Impact investing could help plug $2.5tn funding gap for development

Developing nations need trillions of dollars a year to tackle issues like food security, climate change risks and basic infrastructure. But foreign investment into these countries dropped by 16% in 2014, to $1.23tn, further widening the $2.5tn gap needed annually to address the most critical areas.

“The global challenges are so complex and the size of the funding that’s needed is so large, traditional funding sources like philanthropy are probably not going to be sufficient to meet it,” said Anna Kearney, associate director for corporate social responsibility at the Bank of New York Mellon (BNY Mellon), which this week released a white paper on the importance of social finance.

The report comes after a UN summit in Addis Ababa, Ethiopia, last week, where world leaders reached an agreement on how to finance some of the planet’s most pressing development issues.

Impact investing – investments that have a social or environmental benefit while also turning a profit – might be one of the best ways address the financing shortfalls, experts say.

The area has seen tremendous growth in the past two years. There were nearly $7tn in socially responsible investment assets in the US in 2014, a 76% increase over 2012, according to a recent report from the Washington-based nonprofit Forum for Sustainable and Responsible Investment.

A significant portion of this money is going towards helping developing countries. In a survey released in May by financial services firm JP Morgan and the nonprofit Global Impact Investing Network, nearly half of the $60bn in impact investments managed by respondents was invested in emerging markets.

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How To Be Sure Your Social Impact Investments Are Thriving – For You And The Cause

Whether they are donating funds to eliminate malaria in Africa or to upgrade education in low-income communities, high-net-worth individuals (HNWI) are committed to improving the world. HNWIs around the globe are increasingly interested in matching their donations with measurable impact investing that combines their desire to help others with the need to maintain their financial well being.

Social impact investing and charitable giving continue to be top priorities for HNWIs, according to the latest World Wealth Reportfrom RBC Wealth Management and Capgemini. These HNWIs, regardless of their particular areas of interest, often rely on their wealth manager’s advice on impact investing.

The report found that among those who are already receiving advice from their wealth managers, more than half (54 percent) want even more help. HNWIs turn most often to their wealth managers (30 percent) for advice on social impact opportunities and approaches, followed by their family (27 percent) and friends (22 percent).

“Virtually all of my clients do impact investing,” said Arline Segal, first vice president at RBC Wealth Management. “What’s changed over time is that there are more tools available that make it easier to measure the performance of these investments—socially as well as financially.”

Segal said aligning your investments with your philanthropic interests and social concerns can range from opting out of investing in companies whose business practices go against your beliefs to using your power as a shareholder to influence a corporate board in a positive way, such as directing investment in a business that supports a cause of yours.

Paul Brest, professor of Political Economy and dean emeritus at Stanford University, suggested deciding where you want to focus your investing—such as health or environmental issues—and then find either an investment vehicle that emphasizes that goal or an individual business that provides services or products that help the cause.

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Gambia: GCCI, GEF/UNIDO Project convene SME forum on renewable energy

Why mobile money is big business in Africa

Another week and another bank in Africa is entering the mobile money space.

Pan-African Ecobank is partnering with Orange Cameroon to allow the telco’s customers with accounts at the bank to transfer cash between the two services. The two firms are already working together in Mali and plan to introduce the service in four other African countries.

Banks partnering with mobile companies is the latest attempt by financial firms to tap into the continent’s large populace of the “unbanked.”

In sub-Saharan Africa, only a third of adults have access to bank accounts. Compare this to Latin America, another emerging market, the figure stands at 51%, according to the World Bank. There are a lot of people whose money simply never touches the region’s financial systems.

The mobile phone revolution and the rise of mobile money, especially in east Africa with platforms such as M-Pesa, has changed this.

Mobile money is now big business in Africa. Last year, the market generated $656m in revenue and in the next four years this is expected to double to $1.3 billion, analysts say.

Until recently, financial firms ceded this space to telecom companies. But the clear growth of the sector has compelled a re-evaluation. Now banks are not only trying to compete in this space but also offer new products that promise access to banking services to those who up until this point were excluded.

So in Nigeria, for example, GT Bank are getting in business with Etisalat Nigeria, the country’s third biggest mobile operator, to create GTEasySavers, a savings account that can be opened via mobile phones. For the 57% of the country with no access to formal financial services, that’s a small step in the right direction.

And in Kenya, in 2011, only 42% of people had bank accounts. That has risen dramatically, driven by mobile money platforms.

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World’s largest concentrated solar power plant in Morocco showcases AfDB’s New Deal on Energy for Africa

On Thursday, February 4, 2016, King Mohammed VI of Morocco inaugurated the first phase of the country’s Noor Ouarzazate Concentrated Solar Power (CSP) plant, ushering in a new era for Africa’s sustainable energy future.

The Noor Ouarzazate plant (NOORo), supported by the African Development Bank (AfDB) among other donors, is a keystone of Morocco’s solar Program (named Program Noor) to develop 2 GW by 2020 and create transformational impact on Morocco and the region. As such, it stands as a showcase example of the ambitious New Deal on Energy initiated by the Bank’s new President, Akinwumi Adesina, to provide universal access to energy for all Africans by 2025. The New Deal is poised to transform Africa’s energy by exponentially increasing on-grid generation and transmission, off-grid connections, and access to clean cooking energy throughout Africa.

Noor Ouarzazate provides an important early example of the type of project, which can trigger the transformation of Africa’s energy sector required to achieve the New Deal’s ambitious vision. The New Deal will operate through five principles: raising aspirations to solve Africa’s energy challenges; establishing a Transformative Partnership on Energy for Africa; mobilizing domestic and international capital for innovative financing in Africa’s energy sector; supporting African governments in strengthening energy policy, regulation and sector governance; and increasing the Bank’s investments in energy and climate financing. Noor addresses those principles in four ways:

• The plant exponentially harnesses the country’s solar power, achieving over 500 megawatts (MW) installed capacity and increasing on-grid access to more than a million households by 2018;

• The plant in Ouarzazate will also help reduce greenhouse gas emissions in the region by 19 million tons over 25 years, keeping the region in line with its nations’ Nationally Determined Contributions (NDC) commitments under the Paris Agreement on climate change;

• Built on a partnership between the public and private sectors, the project will exponentially increase market access to solar energy by reducing market risk and creating attractive investment potential;

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