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Impact investing in the Middle East and Africa

Impact investing is certainly bringing with it a world of opportunity.

When people invest, they always expect to see some kind of return. But, the great thing about impact investing is that not only will the investor see a return, but it brings societal, economic and environmental benefits too.

Defined as ‘directing capital to enterprises that generate social or environmental benefits’, it’s a scenario where everyone wins.

While it’s been around for decades, it’s only recently become more mainstream, likely because of a shift in demands caused by environmental changes, and more recently, because of the COVID-19 pandemic.

Apart from healthcare, sectors like FoodTech, clean renewable energy, biodiversity and education have all seen a lot of interest from impact investors.

There are certain myths around this type of investing that need to be busted though - it’s not true that it takes them longer to produce profit, for example, or that they create lower returns.

Today, there are some incredible companies which are bringing great returns to investors, like Tesla or Change Please - a coffee company that tackles homelessness in the UK.

For every cup of coffee they sell, 100% of profits go towards helping those experiencing homelessness to find a living wage job, housing and training.

Using the country’s love of coffee, it’s helping to solve this huge social issue.

“Really good coffee doesn't just taste good - it does good too”, is the company’s tagline - and rightly so.

Impact investing in the Middle East and Africa

In the UAE, only 53% of investors invest sustainably, mainly because they’re unclear about the concept of impact investing and how it can make a difference.

In the Middle East and Africa (MEA) region, though, while there is still a lot of work to be done, there has been a recent surge in interest towards this type of investment, especially if you compare it to a decade ago where it was nearly nonexistent.

Take a look at the Middle East.

The FoodTech Challenge in the UAE, for example, is a competition with the aim of funding new business ideas that look for innovative solutions to help with food security.

There have been plenty of other investments too, and it’s all thanks to companies like Crescent Enterprises, which invested in high-tech, sensor-equipped clothing designed for workers toiling in the oppressive heat of the Arabian Gulf.

Looking at some countries in Africa - Nigeria, to be specific - the opportunities for impact investing in basic infrastructure are huge.

The power industry, for example, is a great opportunity for providing renewable power while making sure people are paid good wages.

The demand for basic goods and services to help with development brings countless opportunities for many industries - it’s a real business opportunity for innovators, founders and investors.

In fact, Nigeria has great potential to lead the way in impact investing across the continent.

With a population of 206 million, it has the fastest growing economy in Africa, and it continues to see a growth in impact investments with the issuance of sovereign and corporate green bonds.

How impact investing will help

Recently, although companies may be socially responsible, they’re starting to look at their businesses to see how they can make a lasting change.

If it carries on this way, impact investing could become the biggest sector that the world has ever seen.

Bill Gates recently hinted about his plans to re-orient the U.S economy to help with global warming. And, a Morgan Stanley report indicated that sustainable investing funds have actually met or exceeded the median returns of traditional equity funds.

There are plenty of opportunities available for impact investing - there are still so many social and environmental issues, and it’s only through funding from governments, entrepreneurs and investors that they can be solved.


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