The spread of the Covid-19 global pandemic has brought about a positive rethink of the significance of impact investing and its role in helping address global social and environmental challenges.

The effect of global crises on socially orientated businesses does show that big crises unleash not the criminal in society but rather more altruistic initiatives.

In spite of the aggravating socioeconomic challenges caused by Covid-19, a phenomenon is emerging where, contrary to the decline in commercial investments during the pandemic, there is an increase in the number of impact investments employed towards social entrepreneurial ventures, says a report by the Oxford Business Group in 2020.

The impact investment market is estimated to be worth $715bn, with 1,720 impact investor fund managers by 2019, says the Global Impact Investing Network. The rise in the level of impact investing is attributed to impact investors who are proactively pursuing efforts to support venture investees, to ensure these enterprises recover, grow in impact and financial performance, and become sustainable after Covid-19.

Affect investing termed “investing with purpose” because of its pursuit for positive social change that is not driven through philanthropy, has the potential to improve the quality of life and make social progress.

The impact investing ecosystem in Africa has been criticised for being fragmented and underdeveloped, as a consequence limiting the prospects to connect investors with potential investees. A report by the UN Development Programme on impact investing in Africa shows how poor linkages between sustainable social enterprises, entrepreneurs, investors and innovation networks inhibits impact investing in Africa.

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Article By Boris Urban