Tag Archives: Venture capital

Social Impact Investing Creates Value

Impact investing can mean a diverse range of investments, ranging from housing development in the US, to renewable energy in BRIC countries, and agricultural cooperatives in Africa. Investment can be crowded fund or private equity.  The table below shows the spectrum of different impact investment business models and traditional investments.

Impact investment

Social impact investing is not a new trend; it has been around for several decades through philanthropic investments, in areas like community and social development, infrastructure and gender equality. However, a fairly new type of bond to finance social wellness is the Social Impact Bond, which the Social Finance UK describes as a “public-private partnership which funds effective social services through a performance-based contract.” Unlike social impact bonds, however, social impact investing is a large field that include any social benefit from the underlying business model. The combination of social impact investing and bonds is the new form of business model that is emerging in many developing countries around the world. The HBR wrote several articles about how social entrepreneurs are typically held back by traditional financing processes and structures, but in new markets where risk and opportunity are intertwined, innovative business models are capable of driving new areas of returns for investors with an open mind. This is currently the case with green bonds and has been with impact bonds.

Impact Investing in Different Markets

In the world if impact investing, The impact sector is growing, in a study conducted by the Global Impact Investment network, respondents in impact investing reported they grew their impact assets from USD 25.4 billion to 35.5 billion from 2013 to 2015. The report, found here, shows many trends in the sector by respondent types and tracks the growth of the sector. Some American examples include Goldman Sachs’ investments in community and urban development across the US including New Orleans , Chicago, and NYC.

While globally, Africa is seeing many similar impact investments. One being The Just Shea Program , a program that helps women shea harvesters of Ghana with several areas from providing safety gear that can be repaid through harvest shea nuts, to providing equipment to protect form poisonous snakes, and finally and importantly for economic reasons,  the creation of cooperative silos to increase the price per kilo paid to the harvesters.

In Africa, one of the value creation tools that African private equity can contribute to social impact businesses is the ability to bring their portfolio companies up to above-market standards of compliance and transparency, which in turn raises their value at exit. Investors can also help influence the political climate by investing in areas with strong legal standards and compliance thus creating reasons for government to create more favorable investment climates.

It seems that while impact investing may be difficult for traditional investment, there is a space in portfolios for this type of model, and as data emerges on the results, the potential for ROI is very viable as well as the potential to create positive socially responsible returns.

PV solar start-up opens in Durban

Durban is now home to the first locally owned photovoltaic (PV) solar panel manufacturing plant in South Africa and the most advanced facility of its kind in Africa.

Click here for further details.

Ghana looks for $1bn renewable energy investment

A representative of Ghana’s energy ministry has said that the country is on the lookout for $1 billion worth of investment in renewable energy technology over the next eight years.

The African state was the first developing nation to engage with the UN’s Sustainable Energy for All initiative, and has a target to produce 10% of its electricity from clean sources by 2020. And according to Seth Mahu, deputy director of the country’s energy minister, Ghana is seeking large sums of investment in renewable resources to help it to meet this objective.

Policies are in place to exploit the country’s energy potential in solar, biomass, wind, as well as mini-hydro”, Mahu told The Washington Post.

We are looking at both Ghanaian and non-Ghanaian private-sector operators partnering government to develop these resources.”

As of November last year, 77% of the country’s population had access to electricity, and coming before its renewable energy aspirations is a need to provide affordable power to all communities by 2020.

The National Electrification Scheme was set up in 1989 in order to achieve this goal – a time when only a quarter of the country’s population had access to electricity.

Speaking at a forum in Ghana’s capital Accra on Friday, Adotei Brown, president of the Ghana Institute of Architects (GIA), said that urgent measures need to be taken in order to capitalise on the country’s abundant clean energy resources.

Heavy demand on power generation must lead to the use of the sun’s energy in every building and that the need to recycle water and waste and reduce air-conditioning heat-loads on our buildings may be ignored only to our peril”, he said.

For a country that has experienced significant power cuts over the last three months after a ship damaged a natural gas pipeline off the coast of Togo, Ghana’s ambitious call for renewable energy investors is much-needed.

It now has the difficult task of balancing sustainable energy with widespread access to energy – an undertaking that its clean, renewable resources can help it achieve.

African private equity funds outperformed US venture capital over last decade


An interesting observation:

The strongest performing sectors within the private equity funds in the African index were IT/telecom, industrial, manufacturing and consumer. Other than the consumer sector, all of these have outperformed their other emerging market peers.