PIC and IISA release Africa Impact Report 2019

This advocates case for African economies to become catalysts for collaboration between govts and private investors

PIC and Impact Investing South Africa release the Africa Impact Report 2019

19 November 2019

The Public Investment Corporation (PIC) SOC Limited and Impact Investing South Africa (IISA), today launched the first Africa Impact Report 2019 (“the Report”) at the Global Steering Group (GSG) Impact Summit in Buenos Aires, Argentina.

The Africa Impact Report 2019 aims to advocate a sound investment case for African economies, to become catalysts for collaboration between governments and private investors and to fast track sustainable and scalable solutions for Africa’s impact investment priorities.

Impact investing refers to investments, with the explicit intent to generate measurable social or environmental benefits alongside sound financial returns for investors. Impact investments provide capital to address social and/or environmental challenges.

The Africa Impact Report 2019 is available in PDF format at the link

The PIC is South Africa’s state-owned asset management company that invests, responsibly, across various sectors of the economy. With assets under the PIC’s management exceeding R2.131 trillion (approximately USD 145 billion), the PIC is the biggest investor on the African continent. Its clients are mostly public sector entities.

The PIC has exposure to asset classes such as listed equities, bonds, real estate, private equity and impact investments. The majority of its investments are in South Africa and the remainder in the rest of the African continent, as well as in other global markets.

The Impact Investing South Africa National Task Force is a voluntary partnership amongst conscientious role-players, including development finance institutions, private, retail and investment banks, individuals who represent private capital suppliers, enterprise supporters, public policy and academia.

The IISA is working to identify focus areas and a set of strategies to support growth in South Africa’s impact investment market and to promote public-private coordination towards Government’s National Development Plan objectives and the United Nations Sustainable Development Goals (SDGs). The IISA will be hosting the GSG Summit 2020 in Johannesburg next year and are partnering with GSG-affiliated members Kenya, Zambia, Nigeria and Ghana to shape a Pan-African agenda for the Summit.

Mr Sholto Dolamo, Executive Head: Research and Projects Developments at the PIC, says, “The PIC appreciates the opportunity to contribute to develop a body of knowledge that can meaningfully inform investment decisions and feasible opportunities for impact investing. As a long term investor, the PIC believes impact investing must be elevated as a strategic investment priority if we want to progress towards achieving the UN’s 17 SDGs.”

As a working paper, the Report presents a summary of impact investment-related information, research and recommendations from a range of government and private sector sources. It also presents a baseline assessment of progress made with respect to the UN SDGs and the African Union (AU) Agenda 2063, macroeconomic growth prospects, capital availability and sector-specific opportunities. The Report further outlines gaps, which need to be addressed in order to advance impact investing on the African continent.

Chairman of Impact Investing South Africa, Mr Elias Masilela SOB[i] says, “This is a major turning point in investing thinking in South Africa and for the continent. The impact investing movement is mindful that governments around the world have failed to make meaningful progress towards implementing the Millennium Development Goals and there is no room for failing with the SDGs. This is particularly the case with the NDP, in the South African context.

The need, not only for a private sector partnership but also leadership, is at the heart of this movement. The role of pension funds and asset managers, such as the PIC, is critical in the realisation of our societal aspirations – the eradication of poverty and inequality. It is essential to conscientise policy makers, the owners and the allocators of capital about the urgent need to invest appropriately to reduce social and economic gaps. We need to double our focus on investments that have a positive human impact. We cannot delay any further. If we do, we would have failed society and ourselves. Going to Buenos Aires, we will be tabling an Africa Agenda - to focus on SDG implementation and transforming impact investing into a Marshall Plan for Africa.”

Chairman of Africa Venture Philanthropy Alliance, Mr Oleyemi Cardoso, says, “We strive to improve lives in Africa by increasing the flow of financial, human and intellectual capital to social investments for greater and a more sustainable impact. Our mission is to enable investors to deploy their capital more effectively and collaboratively. We aim to bring together multiple investors, from philanthropists to impact investors, debt and equity providers, to work together in fully leveraging the continuum of capital in social investments.  As our work gathers momentum, we join hands with the GSG and all like-minded orgainsations to get the right impact achieved faster and sustainably across the continent.”

According to the Report, further work will be done to identify solutions to these gaps to ensure Impact Investors into Africa can appropriately benchmark their return, risk and impact requirements.  It identifies Infrastructure bedrock, Industrialisation catalyst and Intra-regional trade for economic independence and inclusivity as being critical to achieving impact investing in Africa.

Some of the observations from the Report include:

- Opportunities for Impact Investing in Africa is driven by the fact that the continent lags behind with implementing most of the UN’s SDGs;

- The largest population- and urbanization growth rates are predicted for Africa;

- Africa has an appealing investment case that can drive long term global economic growth;

- Supply-side capital for Impact Investing for Africa amounts to 14% globally, with the majority still sourced from DFI’s;

- The gap analysis shows that development and impact have been concentrated to a few sectors (Energy and Financial Services) and African countries (Nigeria, South Africa, Kenya, and Ghana);

- Demand-side opportunities require development for broader sector inclusion, such as manufacturing and social infrastructure;

- Gaps in investment include: awareness of impact, sourcing investment projects that meet both social and financial mandates, regulatory and leadership vacuums, impact measurement gaps and employment and skill gaps.

The launch of the Report comes after two important investments engagements that took place recently; The Africa Investment Forum and the second South Africa Investment Conference. It was announced at the Forum that in the case of the former, it was announced that $500 million equity closed for the Africa Infrastructure Investment Fund to speed up investments in agriculture.

Over and above this, a financial close was reached for the Africa Guarantee Fund $175 Equity transaction to support Small and Medium Size Enterprises, and $350 million for South Africa’s beef agro-processing project. The SA Investment Conference saw R363 billion (approximately USD 247 million) of new investment commitments for South Africa had been concluded. It is expected that these commitments have the potential to create an estimated 412 000 direct jobs in the domestic economy.

Additionally, the IISA hosted the second Impact Investing Forum in conjunction with the South Africa Investment Conference. A clear sense of urgency emerged from the Forum; it is time for the financial sector to step up its commitments to impact investing and thus contribute positively towards South Africa achieving socio-economic justice and sustainable growth. The Report aims to help the sector do just that.

Issued Deon Botha, Head of Corporate Affairs, Public Investment Corporation, 19 November 2019