Impact investment and innovative finance are exciting right now and understandably so. Aid budgets are shrinking, recycling capital makes sense for sustainability, and there is no doubt that investment capital can do great things in Africa-from building infrastructure, to scaling responsible companies that create jobs and provide social services.

 

But in Africa, impact investors are limited in their reach and scope. The trade-off between profit and impact is felt more harshly here than in other regions. A huge number of poor people remain persistently excluded from markets where investors can operate. Many of the companies that hold much of Africa’s wealth also continue to resist, or fail to attract, third party investment. For these reasons, impact investment has been limited in its reach across the continent.

 

We think grant funding to the private sector remains essential to reach marginalised people and places. In our work, we have seen five areas where grant capital is key to achieving impact in Africa where investment capital falls short:  

     

• Early stage finance for pro-poor innovation;  
• Driving development through un-investable
  companies;
• Strengthening the private sector in frontier
  markets;
• Catalysing the nascent business development
  services market; and
• Leveraging blended finance solutions.
• In this paper, we share our insights regarding how the
  philanthropic community can use grants wisely for maximum impact. 
  

 

Click the link below to read more.