VCTF sells impact investing to fund managers

Last week, the Venture Capital Trust Fund (VCTF) began the process of attracting impact investors, which it expects to make investments that will both give them profit and make positive social impacts at the same time.

The VCTF last week introduced its impact investing program to a selected audience of major local and international fund managers who it is now negotiating with to make impact investments in Ghana.

The presentation and subsequent negotiation are coming ahead of the formal commissioning of the GIMPA Centre for Impact Investing (GCII), which is slated for August 1st, 2013.

The Ghana Institute of Management and Public Administration (GIMPA) is partnering with the VCTF to promote impact investing in Ghana and their collaboration has already resulted in the establishment of the GCII.

Funding for the promotion of impact investing in Ghana and the establishment of the GCII itself is being provided by the Rockefeller Foundation of the United States.

Impact investing is generally defined as investment intended to create positive social impact beyond financial return. Unlike the traditional forms of investment, impact investment accommodates a strategy for solving social and environmental challenges as an integral part of any business model, placing it on par with the desire to achieve a financial return.

The concept of impact investing challenges private investors and entrepreneurs to develop innovative businesses to deliver effective and lasting solutions to the social and environmental challenges while making profit at the same time.

In recent times, impact investing has received significant attention as a promising asset class for investors looking to deliver double-bottom line outcomes from their investment activities.

According to a research conducted be the Rockefeller Foundation and JP Morgan, it is estimated that the impact investment market offers the potential over the next 10 years for investments of US$400 billion to US$1 trillion and profit of US$183 billion to US$667 billion. This potential is a key driving force behind the VCTF’s decision to promote impact investing in Ghana as a means to complement government effort to address major social challenges.

Daniel Duku, CEO of the VCTF, at last week’s presentation explained to the gathered fund managers that impact investing is direly needed in Ghana considering the scope of the societal and environmental challenges facing the country and the government’s obvious financial constraints.

“Challenges, which continue to impact on the quality of life in the country, include access to education, health care, housing, energy, water, sanitation and unemployment among others” noted Duku.

“Given the enormity of these challenges in Ghana, government alone is incapable of resolving all these challenges effectively. It calls for the collaborative efforts of both government and the private sector to coordinate and direct capital with, the view to addressing them, and this is what impact investing seeks to accomplish.

Presenting the new initiative to fund managers last week, VCTF’s Percival Ampomah, identified the sectors that needed impact investing the most in Ghana; agriculture, housing, education, healthcare, water and sanitation, energy, unemployment and access to finance for small and medium sized enterprises.

The audience included fund managers from a number of investment management firms including among others, Boulders Advisors, Axis Pension Trust, Acumen Fund, EM Capital partners, IC Securities, Secure Pensions, Bridge Capital, Blackstar Advisors, Activity Venture Capital Company, SIC Insurance and Persistent Energy Partners.

Fund managers from the Social Security and National Insurance Trust, the biggest institutional investor in Ghana, as well as the Export Development and Agricultural Investment Fund were also at the presentation and are seeking to become impact investors as well.

A detailed report that will form the roadmap for impact investing in Ghana has already been completed by investment experts from GIMPA and the VCTF itself and will be unveiled imminently.

Assured Duku: “The establishment of GCII is only a first step towards building traction for impact investing in Ghana. GCII promises to set out an effective and influential platform to drive impact investing activities in Ghana.”