Social investment must “take root” in Africa as continent recovers from Covid-19

Africa should take advantage of the Covid-19 crisis to drive fundamental changes to its approach to social investment, according to the head of the African Venture Philanthropy Alliance (AVPA).

Dr Frank Aswani was speaking at a webinar run by the Investment Climate Reform Facility, a project financed by the EU, OACPS, the German Government and British Council, on 23 July. Aswani, the CEO of AVPA, said investments should be raised and new innovative finance deals created to help meet the UN Sustainable Development Goals in the wake of the pandemic.

“We should use this crisis to our advantage to sustainably move us forward,” he said.

“During the recovery and resilience phase of the Covid crisis, there is a strong space for innovative finance and social investment to take root.”

The Investment Climate Reform Facility aims to support African, Caribbean and Pacific countries to improve their investment climate and business environment. The webinar was hosted by the British Council and The Social Investment Consultancy.

During the recovery and resilience phase of the Covid crisis, there is a strong space for innovative finance and social investment to take root – Frank Aswani

Aswani pointed out that Africa had a huge financing gap of between $500bn and $1.2tn a year to achieve the UN Sustainable Development Goals. He added that the Covid-19 pandemic had put Africa’s usual sources of funding – including foreign aid, tax receipts and public debt – under new pressure.

Social investment in Africa is a developing market and webinar attendees were told by Bonnie Chiu, managing director of The Social Investment Consultancy, that, according to 2018 research by the Global Impact Investing Network (GIIN), the highest proportion of global investors were looking to increase their investment in Sub-Saharan Africa.

Chiu added that there was growing interest among impact investors in particular themes related to the Sustainable Development Goals, including health and wellbeing, education and decent work and economic growth.

Speaking later, Yofi Grant, CEO of the Ghanaian government’s Investment Promotion Centre and external independent member of the board of directors of the OACPS Endowment and Trust Fund, emphasised that the Sustainable Development Goals were interpreted differently in Sub Saharan Africa compared with developed nations, where basic services such as education and sanitation were taken for granted.

Grant added that in the past there had been a centralist approach to development in Africa, which was understandable from a region that had been colonised. However, now, he said, governments were taking their own approaches, such as partnerships with the private sector, to achieve their development objectives.

How to be a great impact investor during Covid-19

One of the other speakers highlighted South Africa’s Solidarity Fund as a leading example of how donors could work effectively together to respond rapidly to a crisis.

Zipho Sikhakhane, who is CEO and founder of EMZ Advisory, a consultancy for large corporates and multinationals as well as a board member of South African impact investors E Squared, said that she was impressed how the Solidarity Fund had put all of the available funds to support responses to the pandemic in one place.

“I have been very inspired by the humility from all ends,” she said. “Usually, there is a competition between private, public, etc.” She added that there was a strong feeling that the country needed to unite to focus strongly on addressing the immediate challenges that the pandemic presented.

She highlighted that the decision makers behind the fund allocation were “some of the best investment heads in the country”. The fund has, to date, raised R3.07bn out of a target of R4bn (£187m) and allocated more than R2.2bn.

For Sikhakhane, patience was a key approach as an impact investor during the pandemic. “This is when you show your true objectives and authenticity as an impact investor,” she said. Giving investees time to build sustainable businesses now and beyond the pandemic and understanding that it would take time to get results were important attitudes to take.

Sikhakhane added that quickly gathering a panel of expert advisors helped to speed up the investment decision-making process, as well as putting confidence in enterprises that were already in their portfolio that could quickly pivot, such as those working in the fields of HIV and TB.

• Watch ‘Inclusive Impact Investing and Social Finance During the Covid-19 Crisis and Beyond: Lessons and Experiences from African, Caribbean and Pacific Countries’ here.

African social enterprises rise to the pandemic challenge

On the ground, social enterprises in Sub-Saharan Africa are responding in a variety of ways to the challenges presented by Covid-19. At an earlier webinar in the series, held on 9 July and hosted by the British Council and Social Enterprise UK, Kissy Agyeman-Togobo, co-founder and managing partner of consultancy Songhai Advisory in Ghana, flagged up some of the emerging ideas from social enterprises in the region.

• Marimba Jam, South Africa: Before the pandemic, this enterprise visited schools to perform and teach marimba music in Cape Town. Now it is working online, but has discovered that Whatsapp is a more accessible online platform than Zoom for many of the young people that it works with.

• Bridge of Hope School, Namibia: The school has now reopened after lockdown and has developed new income streams which help to subsidise its pupil fees, including raising chickens to sell within the community and further afield, including over the border in South Africa when it opens.

• Kawa Moka, Ghana: An Accra cafe, which sources its beans from female farmers, was forced to shut during the pandemic, but it has gone into processing artisan roasted beans and selling them online – a long-held ambition of the founder.

• Litha Flora, South Africa: This enterprise produces natural skincare products. During the pandemic it has pivoted into also offering health and wellbeing consultancy.

Social enterprises needed to be agile during the pandemic, said Agyeman-Togobo, emphasising that there was no place for rigid thinking right now. “The current climate is presenting a lot of opportunities but social enterprises need to dig deep and think creatively about what they already have in their stable and use that to take hold of the opportunities that present themselves,” she said.

• Watch ‘Responses to Covid: Policy, Social Enterprise, Impact businesses and the Social Economy’ here

The two webinars mentioned in this article were held as part of the Investment Climate Reform Facility, which aims to support countries in Africa, Caribbean and the Pacific to create a more conducive and sustainable investment climate. The Facility is jointly financed by the EU and OACPS under the 11^th European Development Fund (EDF) together with the German Federal Ministry for Economic Cooperation and Development (BMZ) and the British Council. The British Council is working with GIZ, Expertise France and SNV to offer support to public and private organisations in African, Caribbean and Pacific countries in developing initiatives to build impactful post-Covid economies. To find out more, see the fact sheet here.

The content of this article is the sole responsibility of British Council and Pioneers Post and does not necessarily reflect the views of the EU, OACPS, BMZ or the other implementing partners.

Header photo by Ekow Bansah on Pexels.