Impact Investing in South Africa

Written by NMK Africa

July 18, 2019

Why should you care about impact investing in South Africa?

The Upper-bound poverty line in South Africa is an income per month per individual of R1 183 according to Stats SA.

The graph below shows that a significant portion of South Africa is living in poverty and for the nation to move forward something must be done about this. According to the Living Conditions Survey conducted by Stats SA between 2014/15 about 49.2% of the population is living in poverty. The construction of the poverty line is done once every 5 to 10 years.

Impact investing can be defined as “investments made into companies, organisations, vehicles and funds with the intent to contribute to measurable positive social, economic and environmental impact alongside financial returns” (Source: ifc). It is important to note that financial returns are an important aspect to successful impact investing. Impact is limited if there’s no financial gain as these so-called “impact initiatives” eventually run out money and end up not achieving predetermined goals.

Instead of increasing the burden of offering grants to individuals from taxpayers’ money why not reduce the grant bill, reduce unemployment and invest in people. Some corporates have focused their attention on selling products to markets instead of understanding what the market needs. With impact investing the market gets what it needs from its people. I know what you are thinking… “what’s the risk?” Of course, there’s risk! Sometimes you’re investing in untrained individuals or unproven management teams etc. however, with set guidelines and parameters we believe the methodology around impact investing will be an absolute success in South Africa. Not only will it reduce unemployment and poverty, but it will contribute to social welfare along with prosperity for the future.

The approximate size of impact investing globally is about $502 billion (thegiin.org). So, the challenge to all entrepreneurs is how do we make solutions that will impact the rest of Africa. Where do you get the money?

Companies like us are looking for you.

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