Tag Archives: government policy

Social Impact Investing Creates Value

Impact investing can mean a diverse range of investments, ranging from housing development in the US to renewable energy in BRIC countries and agricultural cooperatives in Africa. Investment can be crowded fund or private equity.  The table below shows the spectrum of different impact investment business models and traditional investments.

Impact Investment

Social impact investing is not a new trend; it has been around for several decades through philanthropic investments, in areas like community and social development, infrastructure and gender equality. However, a fairly new type of bond to finance social wellness is the Social Impact Bond, which the Social Finance UK describes as a “public-private partnership which funds effective social services through a performance-based contract.” Unlike social impact bonds, however, social impact investing is a large field that include any social benefit from the underlying business model. The combination of social impact investing and bonds is the new form of business model that is emerging in many developing countries around the world. The HBR wrote several articles about how social entrepreneurs are typically held back by traditional financing processes and structures, but in new markets where risk and opportunity are intertwined, innovative business models are capable of driving new areas of returns for investors with an open mind. This is currently the case with green bonds and has been with impact bonds.

Impact Investing in Different Markets

In the world if impact investing, The impact sector is growing, in a study conducted by the Global Impact Investment network, respondents in impact investing reported they grew their impact assets from USD 25.4 billion to 35.5 billion from 2013 to 2015. The report, found here, shows many trends in the sector by respondent types and tracks the growth of the sector. Some American examples include Goldman Sachs’ investments in community and urban development across the US including New Orleans , Chicago, and NYC.

While globally, Africa is seeing many similar impact investments. One being The Just Shea Program , a program that helps women shea harvesters of Ghana with several areas from providing safety gear that can be repaid through harvest shea nuts, to providing equipment to protect form poisonous snakes, and finally and importantly for economic reasons,  the creation of cooperative silos to increase the price per kilo paid to the harvesters.

In Africa, one of the value creation tools that African private equity can contribute to social impact businesses is the ability to bring their portfolio companies up to above-market standards of compliance and transparency, which in turn raises their value at exit. Investors can also help influence the political climate by investing in areas with strong legal standards and compliance thus creating reasons for government to create more favorable investment climates.

It seems that while impact investing may be difficult for traditional investment, there is a space in portfolios for this type of model, and as data emerges on the results, the potential for ROI is very viable as well as the potential to create positive socially responsible returns.

African and EU Partnership Framework Continues To Bolster Development Work

The recovering African markets are reopening the gateways not only for sustainable investment opportunities but also new impact investment, both for local players, as well as globally. This past July, The EU Africa Partnership  Civil Society Summit took place in Tunis to cover the ongoing priorities of the groups vision and roadmap. Among the top of this list of objectives were the focus on continued economic development, that includes policy and advisory support frameworks to help countries and investors with placements for projects throughout Africa. This can include process to help maintain transparency and identify and advise on financial risk mitigation.

As continued sustainable development assists in potential for commerce and trade, this means a better ability for strong performing sectors in West and East Africa to truly take the reigns of driving the future of their firms. Sidney Yankson, CEO of Ghana Capital Partners , who attended the EU Africa Partnership Summit in previous years, believes the following is true of this summit;

” Part of our firm’s objective is to not only drive investment opportunities, but to contribute to the ecosystem of society where we operate through sustainability activities. As we have seen fluctuations in the growth of markets not only here in West Africa but globally, we find the continued interest of such organizations very important to ensure sound investment and development support to local and foreign partners.”

 

GCP will continue to work with local and European partners in various sectors, in particular  with policy influencers and foundations across the region to share experiences and methods for success in this vital time for investment in renewable and infrastructure in Africa.

Keeping Ghana Alight – New Initiatives for Better Solar Coverage

As many African nations continue to evolve their utility coverage and infrastructure, many struggle to establish sustainable conditions and terms for such projects. Ghana’s

Africa Renewable and Solar Developments

Renewable Solar Projects Installation

recent new President Nana Addo Dankwa Akufo-Addo who came into office earlier in Spring 2017, has made clear a new positive agenda to commit to developing solar in the country. His position in a recent State of the Nation address was that it will resume Ghana’s renewable energy program, as well as implementing new initiatives to attract private sector investment in renewable.

The Ghanaian president has also stated that utility Electricity Company of Ghana (ECG) had signed 43 Power Purchase Agreements (PPA) by the end of 2016, and that over 20 more were under consideration. He added that there will be an attempt to enforce a new procurement law for more fair bidding processes, and that many of the countries existing PPA’s u

nder the last government may be under review for reconsideration.

In addition to these new initiatives, in mid-March the country’s Energy Commission launched a rooftop solar programme, originally conceived in 2015, which provides an initial investment to cover the cost of PV panels up to a maximum of 500 W. The Energy Commission aims at installing 200 MW of rooftop PV capacity in the medium term. The programme is to be expanded to cover non-residential facilities including ministries, departments and agencies across the country.

Sources:

MDAs to be connected to solar energy

Ghana’s new government relaunches solar program