Southern Africa is fast becoming a hotbed of impact investment activity, with a total of US$22.53-billion in invested across the region as of mid-2015.
Published this week, the report includes findings from 12 countries and shows that development finance institutions (DFIs) provided approximately 75% ($16.8 billion) of impact investing capital in the region. That number apparently covers more than 650 deals.
Several other types of investors — including VC/PE funds, foundations, commercial banks, and pension funds — actively invest in the region, with such non-DFI impact investors having deployed nearly US$5.7-billion in the region through more than 500 deals.
Of the countries covered by the report, South Africa benefited the most from impact investment, with more than 65% (US$14.7 billion) of impact investing capital going to the region’s largest and most advance economy.
While the report authors note that trends and opportunities for impact investors vary from country to country, high-potential sectors for the region include agro-processing, energy, and supply chain integration. Unlike in the rest of sub-Saharan Africa, agriculture is a small contributor to GDP in Southern Africa, yet the sector employs most of the population. As such, investment in agriculture is seen as important to increasing incomes and food security.
“Given the growing interest in this important region, we hope that this in-depth market research will serve investors already active in Southern Africa, as well as those looking to deploy impact capital in these diverse countries,” said Amit Bouri, CEO of the GIIN. “Impact investors are continuing to support these challenging but critical markets, working to demonstrate that investment in the region can drive meaningful social and environmental impact alongside financial returns.”
“We are excited to share research that will help investors better understand the region,” said Annie Roberts, a Partner at Open Capital Advisors. “We increasingly hear that impact investors are looking to deploy capital outside traditional markets in South Africa, and are excited to see so much activity in Zambia, Mozambique, and other countries in the region. Some investors believe that impact investing hasn’t reached Southern Africa yet, but as this report shows, there is a vibrant eco-system with many local players.”
By Nur Bremmen of Ventureburn