By Isaac Ofosu Debrah, National Coordinator, SDG Philanthropy Platform, UNDP Ghana
For many social purpose organizations—be it a social enterprise, a hybrid NGO, a socially responsible business, the dwindling of traditional donor grants after Ghana became a lower middle-income country with its accompanying “donor flight” could impede sustainability and have dire consequences on the ability to drive the required innovation to achieve the Sustainable Development Goals (SDGs).
Although this could be challenging times for such organizations, impact investing can bring some array of hope. Impact investing involves the use of repayable finance to increase measurable social and environmental impact either at market rate or below market rate returns. This can offer another way of unlocking private capital for organizations which continue to remain at the forefront of innovation, to address the many challenges in healthcare, environment, education, agro-processing, poverty, and economic opportunities for women.
According to a study published by the Global Impact Investing Network, in 2014 alone, impact capital deployed in Ghana was about $1.6 billion, which was 0.27% of GDP at the time. At the same time, the amount constituted 25 percent of the total USD 6.5 billion worth of impact investing deployed in West Africa.
Nevertheless, creating a sustainable ecosystem for impact investing in Ghana would require some essential building blocks, as this cannot develop in a vacuum. The questions one must ask could be:
- What are the policies for a thriving impact investing environment?
- How are businesses, social enterprises and other hybrid organizations positioned for this investment approach?
- What are the opportunities for foundations and fund managers interested in the Ghanaian space?
To reflect on these questions and how the impact investing landscape is developing, the UNDP SDG Philanthropy Platform in Ghana hosted an interactive session with the Vice President (VP) in charge of Economic Opportunities and Markets at Ford Foundation, Dr. Xavier de Souza Briggs, and with other impact investing ecosystem players (such as impact investors, government, foundations, social enterprises).
Linking the achievement of the SDGs with impact investing, Dr Briggs emphasized the importance of impact investing in the context of resource mobilization. He noted that the SDGs are the world and everyone’s goals and achieving them would require urgent resources mobilization. "It seems right and appropriate for the United Nations and its many partner organizations to think about impact investing in the context of resource mobilization on a very large scale,” stated Dr Briggs
The Ford VP also used the opportunity to share some thoughts on the use of $1 billion dollars of the Foundation’s endowments on what the Foundation calls “mission-related investment.” He indicated that this now requires Ford to work through funds and intermediaries, and not to do direct private finance. He added that in line with the Foundation’s deep interest in financial inclusion, the new approach will not be entirely through big funds.
Moreover, sharing the Government of Ghana’s SDGs financing strategy at the meeting, the SDGs Advisor to the Finance Ministry, Ms. Hilde Opoku, indicated that the Ministry of Finance has embraced impact investing as an important investing approach towards achieving the SDGs as per the Government’s ‘Ghana beyond aid agenda’. She emphasized that “investing in the SDGs is about impact investment, to derive values for people and the planet.” She added that to successfully implement the SDGs, the Government of Ghana has introduced SDGs budgeting methodology which aligns policies and programmes with accompanying cost allocations, as well as the SDGs investment fair to dialogue on SDGs financing.
For many impact investors, financial returns are as important as the measurement of social and environmental impact. Therefore, social enterprises, small and medium scale business, and hybrid organizations should make their value proposition clear. Perhaps, increased dialogues on investible opportunities could attract more impact investing in Ghana.