Social impact investment is the use of repayable finance to achieve socio-economic impact as well as a financial return. There is an explicit intention on the part of both investor and investee to create that positive impact. This could be an investment in education, healthcare, agriculture, and access to early stage SME finance amongst others, all of which represent major challenges in South Africa. The magnitude of these challenges far outweighs the public and philanthropic resources allocated to them. In fact with current investment levels in SDG-related sectors in developing countries, an average annual funding shortfall of some $2.5 trillion remains. There is thus a need to attract private investment capital to tackle social and environmental issues.
SOCIAL IMPACT INVESTING NATIONAL ADVISORY BOARD
The Bertha Centre for Social Innovation and Entrepreneurship at the Graduate School of Business at the University of Cape Town has partnered with the Ford Foundation in order to provide a secretariat for a Social Impact Investing National Advisory Board (NAB). The NAB will identify areas of focus and advocate for a series of public and private sector strategies in order to support the growth of the market.
South Africa will be the first African country to take part in the Global Social Impact Investing Steering Group (GSGII), which was established in 2015 as the successor to the Social Impact Investment Taskforce, established by G8. The GSGII is continuing the work of the Taskforce in catalysing a global social impact investment market across a wider membership. As one of the hosts, Darren Walker, has put his money where his mouth is with the Ford Foundation committing $1B from their endowment to mission related investments – “As a society we are facing enormous challenges and through impact investing we can create sustainable, scalable solutions for the public good. Impact investing is a win-win, generating beneficial social or environmental impacts alongside financial returns”.
The GSGII is promoting a unified view of impact investment, facilitating knowledge exchange and encouraging policy change in national markets. Led by Sir Ronald Cohen, it brings together leaders from the worlds of finance, business and philanthropy across the globe, as well as government officials and network organisations active in supporting the impact investment sector.
IMPACT AROUND THE GLOBE
The global trend, which the GSGII was formed to accelerate, is gaining traction and recognition. The Global Sustainable Investment Alliance (GSIA) estimates that there are presently $22.89tn worth of assets professionally managed under responsible investment mandates – representing 25% growth from 2014 alone. The most common form of sustainable investment is negative/exclusionary screening, applicable to $15.02tn worth of assets. ESG integration and corporate/shareholder action are also prominent strategies and account for $10.37tn and $8.37tn in assets respectively. A joint report by JP Morgan and the Global Impact Investing Network (GIIN) estimated the size of the impact investing industry at $60bn in 2014 and a recent survey suggests respondents had grown their impact assets from $25.4bn to $35.5bn between 2013 -2016.
Some instances of initiatives that NAB efforts and outputs have contributed to globally include:
- United States: The NAB produced a set of policy recommendations many of which have been adopted since 2014. The White House set out to track the commitment of $2.5B made by 29 impact investors at the time, 42% of which they confirmed had been deployed a year later.
- United Kingdom: The UK has pioneered the market in many ways including dedicated policy making teams and the creation of multiple innovative financial instruments. The NAB pulled public and private sector resources together to build the market to over £1.5B in size across 3500 individual investments.
- Australia: The most significant actions to come out of the NAB thus far include a blueprint for a new and independent $300M financial institution, Impact Capital Australia and a $500k Impact Readiness Grants Fund in partnership with the National Australia Bank.
THE NAB PROCESS
There is a keen awareness that any process likely to result in actionable outcomes requires strong buy-in from both public and private sector. As such a group of thought leaders across a range of sectors will be chosen by a selection committee of their peers based on demonstration of technical expertise, political influence and passion for the inclusive, sustainable economy. The NAB will be a dynamic organisation made up of a core membership of 20 with a wider group of contributing experts depending on the areas of focus.
The bulk of the engagement will take place over a period of 18 months starting in the latter half of 2017. The core function of the NAB will be to critically examine the social economy and economy at large and identify key pubic and private sector levers that will accelerate the growth of the social impact investment market. Members will need to rely on their own experience as well as local and international expertise to identify 5 focus areas on the demand and supply side of the market. An individual or pair will be encouraged to take responsibility for a focus area and constitute a task team and/or commission research to build the business and impact case for the policy lever. These concrete recommendations will enable policy makers and SA business to encourage more impact investing. This process will be facilitated by the secretariat.
The outputs from this work will be showcased on local and international platforms and leading members of the NAB will present the work at the annual GSGII summit. The summit will bring together over 500 leaders and practitioners from the global network, including representatives from National Advisory Boards in its 13 member countries. Willing and able organisations and individuals will take the output of this process forward as has been done in other participating countries.
Why get involved?
Building the Social Impact Investing market in South Africa will result in a more sustainable and inclusive economy for the bulk of South African citizens
What commitment does it involve?
Quarterly meetings that will take place over an 18-month period
Working groups are likely to be formed around the 5 focus areas and they may choose to meet in addition to scheduled meetings
What compensation will be paid?
Local and international travel expenses will be covered
Who are we looking for?
A public, private or civil society sector thought leader with one or all of the following attributes:
- A clear desire to improve social and environmental outcomes in South Africa
- Technical expertise in the fields of investing, social and environmental programmes or public policy
- Person of integrity with a degree of political influence
- A track record of getting things done
How can I get involved?
Please send your CV to email@example.com by 15 July 2017 and you will be contacted directly. Alternatively you can nominate a colleague or acquaintance to participate if you think they fit the criteria
 “Investing for social impact in developing countries” in OECD (2016), Development Co- operation Report 2016: The Sustainable Development Goals as Business Opportunities, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/dcr-2016-
 The Social Investment Task Force has expanded from an initial 9 countries (G8 and Australia) to include the G20 countries and more.