Nairobi hosts inaugural dialogue on impact investment

The Global Steering Group for Impact investment (GSG) convened its inaugural Kenya Impact Dialogue on Monday, seeing over 200 impact investors, social entrepreneurs, development finance specialists and policy-makers discuss the need for a coherent approach to impact investment in Kenya.

In her keynote address at the dialogue, Industrialization Principal Secretary Betty Maina said formation of National Advisory Boards (NABs), presents the country an opportunity to identify opportunities and resolve challenges faced by impact investors and entrepreneurs by engaging policymakers and informing the development of national impact investment strategies.

“We appreciate the platform provided by GSG for countries engagement to co-create policy interventions for inclusive and sustainable development through impact investment,” said Ms Maina.

Impact to plug SDG financing gap

Aspen Network of Development Entrepreneurs (ANDE) Maryanne Ochola, East Africa Regional Chapter Manager echoed the PSs sentiments saying time was running out in the fight to eradicate poverty.

“We have a financing gap of $2.5 trillion towards the development of the UN Sustainable Development Goals (SDGs). We need to acknowledge that governments can’t do this alone and we need private capital to meet societal needs. Impact Investment affords us the opportunity to unlock financial and social good,” she said.

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Block 5

Ochola explained that globally, impact investment has grown by 41% in terms of compound annual growth rate (CAGR) to reach over $250 billion in assets under management (AUM). She however lamented that the amount remains a drop in the ocean with capital largely skewed towards large ticket sizes at the expense of small and growing businesses that can also transform an economy.

In her address, British High Commissioner Susie Kitchens said that the SDG’s are facing a global annual investment gap of $2.5 trillion per year.

“We have a great opportunity to shape the landscape and to drive forward the equitable march of progress to drive prosperity and security. We need bankable, investment-ready projects,” said Ms Kitchens.

According to the diplomat, Kenya is acknowledged as a regional hub for impact investing, being the third largest private equity market in Sub-Saharan Africa.

Impact movement taking shape

In his address to the dialogue, GSG CEO Amit Bhatia stressed that the impact movement has the same core characteristics as other successful movements have with the simple premise that it can be understood by all.

“All movements are replicable and decentralized, all successful movements are inclusive and abiding – they engage all citizens, all actors, irrespective of taste, religion and nationality etc. The impact movement is inclusive, the left, the right, big businesses, small businesses. We need to bid goodbye to aid and donors , we need to fix capitalism first,” Mr. Bhatia added.

GSG solving development challenges

PS Maina said that the government is mulling over on the best way to address the ever demanding economic, social and environmental challenges.

“With the ever-diminishing fiscal space, it is evidently clear to many governments around the world that we can no longer rely on the public sector resources. Private equity and venture capital, beside philanthropy, is increasingly becoming an important complement to scale up impact investments through collaborative action by making the needed policy changes,”

The importance of education funding

Dr Shannon May, founder of the Bri:ges Academy said, “Education should be in your portfolio if it isn’t yet – there are 300 million children in school not reading. We need something to change, expand your portfolio, invest in education and join the GSG to see impact investment expand across the African continent,”

Entrepreneurship and impact

Amref Health Global CEO Dr. Githinji Gitahi speaking in the first panel discussion, on Entrepreneurship and Impact said many donors are asking for sustainability and co-creation.

“When we have profits, we need to be shy and hide it. We might otherwise be labeled as profiteers,” said Dr Gitahi.

Sanergy Founder and CEO David Auerbach said: “I am not seeing many impact investors willing to come in when it’s just an idea – this is very different from the Silicon Valley-type view then it’s your responsibility as an entrepreneur.”

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The B-Team Africa Lead Robert Karanja, Lead said “Governments provide an enabling environment, but we’ve seen corporates encourage young people to be their (own) bosses.

“We provide an alternative to people in this country and not only go to school and be employed but also being their own bosses – they might not be enough job opportunities for people coming out of the market, we are driving towards bringing different mindset.”

Solving social problems through impact

In the second Keynote Address, Private Capital for Public Good, Ambassador Martin Kimani, Director of Kenya’s National Counter Terrorism Centre and Special Envoy CVE, asked: “How will your work reinforce the institutions, how will your work help us do a better job?”

“The impact movement needs to be informed by what’s local and specific. Social enterprises must work with government and work with the political institutions that stop terrorism,” he said.

Amar Inamdar, Managing Director at KawiSafi Ventures, said in the Capital and Impact keynote speech that impact markets represent a “tremendous opportunity to solve problems”.

“Let’s crowd each other in,” he said. “East Africa is a hotbed of opportunity,” he added, naming mobile payments company M-Pesa as a prime example. “Capital will flow to the highest return and lowest risk and there is a huge opportunity to demonstrate and a huge opportunity to lower the risk.”

Time for a Kenyan nab

In the Closing Panel on Building a Kenyan NAB, Arif Neky, Senior Advisor – UN Strategic Partnerships Coordinator SDG Partnership Platform stressed the need create practical ecosystems for partners on the ground. “We would be delighted to support as the NAB in Kenya is established. I think GSG has come to town at the right time,”

Mr. Neky continued: “We need to focus on those which have been left behind, looking at the SDG partnership platform to identify bankable projects that help address some critical issues like health and poverty

“We need to aggregate many partners together in one common form and the NAB can help catalyze this. Is there the opportunity to move from pilots – which are puffs of excellence tin a sea of deprivation – how do we make sure that those solutions are in effect?”

Duncan Onyango of Acumen said any NAB “should embrace its convening power – the right people at the right time. How to ensure we get local funds moving into the sector [the NAB] will ensure that.” Peter Oloo, CEO of the Social Enterprise Society of Kenya, agreed, “The Kenyan NAB has really come at the right time.” Kenya has the charity act – “We need the policy and legal framework in place for everything else to fall in place.”

Call to action

UN Resident Coordinator Siddharth Chatterjee in his closing remarks said impact investment is where the private sector can make huge profits.

“We need a Marshall Plan of employment for Africa and this will come not from governments, but from the private sector. Kenya can be in food surplus in the next five years as seeds and technology adapt to climate change, it’s about getting the big players together to invest into these innovations.”

Challenging impact investors to think big, Chatterjee added that there was room for profitable investments through economies of scale. “Kenya needs to make itself creditworthy and investor-friendly. The NAB is great because it’s coming from a country that also helped to create the SDGs.” He said.

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