Participants see strong correlation, not conflict, between impact and returns
AVCA – The African Private Capital Association – held its second Sustainable Investing in Africa Summit yesterday, bringing together over 150 global LPs, GPs, entrepreneurs and thought leaders committed to putting private capital to work to advance sustainable development in Africa. The event sought to build on the level of climate and social impact ambition generated at the recently held Africa Climate Summit and set the agenda for private capital allocators in Africa.
The opening panel, Seizing the Sustainable Opportunity in Private Capital, explored the evolution of impact investing over the past 20 years. Panellists underlined the importance of innovation in blended finance and the transformative role of technology in enabling embedded finance to expand access to affordable clean energy solutions. Highlighting the emerging consensus around the convergence of profit and purpose, the panel made a compelling call to move beyond outdated perceptions of the need for investors to calculate trade-offs between impact and returns.
‘Tokunboh Ishmael, co-founder and Managing Director of Alitheia Capital, urged investors to adopt intentionality through gender lens investing and highlighted the value of “greenifying and techifying” businesses to make them more competitive and sustainable. Fellow panellists, including Amal-Lee Amin, Managing Director and Head of Climate, Diversity and Advisory, British International Investment; Karima Ola, Partner, LeapFrog Investments; and Jiwoo Choi, Chief of Strategic Initiatives, Acumen Fund, were united on the vital need for more investments that reach the grassroots level – ensuring that capital flows to where it is needed most.
Panellists in the Deep Dive: Investing for Resilience Amidst & In Post-Conflict Regions session focused on the impact that can be created by investing in frontier markets often starved of capital. They shared practical examples of structures such as the Africa Resilience Investment Accelerator (ARIA) that pool market mapping, origination and due diligence for DFIs to lower transaction costs and create an enabling ecosystem for investments designed to support economic revival and resilience. Barthout Van Slingelandt, Managing Partner XSML Capital, emphasised the value of strong local partners – both in terms of risk mitigation and identifying buyers at exit.
The Decarbonisation of Heavy Industries case study convened Sadio Wade, Principal, Actis; Sam Senbanjo, Managing Director, A.P. Moller Capital; and Paras Patel, Managing Partner, E3 Capital. Speakers traded views on the opportunities for decarbonisation strategies to propel green growth. Egypt, Namibia, Morocco, and South Africa were cited as high-priority markets to build sustainable value chains in green manufacturing through new climate technologies such as green hydrogen.
The panel Technology as a Tool for Sustainable Investing celebrated the power of technology and data to build both trust – in the form of measurable and verifiable impact – and scale. Speakers acknowledged the transformative impact taking place through the disruptive nature of AI, data analytics, and tech-enabled investment decision-making.
During the panel A Blueprint for Change: Innovative Approaches to Sustainable Infrastructure in Africa, Kolawole Owodunni, Executive Director and Chief Investment Officer of the Nigeria Sovereign Investment Authority (NSIA), drove a strong argument for the development of local currency financing and private debt, referring to these instruments “as effective mechanisms that could improve the bankability of infrastructure projects of the future.”
The final panel, Moving the Needle: The Power of Private Capital for Sustainable Development, explored the growing synergies between financial return and social impact – a recurring theme throughout the day. The benefits of embedding the SDGs and ESG into values and strategic investments are clear, and as Eric Kump, Partner, Alterra Capital Partners summarised, investors should “practice ESG for value creation and not for obligation.”
Speakers recognised risk perception as the main impediment to more significant capital flows, noting the tendency to treat Africa as having a homogenous risk profile. Panellists unanimously agreed that capital still lags opportunity when it comes to impact investing in Africa and the Summit closed with a collective call for more firepower to accelerate progress towards the SDGs by the diverse stakeholders in the room, from foundations to development finance institutions, fund managers and family offices.
Albert Alsina, Founder and Chief Executive Officer of Mediterrania Capital Partners, concluded that “the perception of risk in Africa is much higher than it (really) is. There are incredible businesses across the region – they just require the right support.”