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Investing with Purpose: Mobilizing Private Capital in Financing the Sustainable Development Goals (SDGs)
By admin March 15, 2019

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The fast-growing industry of impact investing demonstrates the promising role of private capital in achieving the Sustainable Development Goals (SDGs). An increasing number of fund managers, diversified finance institutions and individual investors are mapping their existing portfolios into the SDGs and align their investment strategies with their targeted objective of producing positive and measurable impact.

Impact investing aims to generate positive social and environmental impact alongside financial returns, with one of its distinctive features residing in the intention of investors, which goes beyond the pursuit of single capital profits. While capital owners who have general an interest in a diverse social agenda, can thus leverage their assets. Then, other finance institutions and government investors or wealth managers who bear the fiduciary duty can provide investment opportunities to advance social and environmental goals while growing overall financial endowment.

The lack of access to reliable electricity is identified as a substantial barrier to economic activities and quality of life for people living in Sub-Saharan Africa. Despite generations of efforts devoted to increasing universal access to energy, significant gaps still exist with the fundamental problem rooted in not just power but intertwined with financial, technical and political factors.

SunFunder is one of the impact investment actors who aim to achieve environmental and social benefits in mobilizing structured finance. Founded in 2012, this financial intermediary entity has been bridging solar companies and diverse investor-types with structured debt financing, which allows to utilize solar PV technologies whose costs have dropped significantly compared to traditional coal-fired grid extensions, thus creating affordable and clean electrification options for off-grid communities. Assets under management were estimated to reach $47 million, with geographic areas covering Sub-Saharan Africa, India and the Pacific regions. Similar investments with intention are also expected to achieve broader results in terms of creating decent work, fostering sustainable communities and partnerships for the SDGs.

The lessons from impact investing are three-fold. First, Governments are recommended to improve the access to markets and create favorable environments for global investors. Second, it’s in the interest of impact investors to diversify asset classes and fund structures to meet investors’ various risk-return profiles and the diverse capital needs of companies operating in the target market. Finally, it is expected to foster sustainable partnerships encompassing the financial, philanthropic and public sectors for better impact measurement and assessment, development partners can play a crucial role in helping facilitate the interaction between the private sector and governments from supporting the creation and advancement of the regulatory environment to mitigating risks associated with investing in sustainable startups and greenfield businesses.

 

For More Information:

Electricity Access in Sub-Saharan Africa – Uptake, Reliability, and Complementary Factors for Economic Impact

Seizing the Mini-grid Opportunity in Africa for impact and Investment

Lessons We’ve Learned in Energy Access

Global Impact Investing Network

Impact Investing’s Three Measurement Tools


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