ESG and Impact Investing in Africa


A strong end to 2020 was boosted by factors including the US’ announcement of a further $1.9trn of Covid-19 related stimulus, the challenge for emerging markets investors now is to focus on five years of real change across economies.

On a global scale, emerging and frontier markets account for the largest share of the world’s population, land and mineral resources. They are the drivers of global growth and consumption. Sustainability is a function of their development, and it is therefore essential to promote responsible business practices, enforce human rights and environmental protection.

These are also high impact markets where a minor change can have major global consequences. Stopping deforestation in Brazil, reducing emissions in China, eliminating poverty in India, or finding a solution to water scarcity in Africa, for example, could change the entire planet. Environmental, Social and Governance (ESG) considerations are vital when investing in developing countries, and if the next five years are to be the years of emerging and frontier markets, they will also be the years of ESG.

Emerging markets funds must use the next five years to ensure ESG is at the centre of investment philosophies, with the biggest environmental and social challenges located in the countries they invest in. Sustainability is a function of emerging markets development, and it is therefore essential to promote responsible business practices, enforce human rights and environmental protection.


Nigeria is leading the way in impact investing in West Africa where twenty-eight impact investors are active in the country. Over the last few years, impact investments have continued to grow in Nigeria.


The opportunity for impact investments varies and investors may choose to put their money into emerging markets or developed economies. There is no hard and fast rule on the delineation as to what is and what is not impact investment.

However, Impact Investments span across number of industries including:

  1. Healthcare e.g., developing and providing technology that will enhance good health of humans, telemedicine/telehealth/e-health
  2. Education e.g., emerging online education and schools especially during and post-COVID
  3. Energy, especially clean and renewable energy
  4. Agriculture
  5. Microfinancing e.g., digital microfinance banking platforms.
  6. Housing


In Nigeria, there is no law whose sole purpose is to particularly regulate impact investments. However, there are several laws with implications for impact investment and investors. They include:

  1. The Companies and Allied Matters Act
  2. The Nigerian Investment Promotion Act
  3. The Investments and Securities Act
  4. Consolidated Rules and Regulations of the Securities and Exchange Commission
  5. The Finance Act
  6. The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act
  7. The Industrial Inspectorate Act
  8. The Industrial Development (Income Tax Relief) Act
  9. The National Office for Technology Acquisition and Promotion Act
  10. The Rulebook of The Nigerian Stock Exchange 2015
  11. The Immigration Act

Considering the many government institutions that one will have to deal with towards obtaining relevant certifications, permits and or licences, the Nigerian Government, through the Nigerian Investment Promotion Commission (NIPC), created a One-Stop Investment Centre (OSIC) to help bring together all the relevant regulatory bodies and institutions that one may need to relate with for the purpose of obtaining the relevant certifications and or licenses before commencing operations in Nigeria.

The idea behind the creation of OSIC is to help investors (including impact investors) conveniently set up their businesses in Nigeria. How well this aim has been achieved is in doubt.


Nigeria, being a developing country in the third world, has its fair share of socio-economic challenges ranging from poverty, hunger, unemployment, illiteracy, lack of (and sometimes, inadequate) social amenities, security, etc. Issues of climate change (being a general problem world-over) also pose a challenge to the country. These challenges are natural attractors of impact investors both within and outside Nigeria.

Hence, the obvious intervention being carried out by some of these impact investors in some of Nigeria’s sectors. Examples of such investors are Uber, Bolt, Gokada, Oride (all car and bike hailing services mostly operational Nigeria), Learners Corner International Limited (a Nigerian Company that uses technology to deliver education to Nigerian Children especially as a result of COVID), LifeBank (a startup that works with hospitals round the clock to find lifesaving medical products and deliver same to the hospitals in the right condition across Africa), Wecyclers, (a company that offers convenient household recycling services using a fleet of low-cost cargo bikes), Andela(a technology company that recruits and trains local software developers at little or no cost, who in turn work remotely for them for various international companies, thereby generating employment opportunities for thousands of the unemployed populace in Nigeria), and the many Agritech Firms (e.g., Farmcrowdy) that use technology and crowdfunding in furthering their existence and objectives.

Furthermore, a good number of impact investing funds have been made available by some foreign development institutions and bodies. For instance, the African Development Bank invested in the Africa Food Security Fund (AFSF) to boost agribusiness SMEs and enhance food security in some African countries like Nigeria. Also, the International Finance Corporation made an investment in Hygeia Nigeria Limited to improve the healthcare infrastructure in Nigeria and to facilitate access to quality healthcare services.

Locally, the Nigerian Capital Development Fund (NCDF) launched an Impact Investment Note and Fairshares investment platform to enable impact investors make investments and become stakeholders in NCDF with the aim of driving sustainable impact projects in the country.

