This article explores modern trends towards impact investing in Africa. It touches on positive windows for the instrument while highlighting major challenges and the way forward. It is based on academic research/literature and field work by the African Centre for Community and Development. Author: Arrey Mbongaya Ivo

1. Title: Is Impact Investing Gaining Grounds in Africa with a Bark or Bite?
Author: Arrey Mbongaya Ivo
Founder/Director at African Centre for Community and Development
CEO Earth Complex Guesthouse Limbe Cameroon
P.O. Box 181, Limbe, Cameroon
Telephone: 00237675673084
Emails: arreymbongayaivo@gmail.com ivoemmanuelarrey@yahoo.com or
ivo@africancentreforcommunity.com
Relevant Web links:
https://www.linkedin.com/in/arreymbongayaivo
http://www.youtube.com/user/AfricanCentreforCom
http://www.en-gb.connect.facebook.com/pages/African-Centre-for-Community-and-
Development/103686769685856
https://plus.google.com/115235720382245612722/posts
Date: 01/07/2018
©2018 African Centre for Community and Development. All Rights Reserved.

2. Abstract
This article explores modern trends towards impact investing in Africa. It touches on positive windows for the
instrument while highlighting major challenges and the way forward. It is based on academic research/literature
and field work by the African Centre for Community and Development.
Keywords: business, International development, impact investing, Africa, research, venture, capital, economy
From every indicator, the instrument “Impact Investing” is gaining grounds in Africa. From 2007
when it was first coined from a Rockefeller Foundation initiative to now, many more actors in
the area of Official Development Assistance (ODA) as well as private equity, are now putting in
place investment devices that put into consideration the environment and social issues while
seeking financial returns be they at market value, above market value or at the level of capital
preservation. According to the Global Impact Investing Network (GIIN), 99 surveyed investors
committed approximately US$8 billion of assets to impact investments in 2012 while 146
investors in 2015 had approximately $60 billion of their assets under impact investment
management devices. According to Saltuk et al, 2015, many more investors are thinking and
investing under socially responsible programmes and the trend is gaining grounds across Africa
and the globe. But is impact investing gaining grounds in Africa with a bark or with a bite? Some
positive points to indicate a strong evolution of the tool in Africa include the following:
 To begin with, global economic realities are forcing African governments to do business
with more social responsible investors in order to justify accountability to their people.
This is fuelled by recent global financial crises in 2011 and 2008 that led to negative
consequences on countries dependent on investment capital from developed countries
impacted by the financial crises. The reform of governance in Africa to include more

3. participatory and democratic practices is also forcing governments to operate within
global frameworks that guarantee social responsible investment. A move further
empowered by the United Nation’s Sustainable Development Goals expected to run
until 2030 as well as the African Union’s Agenda 2063.
 More so, Rockefeller Foundation’s establishment of the Global Impact Investing
Network (GIIN) in 2009, helped in shaping a framework for impact investing in that it
created the necessary inputs or atoms necessary in qualifying as an organization or
business molecule/investor engaged in impact investing. The three inputs in their
estimation are “intentionality”, “investment with return expectations” as well as
“impact measurement”. Therefore it is now possible to align organizational strategic
goal and resources (intention), with capitalization and profit making (investment with
return expectations) with social and environmental assessment on the effects of
organizational strategic goal goal/resources plus investment returns on communities,
the environment as well as the people living around investment devices (Impact
measurement).
 Moreover, many organizations and investors are increasingly finding the United Nations
Principles for Responsible Investing (UNPRI) which puts responsible accountable
investments with social and environmental considerations in focus as a lucrative tool for
their businesses. Indeed up to 1,276 institutional investors /stakeholders, with
combined assets of over $45 trillion signed up to the UNPRI in 2014. Their combined
assets were thus up from $4 trillion in 2006.

