JOHANNESBURG - Industry leaders have expressed concern about the ruling party’s proposal to impose a form of-prescribed assets on the country’s investment community - a topic that is expected to provoke some heated debate at the upcoming Impact Investment Forum, which will take place on Tuesday, 5 November 2019, ahead of the South Africa Investment Conference.
“How we deploy South Africa’s limited financial resources is a critical conversation that must be had,” says Elias Masilela, Executive Chairman of DNA Economics and Chair of the South African Impact Investing National Task Force that is hosting the event.
“It is essential to conscientise policy makers, owners of capital and allocators of same, about the urgency to invest appropriately - with the aim of reducing social and economic gaps. It is to remind us of the principles that underpin the Sustainable Development Goals (SDGs) and the National Development Plan (NDP), namely, the growing risk of inequality on not only our accumulated capital but also for the existence of governments as we know and want them to be.”
He adds that impact investing, the practice of investing money in order to generate social or environmental impact alongside a financial return, has been gaining momentum globally and has the potential to change the way we address the country’s fundamental challenges of poverty, inequality and unemployment.
Globally, sustainable investing assets in the five major markets stood at $30.7 trillion at the start of 2018, a 34% increase in two years, according to the Global Sustainable Investment Alliance. And the Global Impact Investment Network (GIIN) has estimated the size of impact investing market to be $502 billion based on the collation of AUM data on more than 1,300 impact investors.
According to Tine Fisker Henriksen, Innovative Finance Lead at the UCT Graduate School of Business’s Bertha Centre for Social Innovation, which supports the SA Impact Investing National Task Force, South Africa is leading the conversation on impact investment on the continent.
It was the first African country to join the Global Steering Group (GSG) for Impact Investing and establish a National Task Force in 2018. The South African Task Force is a coalition of public and private sector high-level decision makers including, amongst others, Absa Chairperson Wendy Lucas-Bull and the former CEO of the FirstRand group, Sizwe Nxasana.
“The Forum will showcase practical examples and spark dialogue on the opportunities and risks of impact investing,” says Fisker Henriksen.
“Over the past year, the Task Force has worked hard on market building initiatives, such as scoping the potential for a wholesale fund for the South African market and a South African Education Outcomes Fund, as well as working with the peers to identify a shared impact measurement system.”
Government has supported the Forum from its inception and representatives from the President’s investment team will be among the key speakers at the Forum.
They will discuss how to drive impact through foreign direct investment.
Other topics include addressing the perceived and real risk of impact investing as well as the power of united shareholders to shape the behaviour of corporations for the benefit of people and planet.
This year, there will also be a panel discussion on the status of impact investment in South Africa hosted as part of the main investment conference proceedings on 6 November.
Masilela says, the quality of the debate and the ground covered during the two days will be considerable.
“For South Africa’s growth, job creation and poverty reduction, the outcomes from this Forum are critical. The recent social unrest in Chile, is indicative of what could and will go wrong if we do not deal with inequality.” He warns, “Chile is not at all unique. South Africa finds itself in exactly this same risk situation. We can only stand in solidarity with the Chileans, in their quest for increased equality. We need to focus on investments that have a positive human impact. We cannot delay any further, if we do, we will have failed society and ourselves.”