Impact investment in a new economy

Impact investment has emerged as an important approach for mobilising financial resources for sustainable development. Through impact investment, it has been possible to divest from harmful business practices to sectors that have strong social and environmental outcomes. If well harnessed, impact investments have the potential to unlock significant financial resources that could be used to address systemic challenges as outlined in the sustainable development goals, while at the same time getting a financial return.

Even though impact investments present significant opportunities, there is a lack of awareness of what impact investing is, and how the opportunities it presents can be harnessed to drive economic development. On the other hand, a lot of traditional investments have been packaged as impact investments. It’s important to therefore to be able to navigate through the maze of potential offerings, and to strategically situate oneself.

The African Centre is primarily interested in impact investments that signficicantly alleviate poverty, by focusing on creating opportunities at the base of the pyramid, and helping to promote the emergence of sustainable enterprises. In this regard, we are very keen to initiate dialogue with industry players with a view of making sure impact investments are widely inclusive as possible. For example in South Africa, strategies of investing for impact are mostly focused on investor engagement, thematic investments and to some extent impact investments.

A major question that still remains to be answered is, how do you achieve tangible outcomes from impact investing, and how do you measure that impact?

This is the question we will be exploring in the coming months through strategic discourse and engagement with key stakeholders in South Africa and the continent, with a view of mobilising investors to support sustainable enterprises at the base of the pyramid.

To kick-start this year long conversation, we recently held a public dialogue on the role of impact investment in driving the transition to a new economy. The dialogue, which  was well attended brought together various impact investment houses in South Africa. The keynote address at the dialogue was delivered by the manager of Sustainable Investment Practices at Futuregrowth Asset Management, one of the premier impact investment houses in South Africa. The next major dialogue on the topic is scheduled for April in Cape Town.

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