MICROFINANCE PAPER WRAP-UP: “The Landscape for Social Investments in Southern Africa;” by Dr Frank Aswani, Nancy Kairo, Oluwatoyin Adegbite-Moore, Rachel Keeler; Published by African Venture Philanthropy Alliance (AVPA)

This report presents research on “social” investors in Angola, Botswana, Mozambique, South Africa, Zambia and Zimbabwe. The authors define social investment as “financial and non-financial capital deployed according to rigorous investment principles to generate positive social and environmental impact, with varying financial return expectations.” The dataset draws on approximately 250 investors, 71 percent of which are based in South Africa.

The authors cite data from the Sustainable Development Goals Center for Africa indicating an annual gap of USD 500 billion to USD 1.2 trillion between actual investment flows and the amount needed to attain the UN Sustainable Development Goals (SDGs). Meanwhile, from 2013 to 2018, official development assistance and foreign direct investment declined 20 percent and 45 percent, respectively. In terms of progress toward the SDGs, the region is performing best on “Climate Action” and “Partnerships for the Goals” while it is performing least well on “Good Health and Well-Being;” “No Poverty;” “Peace, Justice and Strong Institutions;” “Reduced Inequalities;” and “Zero Hunger.”

Over time, government and private sector initiatives have contributed to the growth of the social investment industry. For example, Zambia created its Zambia National Advisory Board for Impact Investment in 2019. However, most corporate social investment and venture capital is concentrated in South Africa, due to the sophistication of individual philanthropy and the institutionalization of corporate investing in that country.

The challenges faced by Southern Africa’s social enterprises and startups include: (1) on the supply side – insufficient access to funding; (2) on the demand side – lack of knowledge about financial systems and limited numbers of highly skilled employees; and (3) on an industry-wide level – poor macroeconomic conditions, rural entrepreneurs lacking information access and the high cost of telecommunication services.

Going forward, the authors recommend that industry stakeholders: (1) work to “develop enabling environment[s] and infrastructure;” (2) “empower organisations delivering social change”; and (3) “catalyse diverse and innovative pool[s] of social capital.” For example, they are in favor of increasing governments’ roles in social investment, creating alternative funding models for NGOs, and developing knowledge and data tools.

This is a summary of a paper by Dr Frank Aswani, Nancy Kairo, Oluwatoyin Adegbite-Moore, Rachel Keeler; published by the African Venture Philanthropy Alliance; November 2020; 133 pages; available at https://avpa.africa/landscape-report-southern-africa/.

By Romil Pandey, Research Associate

Additional Resources

AVPA homepage
https://avpa.africa/

SDGs website
https://www.un.org/sustainabledevelopment/

“Africa 2030 SDGs Three-Year Reality Check”
https://sdgcafrica.org/wp-content/uploads/2019/06/AFRICA-2030-SDGs-THREE-YEAR-REALITY-CHECK-REPORT.pdf

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