4. Therefore it is clear that impact investing is trending. Despite this strong movement from
asset managers, there is a strong picture that arguably suggests that impact investing is
gaining grounds in Africa with a bark and not a bite. The following points justify this
assertion:
 Difficulty by investors in identifying points of entry in Africa that match the criteria
of intentionality, return on investment expectations and impact measurement. This
it must be stated, is arguably a product of both the African markets and institutional
and other asset managers in that, there is a tendency to over compartmentalize
possible stakeholders and investment windows in Africa. Another issue is that of
attempts at giving a universal definition to a social responsible enterprise in a
complex landscape like Africa with diverse organizational cultures and unstructured
emerging lucrative markets including the informal economies which arguably are an
important and very fast growing sector in the region (Hall and Midgley, 2004).
 More so, the move towards impact investing following the global financial crises of
2011 and 2008 was not smooth. It reduced trust in global financial institutions and
justified the need to diversify African economies so as to avoid future external
shocks that leave governments weak and that spread vulnerabilities across sub-
populations. Traditional investment players in Africa watched the emergence of a
growing number of new actors from within the continent as well as from other
regions of the globe including China and the Middle East. While the Sustainable
Development Goals of the United Nations, seem to be a stitch in time , there is
difficulty of harnessing public spending, with ODA as well as impact investing

5. especially as many have argued that the latter seems to be working on a similar Top
Down trajectory as traditional international aid which many say after infusions of
over US 1 trillion dollars from 1970 to 2010 into Africa, was not able to stop major
issues including poverty, hunger, climate change, desertification, illiteracy,
deforestation, biodiversity loss or to spur industrialization, effective and accountable
governances, curb conflicts, improve intra-African trade etcetera. Indeed in 2015, a
survey by the UN Sustainable Development Solutions Network (SDSN) stated that
effective delivery of the SDGs was only possible in developing countries globally if
they increased annual public and private expenditures by a gaping $1.3 trillion.
Developing and low income countries in Africa on their part are expected to raise
annually US$342-355 billion to successfully deliver on the SDGs. While this is good
news for investors who did not know Africa offered a major entry point for impact
investing, it is ironic that, appetite for such asset movements into Africa is in many
ways mediated by poor understanding of the African contexts, over bureaucracies in
accessing financing as well the lack of inclusive partnerships between investors,
entrepreneurs, civil society and governments.
 Failure in ensuring the financing of early stage businesses as well as a very
insignificant financing of ventures is further compounding the spreading of impact
investing in Africa. While this is fuelled by risk assessment studies or an attempt to
reduce fiduciary risks, it is also factual that many of these studies are mediated by a
lack of effective understanding of the African business landscape, patrimonial
assessments of entrepreneurial viability of social responsible businesses across

6. Africa as well as a lack of effective links between private sector and governments or
between private sector and civil society or between all these actors in order to arrive
at more broad base business coalitions that put social environmental governance at
the heart of investment management. This is a contradiction to the assertions of
Sullivan and Skelcher (2002) that put partnerships as the necessary tool in the 21st
century delivery of business and social policy.
 Besides there is a general lack of effective data on impact investing, impact
measurements exacerbated by the poor links between investors, researchers,
entrepreneurs, innovative networks etcetera intimated above (Dalberg, 2015). This
is further compounded by a somewhat mistake in analyzing the immersion of ICTs in
Africa which is critical in the development and management of investment
portfolios. Mobile penetration for instance is mistaken for access to fast reliable
internet while low access to fast internet is mistaken for lack of viable written
projects or ideation for incubation hence the need why it becomes invaluable for
impact investors to work with stakeholders with local situational intelligence
especially local professionals, businesses, researchers, entrepreneurs, civil society
organizations etcetera in the delivery of their programmes.
 More so, the downgrading of land in Africa as asset is affecting development of
private equity in land related businesses. Many investors when offered land as a
product in a possible partnership seem to over emphasize on the monetary
indicators of the social enterprise or the land owner which as intimated above or as

