FINANCE FORUM
Facing the challenges
The challenge ahead will lie in growing this market; bringing
impact investing further into the mainstream to provide
additional impetus for addressing the continent’s signifi cant
challenges. While dwarfi ng the CSI and philanthropic
contributions, the funds currently committed to investing for
impact are still not suffi cient to the task.
that over USD400-billion in fi nancial assets were directed
to investing for impact in Southern Africa, East Africa and
West Africa in 2017. This attests to the growing confi dence
in and potential of investing for impact in these regions. Not
surprisingly, South Africa – thanks to its sophisticated and
well-connected fi nancial markets – holds the largest amount
of assets dedicated to one or more impact investing strategies,
followed by Nigeria and Kenya.
Oren Fuchs, senior stakeholder manager of the Mineworkers Investment
Company.
Yet, impact investing off ers special benefi ts to institutional
investors and trusts, which are generally required to balance
their long-term liabilities with long-term assets. It also off ers
an unprecedented opportunity for the likes of charitable
foundations and trusts to align their mission with their
underlying investments.
Impact investing a key pillar
At the Mineworker’s Investment Company (MIC), for example,
we have started to adjust our investment strategies, and now
consider impact investing as a key pillar within that strategy. The
MIC is a 100% black owned broad-based investment holding
company that was established by the Mineworkers Investment
Trust (MIT) to provide ongoing funding for the Trust’s social
and educational projects. Our debut in the impact investing
space was almost inadvertent; through Inyosi Empowerment –
established in partnership with Stellar Capital – two specialist
investment funds were created to provide funding and ancillary
support to black-owned businesses. We are now purposefully
seeking to grow and diversify our impact investing portfolio to
around 10% of our nett asset value (which currently stands at
around R5-billion) in the next fi ve to seven years to align with
our purpose to ‘identify and invest in long term cash generative
assets, thereby generating sustainable dividend fl ow to enable
the Trust to meet its social obligations’.
Institutional investors, notably pension schemes, also have the
potential to allow millions of ordinary citizens not only to gain
a stake in the country’s fi nancial sector, but to make a direct
contribution to the welfare of their country through impact
investing. South Africa is said to have the fi fth-largest pension
fund savings in the world as a percentage of GDP. That is a lot of
citizens and a lot of money which could be put to good use.
Unlike philanthropy and CSI, which are primarily directed at the
social and community development sector, another benefi t of
impact investing is that it additionally targets critical areas such
as public sector infrastructure or small business development,
many of which are crying out for investment.
Finding ways to attract funding
With this in mind, the recently established South African
National Task Force for Impact Investment has committed itself
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The greatest scope for this growth lies with long term asset
holders such as institutional investors and trusts. Currently,
development fi nance institutions and specialist fund managers
account for around three quarters of the impact investing
market with asset managers making up the rest. Institutional
investors, notably trusts, foundations and pension schemes,
have been slower to join the party.
Thato Ntseare is impact investment manager at Mineworkers
Investment Company.
to identifying ways to attract funding into key national priorities
such as education, health, sustainable agriculture, fi nancial
inclusion, renewable energy and aff ordable housing. Among the
objectives of the task force is to grow what it calls ‘a pipeline of
investable opportunities’, and equally critically to improve the
match between capital and investable opportunities.
Institutional investors have already started to taste the benefi ts
of investing for impact in South Africa, notably through the
Renewable Energy Independent Power Producer Procurement
(REIPPP) Programme, which has attracted some R209.4-billion in
private sector investment, easing the pressure on the fi scus. The
attractive risk-adjusted returns off ered by the renewable energy
programme has convinced several pension funds to commit
billions of rand of pensioner savings to these projects.
Likewise, Old Mutual’s Housing Impact Fund South Africa
(HIFSA), a development impact fund which seeks to provide
commercially viable investments into the aff ordable housing
sector, had by 2017 invested R9.15-billion into local housing,
also shifting some of the burden off the Treasury.
There is much more that can be achieved. Impact investing has
demonstrated that it has the potential to mobilise signifi cant
capital towards inclusive development. As sizeable investors,
institutional investors in particular have a key role – maybe even
an obligation – to use their size and clout to grow and legitimise
the impact investment space and by so doing, to improve the
welfare of us all.
African Mining
African Mining November 2019
53