10 Impact Investing Facts You Need to Know In 2015

PRETORIA, South Africa - Nov. 6, 2015 - PRLog -- Let’s start off by defining this increasing global trend called Impact Investing.  It can be described as investments made into companies, organizations and funds focused at fostering a measurable, beneficial social or environmental impact alongside financial returns. More basically, it can be defined as investments aimed at achieving socially beneficial outcomes.

In layman's terms, impact investing involves kick-starting businesses such as small and medium enterprises (SMEs) and start-up entrepreneurs (as a form of an investment, meaning to make a profit) that will in turn have a positive impact on society, either in the form of youth employment or education, amongst others.

After reading this article, you should have a better understanding about recent developments in this line of investing.

1.   To assist the economic growth of SMEs and junior mining exploration, South African Revenue Services (SARS) is now offering a tax incentive for fund investors in Venture Capital Companies (VCC) section 12j. Provided the fund investors stay in the fund for more than five years (no money withdrawal for the first five years.)

2.   According to a prediction by JPMorgan, Monitor-Deloitte and the Calvert Foundation, the impact investing market will increase to between $400bn and $1-trillion worldwide in the next five years.

3.   Based on the above prediction, with a 22% of global-impact enterprises being located in Sub-Saharan Africa because much of the opportunity lies on this continent.

4.   A recent report by the Global Impact Investing Network (GIIN), Open Capital Advisors and the U.K. Department for International Development (DFID), East Africa is a global center for impact investing.

5.   Based on the above report, nearly $10 billion in impact-investment funds have flowed into East Africa. Nairobi is the focal point of this funding with about half of the $9.3 billion invested into Kenya. Neighbouring Uganda and Tanzania receive 13% and 12% of the pie respectively. Ethiopia is trailing at 7% of the total.

6.   It is interesting to note from the report that the overwhelming majority of the $9.3 billion total comes from development finance institutions (DFIs) and organizations such as the World Bank. Only $1.4 billion of the total comes from funds that aren’t related to DFIs. This is a sign that while the impact-investment phenomenon is gathering pace, it’s still dominated by traditional sources of funding.

7.   However, Amit Bouri CEO of GIIN, says that the impact-investing sector faces a perception hurdle, with skeptics claiming that prioritizing social goals undermines financial ones.

8.   While, GIIN’s report argues: “In aggregate, impact investment funds launched between 1998 and 2004—those that are largely realised—have outperformed funds in a comparative universe of conventional (private investment) funds.”

9.   Pressing global issues like inequality, climate change and unemployment can be seen as the main factors contributing towards the popularity of impacting investing, simply because if left unaddressed they pose large financial risks.

10. “Money is not the problem in impact investing – it is the lack of skills in the sector, and access to the right pipelines connecting social entrepreneurs and investors,” said Bobby Godsell (Chair, Business Leadership South Africa and member of National Planning Commission) in his keynote talk at the South African Impact Investing Network Conference in 2015.

Gain further inspiration and learn more about impact investing in South Africa. Align yourself with companies doing their part to bring about positive change within our society. Musa Capital is among these and aims to excel in all of its impact investing partnerships which continue to create jobs, skills development and sustainable SMMEs.

William Jimerson, Group CEO at the Musa Group (http://www.musacapital-impactinvesting.com/?utm_source=On...).

Email: info@musacapital.com

Tel: (011) 771 6300

Follow Musa on Twitter: @musacapital1 and William on @WillJimerson.