Africa is the most vulnerable to the effects of Climate Change despite contributing only 4% of carbon dioxide emissions. Yet, it receives the least amount in Climate Financing.
According to AfDB, Africa alone will need US$ 20– 30 billion per year over 10 to 20 years for climate change adaptation. The Climate Crisis will affect areas that stand at the centre of the continent’s development like agriculture, healthcare, water, and productivity. The climate crisis is just but one of the challenges that stand in the way of Africa meets its SDG targets.
The financing needed to achieve the continent’s SDG targets greatly surpasses all current development finance flows and is estimated at between $500 billion – $1.2 trillion annually.
To address these challenges, The African Venture Philanthropy Alliance (AVPA) is launching a new programme that seeks to strengthen the capabilities of African social investors. AVPA is a network of social investors collaborating to mobilize and deploy capital for impact.
Known as The 2022 Africa Impact Investing Fellowship will build the knowledge base of investors in areas such as Innovative Finance, Impact Measurement and Management, and Leadership in Complexity.
“The objective of the AVPA Impact Investing Fellowship Programme is to increase the flow and distribution of capital in Africa by building the capacity of Fellows who represent key stakeholders in the investment sector.” says Dr. Frank Aswani, the CEO of AVPA.
”At the end of the programme, the Fellows will join an alumni network of Impact Investors that we established with the 2021 Africa-Asia Impact Investing Fellowship. This will eventually grow into a strong and catalytic network across the continent,” he adds.
Funding for African social investments has traditionally come from foreign aid and local governments, but these funding sources are under huge threat. Donor funding is declining while public debt is rising, threatening governments’ ability to deliver public services. Africa urgently needs to secure alternative financing sources and modalities if it is expected to meet its social sector financing needs, more so now, as we are in the final years to meet the SDGs.
For this to happen, the continent requires a critical mass of social investors who are highly competent in Innovative Finance. Investors who will: take advantage of the abundant impact opportunities that the continent presents; embrace new funding methodologies; and ambitiously pursue new funding sources. There is a need for a better understanding of innovative financing models and the opportunities they present in mobilizing and deploying capital for maximum impact.
“The impact investing landscape is shifting fast and Africa’s diverse set of challenges makes this continent the ideal sandbox for global impact,” says Dr. Aswani. “However, the continent lacks well-skilled social investors that it badly needs to move capital (especially private) at the required scale and speed to positively affect its trajectory towards the 2030 SDG targets and beyond.”
Impact Investing – an emerging practice in Africa
Impact investing is at its nascent stage in Africa. Although it is now getting an increasing level of attention from various actors in the social investment ecosystem, only a handful of impact funds and foundations are practising impact investing. The compound annual growth rate in Africa between 2017 – 2021 was 7% with sub-Saharan Africa ranking 4th out of the 10 regions studied in terms of the amount of capital allocated for impact.
Mainstreaming impact investing, however, will take time. The obstacles hindering impact investing from gaining traction in Africa amongst wealth holders and their advisors include the lack of capacity-building programmes, the perception that it will necessitate a trade-off on financial returns, a lack of an investment-ready pipeline, inexperience in managing a portfolio, and the complexities in defining and evaluating impact measurement.
The AVPA Impact Investing Fellowship Programme provides an opportunity for deployers of social capital to collaborate and learn new impact financing models. It will be a place for new entrants to stand on the shoulders of impact investing pioneers while building a community to share their challenges and lessons. Most importantly, the Fellowship seeks to forge stronger alliances and encourage collaboration among the various types of investors operating across the ‘Continuum of Capital’; financial – grants, debt, equity – human, and intellectual capital deployed through philanthropy and investment.
What to expect from the 2022 Africa Impact Investing Fellowship
Starting September 2022, the Fellowship will be facilitated by Gayle Peterson, a Fellow at the Oxford Saïd Business School, and run for four months. The programme will include a combination of pre-reading, closed-door learning sessions with expert facilitation, and post-discussion study groups. AVPA will continue engaging with the alumni cohort by helping them identify pipelines of investment ready deals.
Deployers of impact capital – grants, debt, and equity, who are looking to acquire additional knowledge and resources to build an impact strategy while building a strong portfolio should consider applying for the Fellowship.