Impact Investing Digest #13 - 21st August 2024

CENIARTH CONTENT

For those who missed it, another nudge to check out our current thinking on the coffee value chain and profiling some of our direct ( Onyx Coffee & Thanksgiving Coffee Company ) and fund ( Root Capital , MCE Social Capital , Global Partnerships , Clarmondial AG & responsAbility Investments AG ). I'm reliably informed (Keith Polo!) that Missio Invest are also active in the supply chain!

ECOSYSTEM NEWS

From microfinance pioneer to Prime Minister (via BBC News ): Muhammad Yunus pioneered the use of microfinance with Grameen Bank in the 1970s and 1980s in Bangladesh and was awarded the Nobel Peace Prize in 2006. More recently, his work with Yunus Social Business has sought to scale the concept of social enterprise beyond financial services. He's an incredibly inspiring man who I once had the pleasure to listen to in person at an event hosted by ODI Global in London. Despite coming under political attack in recent years as he began to try and influence Bangladesh's political system more broadly, he remains hugely popular with the country's youth and was recently appointed interim Prime Minister following the resignation of the unpopular Sheik Hasina.

UK Pension Funds x Impact (via New Private Markets ): I've previously remarked on the importance of mobilising larger institutional capital pools for impact in the private markets, highlighting examples such as CalPERS committing $25bn to green climate investments. In the UK, 98 Local Government Pension Schemes control ￡350bn (~$445bn) of assets. The introduction of pooling into eight clusters in 2018 has enabled more efficiency in allocations, and in recent years has enabled a heightened focus on private markets. This has seen an increased focus on climate and place-based investing allocations, partially in response to a proposed government target for LGPS funds to invest up to 5% of their assets in projects which support local areas - the article provides lots of examples of significant allocations by different pools. A concrete recent example is a consortium of Welsh pension funds giving Schroders Capital a ￡400m allocation to positive impact projects in Wales, including local employment, affordable housing and healthcare.

Africa-led blended finance models mobilizing billions (via ImpactAlpha ): Aakif Merchant of Convergence Blended Finance highlights three success stories of African DFIs and MDBs launching innovative new models for the continent. It's positive to see solutions emerging from Development Bank of Rwanda (BRD) PLC , Trade and Development Bank Group - TDB Group and African Development Bank Group to increase the flow of capital to the continent.

IMPACT MEASUREMENT & MANAGEMENT

Are fund managers ready for impact accountability? (via ImpactAlpha ) As the field of impact measurement develops, there are growing calls for enhanced impact accountability for managers. Innovations in measuring impact (e.g. 60 Decibels ), impact verification (e.g. BlueMark ) and impact norms (e.g. Impact Frontiers , Operating Principles for Impact Management, 2X Global ) make holding enterprises, financial institutions and fund managers genuinely accountable for impact as well as financial performance a growing possibility. This recent Q&A with Tristan Hackett of BlueMark provided some interesting colour on the issue.

SECTOR-SPECIFIC CONTENT

• Examining the Fragility of the AgTech Ecosystem Behind the Headline Numbers (via ISF Advisors ) - recent setbacks for many AgTech models in emerging and frontier economies underscore the challenges that remain in a rapidly growing ecosystem. Comparing AgTech to other ecosystems serving low and middle-income populations (such as microfinance and PAYGO solar), this report highlights the large differentiation in maturity of ecosystems in the Global South. Brazil and India are clear front-runners (excluding China), while Sub-Saharan ecosystems remain relatively immature even in Kenya and Nigeria.
• How Do We Reach 80 Million Women and Increase Their Incomes by 30%? (via FinDev Gateway ) - Greta Bull of Gates Foundation shares their latest thinking on building an inclusive financial ecosystem benefiting vulnerable women globally. Shifting the discussion from microfinance to a more holistic approach focused on a range of potential sources of capital is welcome, encompassing informal credit, fintech, cash transfers and savings. Similarly, reframing the narrative beyond "assess" to focus on "affordability" is needed in a world with a proliferation of expensive consumer fintech products. The call from a leading donor for donors, currently spending $10bn a year on financial inclusion in Africa, to get more for their money is refreshingly honest and self-reflective.
• Empowering Small Giants: Inclusive Embedded Finance for Micro-retailers (via CGAP ) - useful summary of business models unlocking the potential of FMCG and other micro-retailers in emerging markets. The theme of digitisation enabling embedded finance is one we see through our fund investments in managers such as Quona Capital , Accion Venture Lab and Lendable .
• UN Report Records First Drop in Energy Access in Decade (via International Institute for Sustainable Development ) - a somewhat sobering note to end on, with The Energy Progress Report 2024 finding an increase in 10m people without electricity globally from 2021 to 685m in 2022. This is driven by population growth exceeding new connections in some regions (particularly Sub-Saharan Africa), the global energy crisis, inflation and growing debt distress in many low-income countries.

Thanks for reading!