks of activity in this field on the continent, the market remains fragmented and at different stages – and such efforts face challenges of unpredictability, capacity, and market volatility.
When it comes to upskilling and capacity-building for finance practitioners, there are very few existing local accredited courses in the area of impact investing. With one exception – the only Africa-focused impact investing course available on the continent from globally renowned South African university, The University of Cape Town Graduate School of Business.
The course was designed in partnership with the GSB’s specialised centre, the Bertha Centre for Social Innovation and Entrepreneurship in 2016. Since then, the “Impact Investing in Africa” Executive Development Course has been running annually in South Africa with success, with the bulk taking place in-person and some online iterations during the Covid-19 lockdowns.
In an effort to broaden its reach with relevant industry audiences on the continent – from wealth managers, consultants, funders, and other financial intermediaries – this course will be hosted in Kenya for the first time in July 2024. Course co-convenors are Shiluba Mawela CA (SA) Managing Partner at Tshiamo Impact Partners, together with Daniel Steenkamp and Jason Van Staden of the Bertha Centre Innovative Finance team.
“To increase impact investment, and ultimately impact, requires a multipronged approach – such as training, collaboration, knowledge sharing and innovation. The potential of impact investing is powerful, and we’d like to see more ecosystem development for different stakeholders to collaborate to solve Africa’s social and environmental problems,” says Van Staden. “The Bertha Centre for Social Innovation and Entrepreneurship is at the forefront at building this ecosystem by equipping investors with knowledge, tools and networks to scale their impact.”
The “Impact Investing in Africa” course covers training on catalytic capital, blended finance and social impact bonds – all examples of innovation in the finance sector for scaling social and environmental impact on the African continent. With East Africa being recognised as one of the centres of global impact investing on the continent, there is a lot to be said for cross-regional learning and knowledge-sharing opportunities as well.
“In the context of some developmental constraints and the many opportunities for investment the African market presents, increasing the footprint for education on impact investing to a major financial capital city like Nairobi couldn’t have come at a more pertinent time. Our end goal here is simple: to reach and equip more investors from across the continent with the skills and knowledge to grow impact investing,” says Mawela.
In order to best leverage this investing approach for the continent, education and increased awareness on the topic in the finance sector is crucial. It is therefore imperative that across the financial services spectrum, everyone from seasoned investors to burgeoning entrepreneurs comprehend the foundational principles and advantages of impact investing.
“Typically, impact investing course offerings are all from the global North. Being rooted in Africa in the work we do in this space lends the course a unique perspective from an ‘in the trenches’' experience. It drives the agenda from the perspective of what is really needed and working in our African context,” says Steenkamp. “We also hope to clear up some of the common misconceptions about impact investing, which includes this idea that impact comes at a cost of fair returns.”
The trends indicate that there is more funding set to flow into the continent for impact investing; a third of investors surveyed in a 2023 report by Global Impact Investor Network (GIIN) said they plan to increase allocations to sub-Saharan Africa over the next five years. With these sorts of funds being directed towards investments that yield positive social and environmental impact outcomes, alongside financial returns, it seems that impact investing has the potential to reshape Africa’s future in a positive way.
