Impact investing task-force created to draw in the private sector
‘Our key priority is changing the psyche of SA’s key decision-makers to understand that investing is not just about a commercial bottom line’
A national task-force for impact investing, consisting of investment and asset management companies, pension funds, long-term insurers and banks, was formally launched on Thursday to mobilise and channel capital to under-funded social impact projects.
The task-force, which was born out of the Global Steering Group (GSG) for the impact investment summit in new Dheli two weeks ago, is still building membership but it is currently served by volunteer members, predominantly from the financial services sector, while the national planning commission will act as an observer. It also has individual volunteers who are not representing any institutions but rather command capital of their own.
“The key for us is getting people who determine how and where money is deployed. Our key priority is changing the psyche of SA’s key decision-makers to understand that investing is not just about a commercial bottom line. It’s about changing the environment in which we operate,” said Elias Masilela, executive chair of DNA Economics and chair of the task-force during SA’s first impact investment conference at which the task force was launched. Masilela said they hoped to also get family funds involved.
The task-force’s mission is to mobilise capital that will go into growing small businesses, dealing with unemployment and inequity, as well as investing in economic and social infrastructure such as education and healthcare facilities.
“If we get these variables right, we’ll get the economy ticking and that will crowd-in the private sector,” said Masilela.
Jacko Maree, a member of President Cyril Ramaphosa’s special economic envoy on investment said he believed that half of the $100bn investment the president’s team is trying to harness from investors has to come from SA. The conversation around impact investing, he said, was long overdue and it was time asset managers use the term more often and invest in alternative asset classes instead of chasing short term returns.
Corporates must play bigger role
“Fund managers have to think about greater allocation to alternatives … It’s not easy to undertake these investments but there is higher profitability and lower exposure to tail risks …Corporates must also play a bigger role by being more relevant to the communities in which they operate in. The general feeling is that South African companies have to be forced through different charters to think about this … they need to do it within their core business not through corporate social investment (CSI),” Maree said.
He said investment managers have to find a way to measure impact alongside financial returns because it is critical for inclusive growth. When new investments are considered, he said, they need to take into account the country’s workforce and not the skills-set that SA wishes it had. Much of SA’s rising unemployment rate has been attributed to the mismatch in skills the economy needs compared to what the unemployed workforce possess as the country moves towards being a services-orientated economy.
Social impact pioneer and chair of the GSG, Sir Ronald Cohen said $1bn has been raised over the past year through social-impact bonds to fund entrepreneurship ventures in Africa. Masilela said that while SA was not part of those initial bond offers, it was going to be more involved in the future as it is now part of the GSG.
He added that other African countries that were in new Dehli have nominated SA to lead the social-impact bonds initiative.