Kenya backs National Advisory Board to ‘co-create policy interventions for inclusive and sustainable development through impact investment’
Global Steering Group for Impact Investment convenes inaugural Kenya Impact Dialogue with over 200 delegates
Nairobi, Kenya 10 December 2018 – The Global Steering Group for Impact investment (GSG) convened its inaugural Kenya Impact Dialogue on Monday, seeing over 200 impact investors, social entrepreneurs, development finance specialists and policy-makers discuss the need for a coherent approach to impact investment in Kenya.
In the Special Keynote address, Ms. Betty Maina, Special Secretary to the State Department for Industrialization, Republic of Kenya, said:
“The formation of National Advisory Boards (NABs), presents an opportunity to identify opportunities and resolve challenges faced by impact investors and entrepreneurs by engaging policymakers and informing the development of national impact investment strategies.”
“We appreciate the platform provided by GSG for countries engagement to co-create policy interventions for inclusive and sustainable development through impact investment,” she added.
IMPACT TO PLUG SDG FINANCING GAP
Maryanne Ochola, East Africa Regional Chapter Manager at Aspen Network of Development Entrepreneurs (ANDE), kicked off proceedings with a wake-up call, saying: “Ladies and Gentlemen, we are running out of time… running out of time to eradicate poverty.”
“We have a financing gap of $2.5 trillion towards the development of the UN Sustainable Development Goals (SDGs)… We need to acknowledge that governments can’t do this alone and we need private capital to meet societal needs,” she added.
“Impact Investment affords us the opportunity to unlock financial and social good,” she said.
Globally, impact investment has grown by 41% in terms of compound annual growth rate (CAGR) to reach over $250 billion in assets under management (AUM). But that’s a “drop in the ocean” and the capital is “skewed towards large ticket sizes”, she said. “Small and growing businesses can transform an economy,” she added. “Today is a call to action to all of you as impact leaders.”
In the Welcome Address, Susie Kitchens, the British High Commissioner, said that the SDG’s are facing a global annual investment gap of $2.5 trillion per year. But it must be remembered that impact investment is not a replacement for public spending. Kenya is a regional hub for impact investing, being the third largest private equity market in sub-Saharan Africa, she noted.
“We have a great opportunity to shape the landscape…to drive forward the equitable march of progress to drive prosperity and security. We need bankable, investment-ready projects,” she added.
Between now and 2030, Kenya can unlock $6 billion in impact capital to fund the Sustainable Development Goals (SDGs), said Global Steering Group for Impact Investment CEO Amit Bhatia.
In an interview on CNBC Africa, Mr Bhatia noted Kenya has seen over $4.2 billion of impact investment flow into the country over the past 10 years. Within the African continent, Kenya has consistently attracted over half the total impact capital.
“This groundswell of impact investment is addressing issues such as poverty and climate change using private capital for public good. That’s the message we are bringing to Kenya this week,” he said.
“This is a great opportunity for Kenya to figure out how it can find the resources to unlock private capital, including how the government can create [impact investment] wholesalers.
IMPACT MOVEMENT TAKING SHAPE
In the Theme Address, GSG CEO Amit Bhatia stressed that the impact movement has the same core characteristics as other successful movements have, with the simple premise that it can be understood by all.
“All movements are replicable and decentralized… all successful movements are inclusive and abiding – they engage all citizens, all actors, irrespective of caste, religion, nationality etc.,” he added.
“The impact movement is inclusive, the left, the right, big businesses, small businesses…. We need to bid goodbye to aid and donor – we need to fix capitalism first,” Mr Bhatia added.
GSG SOLVING DEVELOPMENT CHALLENGES
Ms. Betty Maina said: “We as governments ponder on the best way to address the ever demanding economic, social and environmental challenges.
“With the ever-diminishing fiscal space, it is evidently clear to many governments around the world that we can no longer rely on the public sector resources. Private equity and venture capital, beside philanthropy, is increasingly becoming an important complement to scale up impact investments through collaborative action by making the needed policy changes,” she said.
THE IMPORTANCE OF EDUCATION FUNDING
Dr Shannon May, founder of the Bridges Academy, said: “Education should be in your portfolio if it isn’t yet – there are 300 million children in school not reading. We need something to change.”
“Expand your portfolio, invest in education and join the GSG to see Impact investment expand” across the African continent,” she added.
ENTREPRENEURSHIP AND IMPACT
In the first panel discussion, on Entrepreneurship and Impact, Dr. Githinji Gitahi, Global CEO of Amref Health, said many donors are asking for “sustainability and co-creation”, which has “changed the game for us”.