Notable Points

  1. Nigeria is a country faced with an avalanche of socio-economic challenges like hunger, poverty, unemployment, poor healthcare, poor/inadequate infrastructural facilities, illiteracy, among others, which largely affects its growth and development.
  2. Data from the National Bureau of Statistics reveals Nigeria’s unemployment rate as at the second quarter of 2020 to be 27.1 per cent indicating that about 21.7 million Nigerians remain unemployed.
  3. In 2019, The National Bureau of Statistics (NBS) released its “2019 Poverty and Inequality in Nigeria” report, which highlighted that 40 percent of the total population, or almost 83 million people, live below the country’s poverty line of 137,430 naira ($381.75) per year.
  4. However, these challenges create an opportunity for impact funds and impact investment.
  5. Over the last few years, impact investments have continued to grow in Nigeria. Its impact, however, might not be significant amidst the plethora of challenges faced across the country. This myriad of challenges impedes the expansion and maximum realisation of its potential to deliver social, economic and environmental returns at scale.
  6. Nevertheless, these perceived challenges should not serve as an excuse to bury the idea of impact investment. On the contrary, it is a time for stakeholders to re-evaluate guiding principles and collaborate to build a strong socio-economic society.
  7. For investors willing to bear the risks and challenges, Nigeria holds enormous promise. Its sheer size and strong growth prospects position it well to continue its role as a leading economic powerhouse on the African Continent. Moreover, the large proportion of its citizens underserved by basic goods and services provide a wide variety of opportunities for both financial and social/environmental impact.


While it is clear that impact investments have helped to strengthen Nigeria economically and social wise, several challenges still militate against the continued growth of impact investment. Highlights of some of such militating factors are as follows:

  1. Difficulty while sourcing for viable investments: Meeting both financial and environmental/social objectives are proving difficult. This is as a result of limited capacity of sustainable social enterprises in Nigeria. Low deal flow is partly due to the limited number of sustainable social enterprises or impact investees able to demonstrate a sufficient track record and capacity development following the risk appetite of impact investors. This is coupled with limited ability to measure and report adequately on impact performance where such capacities do exist.
  2. Difficulty Exiting Investments: Value in private equity investments in the traditional financial markets is sought and realised through an exit point at which the investor sells their stake in a firm. This can be done through Initial Public Offerings (IPOs) as the endpoint of the funding value chain. The challenge of finding profitable and varied exit options stems from the fact that most African capital markets are still at a relatively early stage of development.
  3. Unclear Policies and Regulatory Environment: While Nigeria was reported by the World Bank to have improved its ease of doing business in the World Bank Report of October 2019, the issue of uncertainty in policies (almost always a consequence of state politics) and regulations has hampered the development of impact investments. Currently, Nigerian enterprises are generally challenged by a poor environment for doing business, and investors constrained by our developing financial markets.
  4. Lack of Ecosystem Synergy: There is a poor synergy between sustainable social enterprises, entrepreneurs, investors and innovation networks. The majority of Nigeria’s sustainable social enterprises are not members of professional associations or other formal networks, which makes finding investible enterprises and entrepreneurs a challenge for investors. Furthermore, sustainable social enterprises may have limited access to academic and research institutions focusing on research and development (R&D) that can be developed into goods and services for markets.
  5. Negative perception: about the unprofitability of impact investing.


It is proposed that the following be adopted as solutions towards some of the problems identified above:

  1. Enacting of an all-inclusive and targeted legislation for impact investors and investment.
  2. Setting up modalities for proper integration of social enterprises into one umbrella body for easy identification of investors.
  3. Setting up avenues (like associations and a regulatory body) for education and disabuse of negative and untrue mindset pertaining to impact investment.
  4. Establishing a central data system to provide information on impact measurement and tracking and other indices emanating from impact investment. This will enable impact investors and other stakeholders make informed decisions and choices.
  5. Enable and continue to enhance the ease of business operations through means such as adopting tax free regimes or reduced tax obligations for impact investors.

With the great human capital that Nigeria possesses and the numerous economic social challenges, it can be argued that the country is a fertile ground for impact investors and investments. Impact investment is indeed a goldmine whose potential remains largely untapped. Therefore, government and other stakeholders should endeavour to do the needful towards establishing the apparatus needed.


Four trends have emerged as South African companies contemplate post-pandemic recovery: new thinking on talent and skills retention, embracing technology, incorporating sustainability in business models, and investing more in employee well-being, benefits and engagement. These were the findings from the South African edition of Mercer’s Global Talent Trends 2020-2021 report, released in March 2021.

The four trends that South Africa companies should adopt are embracing a new multi-stakeholder model that encompasses transparency and empathy; reskilling to transform the workforce for a new world economy; harnessing the power of data and redesigning the work experience to inspire and invigorate employees.

According to the report, 75% of HR leaders in South Africa who participated in the survey expected Covid-19 to negatively affect their businesses. Defining future workforce needs and sustainably restructuring and reinventing should be top priorities for 2021, if companies and organisations are to navigate through the economic crisis sustainably and cost-effectively.

Many South African companies have realised that life will never be the same again post Covid-19. Business survival will, to a large extent, depend on how companies and organisations embrace the future, use technology, invest in skilling and re-skilling employees, develop tailor-made employee benefits, incorporate mental well-being into HR models, develop sustainable working models, and embed Environmental, Social and Governance (ESG) practices in business models.

Up to 67% of the companies surveyed are already building ESG goals into their broader transformation agendas, significantly more than the global average (45%); while one in five organisations (20%) are embedding ESG metrics into executive scorecards.

As a result, companies and organisations have started deeper conversations on such issues as developing people practices that will endure post the pandemic, finding sustainable flexible employee models which can be used as foundations for growth, or for reinventing the future. Companies are now confronted with unavoidable conversations on how they can use the lessons of the pandemic and use innovation, born out of necessity, to develop a new way of working and plan for reinvention and innovation which will include impact investing.