Impact Investors in Africa Are Looking East
Tuesday, August 4, 2015
President Obama’s recent trip to East Africa put the spotlight on a hot area for impact investing. So it’s timely that the Global Impact Investing Network(GIIN), in partnership with Open Capital Advisors, just published a detailed look at impact investing in the region.
Some conclusions: As far as impact investing and social enterprise goes, this is a place to watch. And Kenya is the hub, accounting for more than half of impact capital employed. It also has the largest number of local offices for impact investors, incubators and other players. At the same time, there have been few successful exits.
The report, called The Landscape for Impact Investing in East Africa, zeroes in on Kenya, Uganda, Tanzania, Ethiopia, and Rwanda, among other countries. Development finance institutions (DFIs) play a big role, with about $8 billion in impact capital deployed so far, or 85% of total disbursements. But there are all sorts of other investors, from VCs to foundations, in on the act. These non-DFIs have deployed about $1.4 billion through more than 550 deals. (There’s a chart about all this further below).
Why East Africa? “Impact investors see East Africa as a very vibrant market that is still gr owing and has a lot of momentum,” says Amit Bouri, CEO of the GIIN. “There is tremendous potential for impact investing to create a sustainable wave of investing in the region and generate significant impact on local communities.”
More detail about countries:
Kenya. At least 48 impact fund managers have staff in Nairobi. That’s more than three times as many local offices as any other country in the region. And Kenya has more than triple the amount of impact capital disbursed in East Africa compared to Uganda and Tanzania, the countries with the next highest amounts at around 13% and 12% respectively. In fact , the report says that some investors fear Kenya is saturated. At the same time, thanks to what the report calls “ongoing security concerns and challenges common to the region”, there’s still room to grow, especially in second-tier cities in agricultural aggregation, renewable energy and mass market consumer goods.