RELEASE DATE : 13 November 2020
Insights into the current state of the social investment landscape and key trends that will influence the increased flow of capital into social investments in Southern Africa
Johannesburg, November 13, 2020 – What is the current state of social investments in Southern Africa? What trends has the region witnessed in social investments over the last ten years? How do policies affect the deployment of social capital in the region, and what is the state of social investments in the various Southern Africa countries? How do they compare with their neighbours, and how does the region compare with the rest of the continent?
You can find answers to these questions, and other insights in an inaugural report on the state of social investment financing in Southern Africa released today by the African Venture Philanthropy Alliance, AVPA. The report maps the landscape of social investments in Southern Africa with a deep dive focus on South Africa, Zambia, and Mozambique, and a high level assessment of Angola, Botswana, and Zimbabwe.
AVPA is a unique Pan-African network for social investors, headquartered in Nairobi with offices in Johannesburg and Lagos and committed to building a vibrant and high impact social investment community across Africa. It was launched in 2018 with a mission to drive a transformative social investing agenda on the continent by, among other ways, building a knowledge base on social investments in Africa. The AVPA network operates along the continuum of capital – grants, debt, equity – and is aligned with thriving sister networks in Europe (EVPA), South America (Latimpacto), and Asia (AVPN) to form a dynamic global force for social impact.
Similar to other regions of the continent, Southern Africa faces significant challenges in achieving Sustainable Development Goals due to inadequate funding for social causes.
“Africa needs an estimated $500 billion – $1.2 trillion annually between now and 2030 to meet its SDG financing gap. With traditional sources of social investment like aid and government funding unlikely to fill this gap, we need to turn to the global financial and capital markets for the requisite investments, “ says Dr. Frank Aswani, the CEO of AVPA. “This demands a good understanding of the social investment landscape on the continent and increasing collaboration amongst social investors by breaking down existing silos between providers of grants, debt and equity. We are taking the first step in this direction with this study. It provides a baseline against which we can track future progress and key trends that will influence the increased flow of capital into social investments in Africa while working collaboratively to identify programmatic interventions for creating increased social impact.”
This regional report is a more detailed breakdown of a high level report on the state of social investments in sub-Saharan Africa that the alliance released on Wednesday. It represents findings of an eight-month study AVPA conducted in partnership with Intellecap, the advisory arm of The Aavishkaar Group.
AVPA aims to support the increased flow of capital into social investments in Africa by enabling collaboration between investors deploying grants, debt or equity and addressing information gaps on social investments financing particularly in areas such as Philanthropy, Impact Investing, Private Capital deployment and Corporate Sustainability Programmes. Many social investors in sub-Saharan Africa operate in silos, necessitating strategic interventions to bridge gaps across the different types of capital and investment strategies.
Key highlights:
- The social investment industry in Southern Africa has evolved significantly over the last decade – from the establishment of Tshikululu Social Investments in 1998 to the recent set up of the Zambia National Advisory Board (NAB) for impact investment in 2019.
- The region has experienced a steady decline in Official Development Assistance (ODA) in recent years
- Financial services, Energy and Agriculture are the top three preferred sectors by DFIs with financial services accounting for 48% of the portfolio.
- South Africa has one of the most advanced individual philanthropy and corporate giving ecosystems in the continent.
- This research mapped close to 250 active social investors operating across the focus countries, with 71% based in South Africa.
- The region has a higher number of active regional based family foundations and Corporate Social Investors (CSIs) compared to the West and East Africa regions accounting for 34% of the active social investors identified.
- In South Africa, only 7% of the population is engaged in entrepreneurship compared to 25% in other countries on the continent
- Declining funding for the non-profit sector is necessitating the development of more sustainable and innovative financing mechanisms for NGOs.
- Overarching frameworks and regulations to support social investments do not exist across the focus countries. South Africa has, however, made notable progress in developing frameworks to promote corporate social investment and venture capital.
- Ecosystem support services are highly concentrated in South Africa.
AVPA plans to repeat this study every 2-3 years to track trends and add to the body of knowledge within the ecosystem.
About AVPA: Established in 2018, the African Venture Philanthropy Alliance (AVPA) is a Pan-African network that seeks to drive a transformative social investing agenda in the continent. AVPA leverages the experience and momentum gained by the European Venture Philanthropy Association (evpa.eu.com), Latimpacto (https://latimpacto.org) and the Asian Venture Philanthropy Network (avpn.asia) – thriving networks with a collective membership of 900 members in more than 50 countries and are proven catalysts for mobilizing capital and helping members to deploy it more effectively to drive positive change. AVPA facilitates the flow of human, intellectual and financial capital, not only within Africa, but also from the vast network of members across the 50+ countries outside of Africa. AVPA seeks to support the sector through several key service lines offered to its members.
For interviews and further inquiries, please contact:
Abu Okari
Communications, AVPA
abuokari@avpa.africa
+254711873245