impact investing 2
Posted on 3 July 2024 by UCT GSB Press Office
Political Economy

Supporting impact investment initiatives in Africa

Africa must take charge of its own development agenda, and while impact investors can support it, they must also be supported with a collaborative and research-backed approach from African stakeholders. Here is what is being done in this regard, and how it can benefit all those involved.

By Shiluba Mawela

This article first appeared in

Economies across Africa are facing some serious headwinds, from rising inflation and regional instability to a lack of foreign currency and the high cost of capital. According to McKinsey, Africa’s growth slowed from 2010-2019, and while the continent’s GDP increased faster than its population in those years, the total number of Africans living in poverty increased by 30 million. Since 2020, economic growth has been further hampered by the pandemic, the war in Ukraine and other global crises. 

But for investors looking to make a difference while also making a profit, the continent — with its young, fast-growing and rapidly urbanising workforce and abundant natural resources — still offers significant opportunities.

Over the next five years, a third of impact investors plan to increase allocations to sub-Saharan Africa, according to the Global Impact Investing Network (GIIN)’s 2023 GIINSIGHT series, which is based on data captured from 308 impact investors globally. This reflects ongoing investor interest in these emerging economies. This is positive for the region, since sub-Saharan Africa is already one of the largest beneficiaries of impact investing

The GIINSIGHT report, a barometer for the broader impact investing market, noted that the continent received over $25 million of survey respondents’ Assets Under Management in 2022 (an increase of over 94% from 2017) — more than the $19 million reported in Europe, and the $18 million reported in East Asia.

Impact capital could prove decisive in addressing the range of challenges currently bedeviling the continent, from inadequate infrastructure to limited access to quality education, healthcare and energy. To take just one example of these issues, 43% of the continent (roughly 600 million people) does not have electricity.

Impact capital isn’t a silver bullet: the need for cross-sector partnership

Despit these positive developments, an influx of capital alone will not be a silver bullet that solves Africa’s multifaceted development challenges. To ensure that lives and livelihoods are decisively changed for the better, African nations need to be deliberate in taking charge of their own destinies. And this starts with better coordination between African governments and the different sectors and communities within these countries. 

Specifically, by forming strategic partnerships, sharing lessons, and aligning focus, African stakeholders — including governments, businesses, international partners and the development sector — can together reignite growth and, in alignment with the African Union’s Agenda 2063, build “the Africa We Want”.

Governments’ involvement will be critical in driving this, but there is also an important role that the private sector in general, and the investment community in particular, could play. It was with this in mind that the Africa Impact Investing Group (AIIG) was launched at the inaugural Africa Impact Summit in Cape Town last July. 

The AIIG — a regional collaboration of African National Advisory Boards of the Global Steering Group for Impact Investing in Ghana, Nigeria, South Africa and Zambia, along with impact investing taskforces from Burkina Faso, Côte d’Ivoire, Egypt, Kenya, Mauritius and Senegal — will serve as a platform for collaboration, learning, and advocacy, with the goal of fostering a thriving impact investing ecosystem in Africa.

This new organisation could be a game-changer for African investment. The AIIG will work collaboratively to build awareness around impact investing, mobilise various sources of capital and lobby for enabling policy support. It will also, crucially, seek to develop a pipeline of investment-ready opportunities in key sectors that have the potential to create significant impact, such as agriculture, energy, health, education and financial services. To feed the increased appetite for African investments among impact investors, it will be vital to provide them with the right menu of options.

Leveraging dialogue and research to advance Africa’s development

Of course, investment priorities will vary between countries and regions — Africa is a vast and diverse continent, after all. Thus, dialogue as a path to partnership will be important to identify the challenges and opportunities on the ground in each context. This should involve a range of stakeholders — from government and business leaders to civil society and non-governmental organisations.

Research will also be a key element of the AIIG and its partners’ work, taking this process further by pinpointing the reasons behind any bottlenecks and barriers, and finding solutions to them. This type of approach has generated results in other contexts. For instance, the recently ratified African Continental Free Trade Area emerged out of a collaborative process initiated by the African Union that identified lagging intraregional trade as a problem that needed to be addressed.

Research could also identify pockets of excellence that could serve as knowledge resources for the broader region, with certain countries leading the way in areas where they’ve identified and implemented successful solutions to development challenges. For example, South Africa has a strong regulatory environment, with solid capital and financial markets, and could play a role in helping other markets on the continent develop and progress. Kenya, meanwhile, is adept at attracting foreign investment. Understanding the reasons behind these relative strengths would help inform and support the efforts of other countries, inspiring them to leverage similar approaches for the benefit of their own business and investing ecosystems.

How impact investors can amplify the work of African social innovators

Informed by dialogue and research, we Africans can work together to galvanise the partnerships we need to move the continent towards a brighter future. Africans are a resilient and resourceful people, and we are starting to see a surge of creativity around solving some of the continent’s challenges. 

