Impact Investing in Africa

A Guide to Sustainability for Investors, Institutions, and Entrepreneurs

verfasst von: Edward Mungai

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

As investment in new ventures across the African continent grows, and enterprises multiply in a wide variety of sectors, the next wave of challenges and opportunities has become apparent to those with the experience and vision to understand them. In this book for investors, institutions, entrepreneurs, and everyone interested in the economic future of Africa, noted Kenyan executive Edward Mungai will analyze recent successes and failures in business ventures across the African continent and identify the most important opportunities for impact investment impacting the future of Africa available today and in the near future.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

The author defines impact investing in the African context, using personal examples to show how the lives of ordinary people are being transformed through targeted investments. He also outlines who is investing in these social enterprises, including traditional private equity and asset management funds, development financial institutions (DFIs), foundations and family offices, banks and diversified financial institutions. In addition to defining the state of impact investing in Africa, the author makes a case that the continent needs investment rather than aid. In essence, he argues that impact investing has provided the opportunity for the collaboration between private and public financing to resolve the continent’s challenges.

Edward Mungai

Chapter 2. Doing Business in Africa: What to Consider

Abstract

Here, the author looks at the business environment in Africa, stating what an entrepreneur can expect to encounter as they set up business. Africa is a dynamic market and there will always be cost and time overruns, hence the author’s advice that the entrepreneur should come prepared to back their investment with additional capital and be flexible with timelines. Doing business in Africa is also about making sure that all the value chain participants (various suppliers) are in place, to avoid frustrations and delays in future when the business is already off the ground. The author also points out that it is key for an entrepreneur to make sure that they are aware of and meet all the legal and tax issues.

Edward Mungai

Chapter 3. How Does Impact Investing Scale Down to Ordinary People?

Abstract

Impact investments need to have a tangibly positive effect on the lives of ordinary people in order to be considered a success. In this chapter, the author explores the ways in which an impact investor can align their impact targets with sustainable development goals, to ensure that they contribute to the economic growth and development of Africa. The sustainability of impact investments is also a key factor in the success of an impact investment, as the author goes on to show, arguing that the investor has to address governance challenges faced by investees, as well as funding and skill gaps that often stunt the growth of enterprises.

Edward Mungai

Chapter 4. Landscape of Impacting Investing in Africa

Abstract

In this chapter, the author provides the background of impact investing—the facts, numbers and the players—in Africa, and looks at the key success factors that drive them. The author lists the hot spots for impact investing in Africa, singling out Kenya, Nigeria, Ghana, Rwanda and South Africa. He shows the different ways that foundations, pension funds and insurers, banks, sovereign wealth funds, multinationals, diaspora and retail investors are actively financing impact investments. The author looks at the different considerations that have defined the way the investors approach their investments, including financial returns, impact required, exit mechanisms and risk appetite of the investor.

Edward Mungai

Chapter 5. Emerging Trends in Impact Investing in Africa

Abstract

In this chapter, the author casts a forward glance at how the impact investing space in Africa is expected to evolve over the next few years. He lays out key themes such as the rising importance of cross-border investments, using the case of SimGas of Tanzania and M-Kopa of Kenya, which have been addressing energy problems across the East African region. He also looks at how impact measurement will be key going forward to justify continued investments, the improvement of support ecosystems and how use of data has been giving new entrepreneurs a chance to learn from the experiences of their predecessors over the last decade.

Edward Mungai

Chapter 6. Structuring a Fund

Abstract

The author uses examples from his work at the Kenya Climate Innovation Center to illustrate how to structure a fund with the aim of aligning strategies and core competencies. He argues that it is important to carry out market sizing before setting out in order to avoid disappointment in returns, and that it is necessary to understand the entrepreneur and the products or service prior to investment. Key structures within a fund are critical, and here the author enumerates the need to have a solid board of advisors, an investment committee and a fund management team. Deal origination is also important, as is the appraisal of the investments before commitment and during its lifetime.

Edward Mungai

Chapter 7. Measuring Impact for Continued Growth

Abstract

Here, the author asks the question that is always on the table for an impact investor: How do we know that the investment is bringing about the intended change in the community? There are different frameworks that can be used to measure impact of the fund: the Logical Framework (LF), Results Framework (RF) and Performance Framework (PF). He enumerates the different principles that guide the measurement of impact, noting that measurement should be based on quantifiable evidence, should be participatory in order to include all stakeholders, and should be both cost effective and clear. The author argues that measuring and reporting impact builds a case for future or additional investment.

Edward Mungai

Chapter 8. De-risking Your Investments

Abstract

Here, the author uses the case of Bright Chicks in Uganda, a Danish-led investment that fell on hard times due the many challenges that face impact businesses in the African continent before and after investing. Flexibility and innovation are required in the face of difficulties. These are just a couple of the traits that an investor needs to have before tackling the African impact investing market, which can be fraught with risks at all stages of investment. Furthermore, the author notes that minimizing risk exposure calls for proper performance reporting from the investee in order to catch problems early, proper selection of funding instruments, obtaining owner guarantees on the business and hand-holding the investee in order to transfer skills and improve their governance and management practices.

Edward Mungai

Chapter 9. Challenges for Impact Businesses in Africa

Abstract

Businesses will always face challenges, especially when they are investing in a high-risk high-reward environment like sub-Saharan Africa. The author notes that some of these challenges are on the part of the investee, such as limited access to formal finance, lack of access to market information and facilities such as office space. On the part of the investor, there are a limited number of viable deals in Africa, making it more expensive to invest in due to fierce competition. The investor also faces a problem when exiting an investment since they have limited options due to underdeveloped markets. Three are also problems within the investment ecosystem, with limited synergy between the different players and the enabling environment not always being up to scratch.

Edward Mungai

Backmatter

Titel: Impact Investing in Africa
verfasst von: Edward Mungai
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-00428-6
Print ISBN: 978-3-030-00427-9
DOI: https://doi.org/10.1007/978-3-030-00428-6