“When we have profits, we need to be shy and hide it. We might otherwise be labelled as profiteers,” he said. “Right now, we have included the private sector in agenda 2030 – we see the private sector as a key driver in this.”
“We take young entrepreneurs in healthcare, and we offer them to test their model with access to Amref’s staff and networks. This network is important when going into impact investment.”
Sanergy Founder and CEO David Auerbach said: “I am not seeing many impact investors willing to come in when it’s just an idea – this is very different from the Silicon Valley-type view – then it’s your responsibility as an entrepreneur.”
Continuing, Robert Karanja, Lead, The B-Team Africa, said “Governments provide an enabling environment, but we’ve seen corporates encourage young people to be their (own) bosses.
“We provide an alternative to people in this country and not only go to school and be employed but also being their own bosses – they might not be enough job opportunities for people coming out of the market, we are driving towards bringing different mindset.”
SOLVING SOCIAL PROBLEMS THROUGH IMPACT
In the second Keynote Address, Private Capital for Public Good, Ambassador Martin Kimani, Director of Kenya’s National Counter Terrorism Centre and Special Envoy CVE, asked: “How will your work reinforce the institutions, how will your work help us do a better job?”
“The impact movement needs to be informed by what’s local and specific. Social enterprises must work with government and work with the political institutions that stop terrorism,” he said.
Amar Inamdar, Managing Director at KawiSafi Ventures, said in the Capital and Impact keynote speech that impact markets represent a “tremendous opportunity to solve problems”.
“Let’s crowd each other in,” he said. “East Africa is a hotbed of opportunity,” he added, naming mobile payments company Mpesa as a prime example. “Capital will flow… to the highest return and lowest risk and there is a huge opportunity to demonstrate and a huge opportunity to lower the risk.”
TIME FOR A KENYAN NAB
In the Closing Panel on Building a Kenyan NAB, Arif Neky, Senior Advisor – UN Strategic Partnerships Coordinator – SDG Partnership Platform, said: “We would be delighted to support as the NAB in Kenya is established. I think GSG has come to town at the right time.”
He highlighted the need “create practical ecosystems for partners on the ground.” Kenya’s government announced the creation of an SDG platform to create a platform for this ecosystem to happen.
Duncan Onyango of Acumen said any NAB “should embrace its convening power – the right people at the right time. How to ensure we get local funds moving into the sector –- [the NAB] will ensure that.”
Peter Oloo, CEO of the Social Enterprise Society of Kenya, agreed, “The Kenyan NAB has really come at the right time.” Kenya has the charity act – “We need the policy and legal framework in place for everything else to fall in place.”
Mr Neky continued: “We need to focus on those which have been left behind, looking at the SDG partnership platform to identify bankable projects that help address some critical issues like health and poverty
“We need to aggregate many partners together in one common form and the NAB can help catalyze this. Is there the opportunity to move from pilots – which are puffs of excellence tin a sea of deprivation – how do we make sure that those solutions are in effect?”
GSG is currently setting up a National Advisory Board in Kenya to catalyze impact investment growth. GSG has worked with leaders to launch 22 NABs around the world. They are the vanguard for impact investment and serve as national platforms for private, public, and civil society actors to collaboratively create an enabling environment for impact investing.
Globally, GSG works with these country-led NABs, network partners, and other key stakeholders to identify priorities, deliver initiatives, raise awareness and advocate for the development of impact investing.
As GSG CEO Amit Bhatia told CNBC Africa: “How can we find ways so that impact investors and entrepreneurs are better recognised here, and that the rules and regulations are made more amenable for this hotbed to grow at a very rapid place?”
“For example, if Kenya was to work with us to think about how institutional investor guidelines, for example fiduciary duties for pension funds, can be looked at, that would be amazing.
“Can Kenya make ESG reporting regulations mandatory for corporations, as has happened in many parts of the world, that would be amazing.”
“So, there are many recommendations we are leaving with the government to consider and say ‘we already have a great opportunity’ with Kenya being a hotbed, and now we have to leverage that and take it to the next level.”
CALL TO ACTION
Siddharth Chatterjee, UN Resident Coordinator, in the Closing Keynote, said impact investment is where the private sector can make huge profits.
“We need a Marshall Plan of employment for Africa and this will come not from governments, but from the private sector,” he said.
“Kenya can be in food surplus in the next five years as seeds and technology adapt to climate change… it’s about getting the big players together to invest into these innovations.”
“You need to think big here, it’s about scale – people are being born every day and that means we need to think big, but there is also lots of room of profitable investments through economies of scale.”
“Kenya needs to make itself creditworthy and investor-friendly. The NAB is great because it’s coming from a country that also helped to create the SDGs”.
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