SA leads in push to use capital for social change

SA leads Africa as the country with most funds and assets dedicated to impact investing, according to a new report by the Bertha Centre for Social Innovation and Entrepreneurship at the University of Cape Town Graduate School of Business.

The 2016 African Investing for Impact Barometer paints a picture of continued growth for investments in Africa that seek to combine financial returns with positive social, environmental and governance outcomes. Impact investing is increasingly seen as a key driver of socioeconomic development, drawing on the power of capital to advance social change.

Stephanie Giamporcaro, the director of the publication and annual research project, said that, of the 1,924 investment funds surveyed across nine key countries, 45% were identified as implementing one or more impact investing strategies, amounting to $353.9bn.

For the 2016 barometer, six countries were added to the three surveyed in previous years, which were Nigeria, Kenya and SA.

Giamporcaro said this allowed for a deeper and wider perspective of professional fund managers’ practices across East, West and southern Africa.

“Southern Africa is home to the majority of [impact] investments, with $325.9bn of assets using at least one impact strategy in 2016.

“Fund managers in East Africa reported $15.4bn of overall assets, and in West Africa, another $12.6bn of assets were deploying at least one [impact investing] strategy,” said Giamporcaro, who is also an associate professor at the Graduate School of Business.

SA remains the country with the largest amount of funds and assets dedicated to impact investing. Zimbabwe and Namibia follow well behind in southern Africa. In East Africa, Kenya dominates Tanzania, Uganda and Rwanda, which have less established financial markets. In West Africa, Nigeria has the largest impact investing assets, well ahead of Ghana.

The barometer analysed two categories of professional fund managers: asset managers and private equity and venture cap-

IMPACT INVESTING IS INCREASINGLY SEEN AS A KEY DRIVER OF SOCIOECONOMIC DEVELOPMENT

ital firms. It scored their investments according to five internationally recognised investment strategies: environmental, social and governance integration; investor engagement; screening (positive and negative); sustainability; and impact investing.

Environmental, social and governance integration into investment decisions “remains the leading … strategy employed in these countries”, said lead researcher and PhD scholar at the centre, Xolisa Dhlamini.

“Investor engagement, where an investor uses its shareholder or bondholder status to promote positive change in a company’s behaviour, is the next most implemented strategy, while screening, which includes religious and ethical investment practices such as Islamic finance, remains third.”