We asked the industry: How do you see innovative finance changing investment or philanthropy in South Africa?

By Justine Joseph and François Bonnici

we-asked-the-industry

The Academic

– Dr Stephanie Giampocaro, Research Director and senior lecturer, UCT Graduate School of Business

“Innovative finance – which in Africa today mainly takes the form of impact investing and Impact Bonds – is changing traditional ways of conceiving and practicing investment. Through the Bertha Centre’s recently published African Investing for Impact Barometer, we’ve measured a strong shift towards investing in projects and companies that are financially successful, and driving positive social change. It seems professional investors are adopting this way of thinking and communicating. However, as academics, our role is to remain objective and work to understand whether and how good aspirations can transform into long-lasting, efficient and measurable practices that actually contribute to sustainable development of the continent. This is probably the biggest challenge for innovative finance in Africa.”

 

The Intermediary

– Ryan Short, Partner at Genesis Analytics

“To me, innovative finance means finding a sweet spot where traditional philanthropy and commercial invest- ment can combine. For philanthropists, it provides an opportunity to increase sustainability by introducing financial return, which can be reinvested into more social development. For investors, the power of financial markets can also be harnessed to solve socio-economic challenges. Consultancies need to respond to innovative finance trends by mainstreaming the concept, getting the policy space right, ramping up blended-return measurement systems, and monitoring and evaluation of performance. Better, more rigorous mea- surement of impact is fundamental.

 

The Wealth Manager

– Mark van Wyk, Fund Manager and Head of Impact Investing at Mergence Investment Managers

“Innovative financing models that mobilise investments into businesses or projects that generate financial returns while having impact, can be a positive change to the local landscape. The mobilisation of capital into impact investments for example has the ability to complement philanthropy, where the investment and philanthropy objectives are aligned. Wealth and investment managers will need to accommodate the changing needs of their clients and provide the products and service offerings that meet them.”

 

The Foundation

– Shelagh Gastrow, Executive Director of Inyathelo: The South African Institute for Advancement

“The key issue is that innovative finance should bring more money into social development rather than moving philanthropic funds back into any for-profit model – no matter how flexible and socially aware. The role of philanthropy involves an acceptance of social and financial risk, capacity to make decisions in fast- changing environments and independence from profit-making, shareholders and voters. Many causes linked to social justice and human rights are supported by philanthropy, as they are too contentious for business and government. In my view, innovative finance cannot replace these attributes but might enable more cautious investors to participate in social change with specific measurable deliverables – vaccines, mosquito nets, classrooms or computers. If this results in more support for social development, then innovative finance will have achieved its goal.

That said, while foundations generally have founding documents that refer to the philanthropic objectives of their founders, some large foundations have become bureaucratic and adopted methodologies from the corporate sector. It is possible that they will be attracted to innovative finance models and so change their grant- making process. In my view, this would be unfortunate because funds would shift from focusing on systemic change back to service-delivery, much of which is really the responsibility of governments. Providing services that alleviate poverty is merely making it bearable. Systemic change, which is far more risky and politically charged, would hopefully create an environment where poverty is eradicated.”


Inside | Justine Joseph and François Bonnici

Justine_JosephShe’s a scientist by training, but editor of Inside|Out by profession. She has a Bachelor of Science (Medical) Honours from the University of Cape Town and 10 years experience as a health and science journalist. She was a Mondi Magazine Award finalist and the international winner of the 2006 Novo Nordisk Media Prize for Excellence in Diabetes Writing. In 2011 she co-authored The Story of the Fly and How it Could Save the World with enviro-entrepreneur Jason Drew. She’s contributed to various publications including Shape, Men’s Health, Marie Claire, Cosmopolitan, The Oprah Magazine, Discovery and Hip2B2.

 

Francois_Bonnici

Francois Bonnici is the editorial director of Inside | Out and the co-founder and director of Bertha Centre for Social Innovation and Entrepreneurship at the Graduate School of Business, University of Cape Town. He originally trained as a medical doctor, graduating top of his class. He then read for a Masters in Public Health (London) and an MBA on a Rhodes Scholarship at Oxford’s Said Business School, where he received the prize for the best overall MBA student. He has a Masters in Global Leadership conferred by the World Economic Forum and is the Head of Africa for the Schwab Foundation for Social Entrepreneurship.

 

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