Young people in particular are mobilising to hold governments accountable and change outdated systems. Meanwhile, social innovators and social justice activists are pouring their energy and ingenuity into building their communities and countries. And small and medium-sized enterprises are stepping forward in ever greater numbers to solve key challenges in pioneering and dynamic ways.

To take just one example of this homegrown innovation, AQUAtap Oasis is a pan-African collaborative partnership program in the Democratic Republic of Congo that is aiming to install 500 water centres over five years that will provide clean drinking water to over 1.2 million people. Businesses and initiatives of this nature are emerging across the continent, producing an ever-growing number of rewarding and impactful outcomes. If successfully channelled, impact capital could result in a multiplier effect that amplifies the work of these countless social innovators, changing the lives of citizens throughout the region while supporting these vital green shoots.

But for this process to truly transform the continent, Africans need to take charge of their own development agenda. Although the outlook for sub-Saharan Africa has improved since the pandemic, it remains in a vulnerable position, especially as global geopolitical tensions rise. By pulling together through collaborations like the AIIG, we can ensure that impact investors globally see the advantages that Africa offers even in volatile times, providing them with confidence that they will get the returns they seek while helping to improve lives.

Shiluba Mawela is a course convenor for the Impact Investing in Africa Executive Education short course at the UCT Graduate School of Business


MORE ON Political Economy

PFL 3 Scenarios Pin
Political Economy

Three scenarios for South Africa’s energy crisis: the good, the bad and the likely

South African businesses can be forgiven for feeling like they’re in a movie where the actors are on strike, the script has been lost, and the director has left the set. What are the good, the bad and the likely scenarios for our country’s dire energy situation? We asked the Power Futures Lab (PFL) at UCT’s Graduate School of Business to offer an expert view on where we might be heading.

Read Article
Posted on 23 November 2023 by Wikus Kruger
Political Economy

Thapelo Tsheole

Thapelo Tsheole (MBA PT 2013/14), the CEO of the Botswana Stock Exchange shares his key takeaways from the UCT GSB MBA programme and offers his advice to recent graduates.

Read Article
Posted on 10 May 2023 by Alumni Relations Dept
Political Economy

Interview with Thapelo Tsheole – CEO, Botswana Stock Exchange

Thapelo Tsheole (Modular MBA 2013/14), the CEO of the Botswana Stock Exchange, recently took time out of his attendance at the African Mining Indaba to address our current Modular MBA class about Botswana's economy.

Read Article
Posted on 15 March 2023 by Alumni Relations Dept
Tito Budget - Media
Political Economy

Mboweni says he has hope, but without critical reforms this is likely to fade fast

Even before the onset of the health crisis, SA’s economy was already hurtling toward disaster. But the move to zero-based budgeting and limiting endless SOE bailouts provide possible silver linings.

Read Article
Posted on 25 February 2021 by Sean Gossel
Ghai - media
Political Economy

Yes, there is unity in diversity, and talking about it makes us strong

UCT GSB MBA alumnus, Shivani Ghai, says creating a safe space for talking about difficult topics is an important way to foster unity in a divided world.

Read Article
Posted on 7 August 2020 by Shivani Ghai
IE_Media_8Aug2020_lats tap into
Political Economy

Let’s tap into the defiant optimism of our young people this Youth Day

As protests around structural inequality and racism rage across the world, we need to re-ignite efforts to give young people a voice at all levels of society, but especially as leaders.

Read Article
Posted on 15 June 2020 by Camaren Peter
Sean Gossel
Political Economy

Mboweni's 2020 budget speech draws the battle lines

With the economy on its knees, government’s latest budget speech expects unionised labour to share the pain. If history is a guide, the plan is unlikely to yield the desired results.

Read Article
Posted on 28 February 2020 by Sean Gossel
Political Economy

More broken promises and unmet plans will not deliver the country we need

Ramaphosa has little room to manoeuvre, it’s true. But without bold leadership at this juncture, SA is on the road to nowhere.

Read Article
Posted on 17 February 2020 by Athol Williams
Climate change action starts with each one of us
Political Economy

Climate change action starts with each one of us

Climate change is a global emergency and citizens must play a bigger role in addressing it.

Read Article
Posted on 16 September 2019 by Catherine Constantinides
Business As Usual Wont Fix Youth
Political Economy

Business as usual won't fix youth unemployment, poverty and inequality

Young people are growing tired of vague targets and empty promises made by successive governments since 1994. Now we need decisive leadership and quick action to drive change.

Read Article
Posted on 13 June 2019 by Athol Williams
Brexit Crisis Offers Key Lessons Media
Political Economy

Brexit crisis offers key lessons and opportunities for Africa

The lessons of Brexit warn us that unless the benefits of economic integration are understood - are experienced - by the average African citizen, Africa’s Continental Free Trade Area initiative is doomed to failure.

Read Article
Posted on 29 May 2019 by John Luiz