Subscribe
AEC Quarterly
No Result
View All Result
  • Big Story
  • Opinion
  • Energy
  • Interviews
  • Africa
  • Investment
  • Big Story
  • Opinion
  • Energy
  • Interviews
  • Africa
  • Investment
No Result
View All Result
AEC Quarterly
No Result
View All Result

How Impact Investments Can Develop Nigeria

by Desola Ososami

2 years ago
Reading Time: 4 mins read
How Impact Investments Can Develop Nigeria

The Yaba skyline, home to the growing tech ecosystem and many start-ups in Nigeria

Anyone who watches New Nollywood will notice how frequently the word “start-up” comes up. A personal favourite of mine, Dolapo from ‘Rumour Has it’ owns a social enterprise that provides life skills to misplaced girls in the North and is funded by investors. Her business is an example of an enterprise that provides a positive benefit to society, while gaining profitable returns on her investment. This type of investment is known as Impact Investing.

‘Impact Investing’ has become a hot topic in both the development and finance space- two worlds with traditionally different objectives. Investing in financial markets rewards efficiency and good performance with profits, while aid and subsidies have been used for development but at the cost of efficiency.

Impact Investing marries these two worlds by giving capital to enterprises with a positive societal impact and making these enterprises accountable to shareholders. What’s more attractive is that investors also receive returns from their investments, giving them the best of both worlds.

Related articles

Kenya explores New Investment Opportunities in Expo Dubai 2020

Is Africa really Disadvantaged in Global Trade?

What does Impact Investing in Nigeria look like?

A Global Impact Investing Network and Dalberg report highlights some key features in Nigeria. In 2015, impact investments in Nigeria amounted to $1.9 billion with a recorded 181 deals, making Nigeria the largest recipient of impact investments in West Africa. Each deal had an average value of $1-5 million with an expected return of 13% to 17%. Agriculture, Technology and Financial Services were the biggest recipients of investments, with a focus on Fintech and getting access to the ‘unbanked’. 

Source: BusinessDay

It all paints a good picture of an already booming environment, but there’s more to the story. The community of investors is still small relative to the size of the market, with only 28 Impact Investors recorded. Most investors are fund managers who invest on behalf of foreign investors ranging from International Development Finance Institutions such as the Commonwealth Development Corporation (CDC Investments) to Silicon Valley venture capitalists.

The Tony Elumelu Foundation was the only identified local investor. Nigerian Investors seem to be wary of this kind of investments, due to the misconception that it is a form of philanthropy with little room for financial returns.

Why should Impact Investing matter in Nigeria?

One unique feature that amplifies the potential of Impact Investing in Nigeria is the massive supply of SMEs who are significant contributors to economic growth and development. Entrepreneurs are becoming aware of social and environmental challenges, and innovating ways to tackle them. Examples include LifeBank, which helps hospitals source blood and medical products, We­cyclers – a company which uses cargo bikes to help Lagosians earn money by recycling and the popular Andela, which seeks to find “genius-level” software developers who then work remotely for US and European companies. Companies like Andela create the chance to generate thousands of jobs in Nigeria.

Source: InvestSmall

Providing funds to SMEs create several positive development effects. Firstly, by establishing a middle class which is known to be the backbone of most successful economies. And secondly, because SMEs account for 96% of all Nigerian businesses. Fortifying them will lead to improvements in growth and job opportunities in Nigeria, which is dealing with unemployment at 14.2%, and youth unemployment at an alarming 33.1%.

Unfortunately, like many things in Nigeria, there are several barriers to the magic of impact investing. The industry lacks established standards and processes to track the success of impact and returns, credibly. Additionally, the 2008 financial crisis left people wary of capital markets in the country. Nigeria has since struggled to build confidence in the business environment. 

We also need more local investors to get involved, investors with a unique insight into Nigeria’s problems and with a knack for identifying potential solutions. There are returns to be made for both self and country. This principle moves impact investing from being a purely ‘philanthropic’ gesture to a financially-savvy decision. Not only it is a good financial move, but it also reduces our reliance on the public sector to develop a country with so much potential in the private sector. With proper impact investment, we can develop a country worthy of the talent and creativity it provides. 

Source: aecquarterly
Tags: How Impact Investments Can Develop Nigeria
Share123Tweet77Share31
Previous Post

Covid-19 and Nigeria’s Oil Future

Next Post

Is Nigeria Oil-Rich?

Related Posts

Expo Dubai 2020
Africa

Kenya explores New Investment Opportunities in Expo Dubai 2020

July 13, 2021
Africa's position in Global trade
Africa

Is Africa really Disadvantaged in Global Trade?

May 26, 2021
WHERE IS OGA LANDLORD?
Opinion

WHERE IS OGA LANDLORD?

May 25, 2021
Nigeria Devalues Naira
Africa

Nigeria Migrates to a Unified Exchange rate as it devalues its currency

May 25, 2021
Many people made huge sacrifices for Eritrea's independence
Opinion

Eritrea viewpoint: I fought for independence but I’m still waiting for freedom

May 24, 2021
Macron hosts Africa summit on post-COVID-19 economic recovery
Finance

Macron hosts Africa summit on post-COVID-19 economic recovery

May 19, 2021

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Popular Post

  • 5 Young African Entrepreneurs to look out for in 2021

    5 Young African Entrepreneurs to look out for in 2021

    317 shares
    Share 127 Tweet 79
  • Meet Cira-O3, Egypt’s COVID-19 Robot Nurse

    313 shares
    Share 125 Tweet 78
  • Winning in the African Oil and Gas Industry

    312 shares
    Share 125 Tweet 78
  • Africa claims Top 3 spots for the Highest Concentration of Women Entrepreneurs in the World

    312 shares
    Share 125 Tweet 78
  • Assessing Africa’s Digital Response Strategy to COVID-19

    311 shares
    Share 124 Tweet 78

Recommended

Nigeria’s Path to Taxing the Digital Economy: Netflix and Amazon Included

Nigeria’s Path to Taxing the Digital Economy: Netflix and Amazon Included

December 5, 2020
Covid-19

Assessing Africa’s digital response strategy to Covid-19

November 3, 2020

Sign Up For AEC Quarterly Newsletter

Get our most compelling stories delivered straight to your inbox.

AEC Quarterly

AEC Quarterly is a great read for investors looking for new opportunities with articles and reports exploring growth, creativity and entrepreneurial spirit.

  • Big Story
  • Africa
  • Opinion
  • Energy
  • Finance
  • Interviews
  • Home
  • About
  • Contact
  • Get Featured in AEC Quarterly Magazine

© 2020 AEC Quarterly. All Rights Reserved. Use of this site constitutes acceptance of our, Terms of Use and Privacy Policy.

No Result
View All Result
  • Big Story
  • Opinion
  • Energy
  • Interviews
  • Africa
  • Investment

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.

Go to mobile version