7. a reality on the ground should not be the case for an emerging economy with actors
operating with one of the lowest levels of access to financing in the world.
 More so, investors are finding it difficult to exit after financing. Many find it difficult
to make more than real market values of their inputs and are not comfortable with
market value exit or private equity in a region many have little understanding of its
political economies which in this light has been blamed by poor media coverage of
the continent as well as the dictates of international aid in that, it is impossible to
sustain the instrument without corresponding media or academic literature of
sometimes rightful and erroneous depictions of general catastrophes and social
issues in the continent hence denaturing incidentally effective appraisal of the
business and enabling environment of the continent.
Despite these roadblocks on the pathway to impact investing in Africa, there is ample reason to
belief that the instrument can be very lucrative. The following reasons justify this assertion:
 Africa’s growing middle class (Aissa et al, 2011) which was able to reach 350 million
people in 2010. This sub-population was able to spend US 1 trillion dollar in the same
year and is estimated to double by 2050. There is thus huge possibility and potentials for
the development of impact investment ecosystems that benefit from this in areas like
education, agriculture, health, energy, communication and infrastructural development.
 More so, the natural resources landscape in Africa apart from the annual 2.6 percent
population growth rate in many parts is huge. This is further supported by a dynamic
gross domestic product (GDP) in the continent that was able to reach 5.3 percent

8. between 2005 and 2010. With the right investment flows, value chain development
across sectors can be a major entry point for impact investing especially as the continent
can now boast of having 6 out of the 10 fastest growing economies of the globe hence
justifying an earlier prediction of the International Monetary Fund (IMF). With over 60
percent of the world’s remaining arable land and with over 600 million people without
access to electricity, the continental needs arguably open up financing windows for
impact investing if they are followed by more inclusive programmes with due diligence
and trans-boundary partnerships/financing.
Therefore, Africa offers a major route for impact investing. It will take the merging of subjective
wellbeing (Arrey, 2008) and objective wellbeing indicators/analyses, more accountable
governments, visible social enterprises as well as more dynamic research and innovation from
investors and their partners to make the device more effective and impactful. It will take more
partnerships and diverse other instruments for financing, including ventures and blended
finance to arrive there. It will take global political and economic will and a downgrading of
negative stereotypes about Africa as well as improvements in relevant pillars like roads, energy
infrastructure, ports, airports, schools, health centres, transportation networks, trade,
agriculture, tourism, natural resource management, good governance, human rights etcetera to
get there. Impact investing is gaining grounds in Africa but it needs the relevant boosters to
bark and bite.

9. References and Bibliography
African Union Commission. 2014. Agenda 2063: The Africa We Want. African Union
Commission. Available at: http://agenda2063.au.int/55 African Union Commission . 2014.
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Dalberg Global Development Advisors. 2011. Impact Investing in West Africa. Dalberg Global
Development Advisors. Available at: www.assets.rockefellerfoundation.org
Global Impact Investing Network. 2009 – 2014. About Impact Investing. Global Impact Investing
Network (GIIN) Available at: http://www.thegiin.org/
Hall A, Midgley J. 2004. Social Policy for Development. Sage Publications: London.
I.M. Arrey (2008) “Subjective Wellbeing a lucrative Contemporary Jargon for Development
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Saltuk, Y; El Idrissi, A; Bouri, A; Mudaliar, A; Schiff, H. 2015. Eyes on the Horizon: The Impact
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http://www.thegiin.org/ .
Mckinsey Global Institute. 2011. Mapping global capital markets. McKinsey Global Institute.
Available at: http://www.mckinsey.com

10. United Nations Conference on Trade and Development. 2014. Economic Development in Africa
Report 2014: Catalysing Investment for Transformative Growth in Africa. United Nations
Conference on Trade and Development. Available at: http://unctad.org/
International Monetary Fund. 2015. Regional Economic Outlook: Sub-Saharan Africa –
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Aissa, M; Mubila, M; Lufumpa, C. African Development Bank. 2011. The Middle of the Pyramid:
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UNDP African Facility for Inclusive Markets. 2013. Realizing Africa’s Wealth. Available at:
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©2018 African Centre for Community and Development. All Rights Reserved.