IB/IGB and the impact investing agenda
Investments in IB/IGB are mostly done by impact investors and some selected banks or financial institutions. Impact investors are firms with a double bottom line of generating financial returns and social or environmental impact. Sometimes also banks, grant institutions, and development partners are investing in IB/IGB. The IB/IGB discussion subsumes the sum of all such investments under impact investing. However, while impact investors invest in impact and subsume any investment in planet, people or technology and innovation under impact investing, only a few such investments globally have a deliberate and of these again a small share are actually for IB/IGB purposes.
Impact investing should not be confused with the delivery of grants. In fact, while being part of the portfolio of impact investors, the availability of grants are rather small. Most impact investors place equity, some loans, and other an innovative mixture of loans, equity and grants. Impact investors do not necessarily maximize their financial return. Sometimes they compromise on interest rates when they see a clear social or environmental return. Most impact investors however invest through equity with targeted 5 years exit strategies. The funds are typically provided against clearly described deliberate impact objectives against benchmarks combining commercial with social ort environmental targets. Impact investing is typically in the range of USD 0.1-3 million (sometimes more), while the fewer grant providers have ticket sizes between $5.000 and $100,000.
The 15 minutes pitching trials many social enterprises do is typically only for much smaller ticket and often grant based sizes;. Compared to the many applications, the success rate of such pitching is rather low (1:10 in the shortlisting and 1:100 in the longlisting exercises). For larger ticket sizes applications, and for outlining the financial return detailed transformation business plans are required. These need to show in dynamic projections how the company will transform to achieve higher or more impact
The 2022 impact investing landscape report done by Impact Investing Ghana (IIGh) and the Ghana Venture Capital Association (GVCA) suggests a major growth in venture capital and private equity in the last decade, reaching in 2023 nearly USD 7 billion investments accumulated. The report mentions 38 venture capital and private equity funds, 12 development financing institutions, 27 corporate pension trustees, 7 grant institutions, 7 crowdfunding platforms, 5 guarantee funds, 23 commercial banks, 145 rural banks, and 180 microfinance institutions active in Ghana. However only a small part of this is relevant for IB/IGB investing, such as perhaps
- the 5 impact funds active in Ghana (examples are: Brighter Investment, CiGaba Fund, Deal Source (a platform), Injaroo Invest, Lend-a-hand (crowd funding platform) New Venture Fund, Mirepa Capital, Oasis Capital, Palladium Capital, RISA Fund, Wangara Capital, Wangara Green Venture,. Yaro Capital Zebu Invest, Zinari Capital, among others),
- others targeting the Ghana market from outside the country (e.g. Aavishka Fund, Bamboo Finance, Leapfrog, and others ),
- other opportunities are coming from the banking sector (e.g. Fidelity Bank, Eco Bank, Sinapi Aba),
- and other through institutional investments from development partners such as EC, GIZ, IFAD, Mastercard Foundation, UNCDF, UNIDO, USAID, among others) or –
- for larger ticket sizes through institutional development investors (IIB, DEG, FMO, IFC, Proparco, SIFEM).
Impact Investing Ghana is the nodal agency in Ghana promoting the impact investing industry. It is very active in advancing the ecosystem development for impact investing in Ghana, and it has close cooperation with neighboring countries and the global impact investing industry (GSG) and networks. IIGh is also active in research, advocacy and policy advice. It is not a fund for companies to source investments; for this purpose IIGh works closely with DealSource, a platform for accessing impact investors. IIGh will also be a member of the investment committee under the proposed Risk Reduction and Social Innovation Fund (RRSIF)