Stakeholders in the global impact investing space have advised the Nigerian governments at the federal and sub-national levels to promote inclusive growth through the attraction of catalytic capital and investors into riskier opportunities via a funding model that will improve social growth.
They also recommended that the federal government should pay attention to sectors such as education, healthcare and agriculture where impact investing could produce the greatest benefits to the people in the country.
These recommendations were made at the 6th Annual Convening of the Impact Investors Foundation (IIF) held at the Oriental Hotel in Lagos State yesterday.
The two-day conference comes with the theme “Catalytic Capital for Inclusive Growth and Development”, and covers specific subjects such as “Demystifying Catalytic Capital – A Spotlight on Case Studies Objectives”, ”Leveraging Innovative Financing Models for Inclusive Growth and Development: A case study of the Nigerian Wholesale Impact Investment Fund”, “ Enabling Inclusive Growth and Development in the Agriculture Sector”, “ Enabling Inclusive Growth and Development in the Healthcare Sector”, as well as “Exploring partnerships for financing sustainable development in Nigeria”, among others.
“Every year, the Impact Investors Foundation (IIF) organises the Annual Convening on Impact Investing. The convening seeks to address the barriers to the growth of the impact investment ecosystem in Nigeria through a multi-stakeholder platform process. The IIF Annual Convening on Impact Investing is the largest gathering of impact investment stakeholders in the country,” IIF said.
At yesterday’s deliberations were Senator Atiku Abubakar Bagudu, Honourable Minister of Budget and Economic Planning; Clem Agba, former Minister of State for Budget and National Planning; Rt. Honourable Nick Hurd, chair, Global Steering Group for Impact Investment (GSG); Ibukun Awosika, vice chair, GSG, and chairperson, Nigerian National Advisory Board for Impact Investing(NABI); Afolabi Oladele, chair, IIF and vice chair, NABI; Etemore Glover, chief executive officer, IIF and NABI, among others.
This year’s convening was sponsored by GSG, Chapel Hill Denham, UNDP, Sambo Foundation, and Direct Investment Africa (DIafrica). The technical partners include Circular Economy Innovation Partnership, LEAP Africa, GIZ, eha Impact Ventures, avpa, and UNCDF Impact Capital for Development.
“Nigeria and many developing countries are grappling with an unprecedented rise in external debt levels following the COVID-19 pandemic. This situation is further intensified by challenges such as record inflation, escalating interest rates, competing priorities and constrained fiscal capacity.
“There is an urgent need to mobilise private capital to address these multifaceted economic challenges and achieve the Sustainable Development Goals (SDGs). An estimated $3.7 trillion will be needed to bridge the SDG financing gaps. Shifting only 3.7% of the institutional assets estimated at $100 trillion towards sustainable activities in Nigeria and other countries would be enough to fill the gap. Forming meaningful partnerships with multiple stakeholders whose ambition is to transform a sector or market is one way to tap into this funding pool,” IIF said.
Clem Agba said catalytic capital is an investment that is more patient, risk tolerant, concessionary and flexible than conventional capital, noting that it presents a platform for developing economies to attract investors to riskier opportunities which would not have been otherwise possible.
He said: “While the impact investment has grown in recent years, there is a need to attract catalytic capital at scale in order to address the pressing needs and promote inclusive growth in Nigeria.
“Some of the conditions that will promote the growth of catalytic capital include the need for the federal and sub national governments to develop a funding model based on factors corresponding to new areas for improving social growth and enhancing meaningful change, create domestic investment funds, support existing efforts to direct public and private resources to small businesses and low-income communities.”
Citing how he was able to improve low-income communities when he was the governor of Kebbi State such as doubling the income of pastoral communities as well as ensuring farmers prompting repaid their loans, Senator Bagudu suggested that a bigger forum should be held to call the attention of all the stakeholders in the country to the benefits of mobilising catalytic capital to many low-income communities and MSMEs in hard-to-reach areas.
“I have seen as a state governor in the rice value chain, where within one crop season, we saw yield quadrupled, and farmers were able to repay their loans. In the same agricultural space, Fulani women whose activities would require them to wake up by 2am to milk their cows and stepped out by 5am to the market with less than N2000 worth of goods were able to increase the worth of their business through our intervention supported by the European Union,” Senator Bagudu said.
Etemore Glover harped on the need for partnership as this is the only way the immense benefits in impact investing could be tapped.
She said: “There is a need for private and public sector partnership on investment. If you look at the rate of unemployment in Nigeria, we need funds from the government and players in the private sector. Impact investing looks at investments that bring profit and social development.
“Typical investors look at how capital can bring profit. Impact investors are more concerned about how to engender social development, reducing the number of children out of school, access to healthcare, affordable housing, addressing social and developmental problems that typical investors will not be interested in.”
Nigeria is projected to become the third most populous nation by 2050. Consequently, Honourable Nick Hurd said Nigeria is of interest to the global investing community, adding that if the country gets its development well, the ripple effects will be felt not only in Sub Saharan Africa, but the entire continent.
“Nigeria should lead in terms of demonstrable model of growth on the continent,” Hurd said.
Justifying while the state government is involved in impact investing as is the case of the Lagos State Employment Trust Fund (LSETF), Afolabi said the government needed to show that some sectors are not as risky as the private sector players have made the people to believe. The convening continues today.
