New Report On Southern Africa Highlights Hotbed of Impact Investing Activity, With Over USD 5.7 Billion From Non-DFI Impact Investors

The Global Impact Investing Network (GIIN), in partnership with Open Capital Advisors, published The Landscape for Impact Investing in Southern Africa, a state-of-the-market analysis of the impact investing industry in the active region. The report includes findings from 12 countries, as well as a dedicated chapter exploring the role of development finance institutions (DFIs) across Southern Africa.

The report analyzes a market comprising countries that vary substantially in their level of development but that present common challenges and opportunities for investments to have social and environmental impact. Progress has been made on key development indicators in South Africa, the region’s anchor, but there remain significant gaps in the provision of vital goods and services across the region. Despite recent economic growth, half the region’s population (double the global average) lives on less than USD 1.25 per day. Looking forward, Southern Africa’s GDP is projected to continue to grow by five percent per annum.

International DFIs are significant players in the market, having deployed nearly USD 16.8 billion in impact capital across the region through over 650 deals. South Africa-based DFIs also play a pivotal role and have deployed USD 17.1 billion regionally through over 7,500 deals. Additionally, 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 USD 5.7 billion in the region through more than 500 deals.

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Responsible investing is becoming the new normal

Sustainability is attracting ever-greater public attention. The topic already ranks highly on the legislative agendas of most governments, especially since the groundbreaking agreement reached at the Paris climate talks last year. This growing public awareness of sustainability signals an important shift in global priorities. It is pushing consumers, governments and business leaders to pay more attention to environmental, social and governance issues than ever before. This shift will also have a fundamental impact on the way companies are run and perform.

The Volkswagon emissions scandal is just one example of how the management of social and environmental issues can have a deep, bottom-line impact for corporate performance. Although the extent of the financial and strategic ramifications on Volkswagen are still unfolding, the scandal has already led to a $25bn (£17.2bn) loss in market value, the prospect of over $90bn (£62bn) in US fines, and a corporate reputation in tatters. Such examples demonstrate clearly that a company’s management of key ESG topics can have a very direct impact on the firm’s competiveness and long-term profitability. It therefore comes as little surprise that more investors today than ever before are integrating key ESG metrics into their investment analyses.

This growing investor focus is perhaps most evident in the rapid growth in signatories to the United Nations-sponsored Principles of Responsible Investment (PRI). PRI signatories commit to “incorporate ESG issues into their decision-making and ownership practices and so better align their objectives with those of society at large.” Today, over 1,300 asset managers have become signatories, representing over $60tn (£41tn) in assets under management. These asset owners include heavyweight investors like Blackrock, PIMCO, KKR, Partners Group, and Goldman Sachs, suggesting that the integration of ESG analysis into the investment process has already entered the investment mainstream.

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Impact Investing’s Role in Global Development

I recently went to an event at the Center for Strategic and International Studies called ‘Impact Investing: An Opportunity for Development?’. The event brought together a diverse panel of experts from the private and philanthropic sectors to discuss what the title implies: impact investing and its potential to address global issues.

With all the hype surrounding it these days, impact investing could easily be considered the magic remedy for international development and economic growth. Part of its allure is the promise that both investors and investees can win.

Filling funding gaps

Saadia Madsbjerg, Managing Director at Rockefeller Foundation, opened up by pointing out the need for more capital for development. She noted that there was a $200 trillion funding gap in dealing with the problems in the developing world – a gap that impact investing could help fill.

Impact investing is a fast growing segment of the investment marketplace, and will continue to grow. Although the market has not been fully quantified, GIIN with J.P. Morgan released their annual investor survey report for last year, which showed more than a hundred investors (organizations, foundations, institutions and individuals) reporting to manage over $60 billion in impact investments. Calvert Foundation investors alone have invested more than $1 billion since 1995. John Simon, Founding Partner of Total Impact Advisors, asserted that impact investing is growing at about $10 billion a year and will continue to grow for the foreseeable future. Stats like these are impressive; but if philanthropic and public sector funding gaps continue to grow in the trillions, even with its projected growth the impact investing sector won’t be able to fully address those gaps.

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Press Release: Africa Finance Corporation increases stake in Cabeólica Wind Farm

Africa Finance Corporation (AFC) has completed the purchase of InfraCo Africa’s stake in the Cabeólica Wind Farm. The deal follows the share purchase agreement signed on 6 May 2015 in which AFC agreed to purchase InfraCo Africa’s remaining stake in the project.

Cabeólica is the first privately-financed sustainable wind farm on a commercial scale in sub-Saharan Africa. Operating across four of Cape Verde’s islands (Boa Vista, Sao Vincente, Sal and Santiago) and consisting of over 30 wind turbines, it has a total installed capacity of 25.5MW, equivalent to around 20% of Cape Verde’s energy needs. To date, Cabeólica has generated over 300,000 MWh of clean wind power.

The project has transformed Cape Verde’s access to electricity. Prior to becoming operational, the islands suffered from chronic power shortages and were heavily dependent on imported oil, with only 2% of the country’s energy needs being sourced from wind power. Today, Cape Verde benefits from a reliable and extended electricity grid.

Andrew Alli, President & CEO of Africa Finance Corporation said:

“We are very excited to take a larger part in this ground-breaking project. Cabeólica provides access to electricity for 360,000 people, which is about 72% of the Cape Verde population. The project is staffed entirely by skilled Cape Verdean employees and with sustainability at its core; it has avoided an estimated 55,000 tonnes of carbon emissions a year and averted the need to import 15 million litres of diesel a year. The additional share purchase will allow further expansion and other uses of wind energy in Cape Verde. We are very proud of our growing work in addressing Cape Verde’s energy needs though sustainable measures, all the while seeking a competitive return on investment for our shareholders.”

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Uganda designs Africa’s first solar bus, invites Investors

Ugandan engineers have built a solar-powered electric bus that they say is a first of its kind in East Africa and think it will revolutionize the automotive market in the region. The Kayoola, as its called, is a 35-seater that can run for up to 80 kilometers on two power banks that can also be recharged by solar panels installed on the roof of the bus.

Paul Musasizi, chief executive officer of Kiira Motors Corporation (KMC), the state-funded company behind the vehicle, says with the potential for solar power in Uganda, it only made sense that engineers started to leverage the energy source for cars.

“The bus is purely electric and our idea is to test the strength of solar energy in enabling people to move,” he told a local newspaper.

The company built the prototype with funds from the Ugandan government. But KMC is hoping to attract investors to the project to start producing the buses for the mass market by 2018 at a retail price of $58,000. Typically, 35-seater buses retail between $35,000 to $50,000.

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