A roundup of the latest developments in Sustainable Finance and Impact Investing in Africa.
I'm excited about the Africa Impact Summit on the 13-14th of July, so I spent the weekend catching up on the latest in sustainable finance and impact investing. Here's some background and a roundup.
The African continent is facing a number of major challenges, including poverty, inequality, climate change, and environmental degradation. These challenges are interconnected, and they require a comprehensive approach to be addressed. Sustainable finance and impact investing offer a promising way to address these challenges, by mobilising capital to support sustainable development projects and initiatives.
Sustainable finance is an approach to financial decision-making that takes into account the environmental, social, and governance (ESG) impacts of investments. Sustainable finance is gaining traction in Africa, as investors and policymakers increasingly recognise the need to align financial flows with the 2030 Agenda for Sustainable Development.
There are a number of different sustainable finance frameworks and initiatives in Africa. The African Development Bank (AfDB) has developed a Sustainable Banking Network, which brings together banks and financial institutions across the continent to promote sustainable finance. In 2013 the AfDB launched its inaugural green bond transaction, $500 million to finance green projects in Africa. The latest issuance was a AUD 15 million Kangaroo Green Bond on the 8th March 2023, due March 2038.
Impact investing is a type of investment that seeks to generate both financial returns and measurable social or environmental outcomes. Impact investing is gaining popularity in Africa, as investors seek to make a positive impact on the continent while also generating financial returns.
There are a number of different impact investing funds and initiatives in Africa. Impact Investing South Africa “is a cross sectoral initiative aimed at building the eco-system in order to accelerate the deployment of capital that optimises financial, social and environmental returns”. African Frontier Capital (AFC) is one of the biggest impact investing companies that has been dedicated to providing capital to sub-Saharan Africa’s burgeoning entrepreneurs and companies since 2010. The Acumen Fund is another impact investing fund that is active in Africa, which began investing in Africa in 2003.
There have been a number of recent developments in the field of sustainable finance and impact investing in Africa. In 2022, the AfDB launched the Africa Sustainable Finance Hub, which is a platform that will promote sustainable finance in Africa. The Hub will provide technical assistance to governments, financial institutions, and businesses on sustainable finance.
Just four days ago The United Nations Development Programme (UNDP) published the “UNDP Africa Investment Insights Report” through the SDG Investor Platform, which is an overview of impact investing opportunities in Africa.
Sustainable finance and impact investing are two promising approaches to addressing the major challenges facing the African continent. These approaches are gaining traction in Africa, and there have been a number of recent developments in the field. As sustainable finance and impact investing continue to grow in Africa, they have the potential to make a significant positive impact on the continent.
In addition to the above, here are some other recent developments in the field of sustainable finance and impact investing in Africa:
The amount of impact investment capital flowing into Africa has been growing rapidly in recent years. In 2022, the total amount of impact investment capital in Africa reached $8.5 billion, up from $3.5 billion in 2017.
In recent years, there has been a growing interest in sustainable finance in Africa. This has led to the development of a number of sustainable finance initiatives in Africa, such as the African Sustainable Finance Alliance (2021) and the Sustainable Banking Network Africa (2022).
The African Development Bank (AfDB) has also launched a number of initiatives to promote sustainable finance in Africa. These include the AfDB's Sustainable Finance Initiative, which aims to mobilise $100 billion in sustainable finance for Africa by 2025.
These are just a few of the many recent developments in the field of sustainable finance and impact investing in Africa. As these approaches continue to grow in popularity, they have the potential to make a significant positive impact on the continent.
If you know of any other developments, please feel free to let me know. I have probably missed out on a few on the continent that are worth highlighting as these fields grow and provide much needed stimulus to the African growth and development story.
In the next episode of the Woke Money Podcast, I have the pleasure of chatting with the CEO of the Southern Africa Private Equity and Venture Capital Association (SAVCA), Tshepiso Kobile. Keep an eye-out for the notification in your mailbox on the 17th of July 2023, when this new episode will be published.
