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Nov 3, 2015 4:45 EST

Africa is the new frontier of impact investing

iCrowdNewswire - Nov 3, 2015

Africa

 

In the endless search for global development opportunities, the supply is limited for the first time in history. Africa is truly the last frontier.

In fact, 44 percent of its population in 2006 was 15 or younger — and members of the millennial generation synonymous with innovation — making Sub-Saharan Africa the youngest region in the world.

And this youth population is eager for opportunities — but without sufficient food or access to education, they can’t seize them. Instead, civil unrest only proliferates, furthering economic turmoil, the cycle of poverty, and the divide between countries with and without Internet access.

As a result, Africa has caught the eye of global impact investors ready to jump-start the continent’s economies. By creating opportunities for full-time employment and entrepreneurship through impact investing, we can change the cycle to one of ownership and pride.

Unlocking new, responsible investment opportunities in Africa

Investing in impact opportunities in Africa can give its young, massive, and capable workforce the education it needs to build businesses and grow sectors. Currently, the continent has an extraordinarily low amount of infrastructure, which has strengthened the digital divide and created a high barrier to economic growth.

That’s because the cost of broadband is disproportionately high. There’s no true electric grid in many countries, particularly rural ones, so civilians can’t power devices or access information through the Internet.

Initiatives like Microsoft 4Afrika and Initiative for Global Development, focused on closing the digital divide and strengthening commerce, are crucial. The simple installation of solar panels can power entire villages so people in rural areas can access the wealth of information available online.

Through accessible broadband, fathers don’t have to go on three-day trips to find work in a city. They can compare their products online and sell them outright to a predetermined buyer. Accessible broadband is as fundamental as roads and tunnels. When you invest in a project or a business that affinity groups are thrilled about, such as school systems, clean water, or solar panels, it magnifies as economic growth and prosperity.

By investing, you create the opportunity to generate a return and reinvest that money all over again. On a larger scale, the velocity of that money becomes much more powerful and sustainable.

Impact investing and the African economy

In terms of impact, Africa is a blank development canvas because there’s no legacy technology to contend with from an infrastructure standpoint. Emerging markets like Africa skipped landline phone technology because they were too poor to lay the foundation. Instead, they went straight to cellular.

Including Africa in today’s digital leap is much more promising and vital than 25 years ago. Armed with a robust labor force and progressive groups of women business leaders, Africa is ripe with opportunity and longing for change. And investments, especially those related to the Internet, have already made enormous strides in the following areas:

Read more: African Angel bootcamps to mobilise early-stage investors

Education and healthcare: Impact investing has positively affected healthcare and education in terms of quality and access, which has been primarily driven by the Internet. Setting up a videoconference with a Western doctor or hospital to show a villager’s symptoms is a novel and life-altering idea. In addition to being able to read and access medical literature, villagers can now get correctly diagnosed and treated much faster, limiting the reach of illness and disease.

Entrepreneurship: I’ve reviewed many business plans that Africans are producing, and I’m constantly impressed. When asked, “How did you do such a great deck presentation?” they respond, “I was on Prezi, on the Internet.”

Accessible Internet has equipped people to set up businesses in their local communities, which in turn has fueled innovation and the immersion of the brain trust in Africa. Innovation once flowed from the West across the globe, but as the entrepreneurial mindset spreads in Africa, it will start moving both ways.

Society and the economy: Seeing African villagers build a business with the help of the internet is uplifting. They have an insatiable appetite for using information to help improve their lives and build African-based businesses, which attracts more money and better access to their local communities. A quick search on Kickstarter for African-based companies and other businesses looking to improve society on the continent yields pages of search results.

Ushering in the Next Wave of Change

Because impact investing is still in its beginning stages, new investors can help make a mark in a number of ways. To leave a lasting impression on the economy, investors will have to focus on a few key goals:

Reducing global conflict: Many civil wars are fought over poverty, the lack of opportunity, and a tremendous dislocation of wealth. When one group has control over the country’s funds while everybody else is incredibly poor, cultural problems escalate.

The US State Department has made strides through organisations like OPIC, the Overseas Private Investment Corporation, to funnel investments to areas that are strategically important and desperate for advancement. As economic opportunity flourishes, uprisings diminish.

Read more: Is impact investment the key to fixing Africa’s socio-environmental issues?

Creating opportunities for full-time employment: Meeting people’s basic needs through full-time employment will be the ultimate challenge. But providing jobs through opportunities such as travel tourism, for example, creates a strong conduit to economic prosperity and less conflict.

This ties back to affinity groups — people who understand and have a stake in local issues. Who wouldn’t want to invest in a program that would benefit his homeland or village? Africans just don’t have the platform or access to create meaningful change.

Leveraging social media to bring insights to the world stage: Once information is made available, the next step is making action simple and ensuring that people can surface it from the sea of online information. That’s where social media comes into play.

Offering engaged North Africans the chance to collectively invest in a local company or project will put an entrepreneur in business and resonate across communities — and it couldn’t happen without social media spreading actionable knowledge and creating awareness.

Transferring wealth to socially aware and active millennials: Once we build the infrastructure, generate awareness, and build momentum, the next movement is engaging the private sector in what were traditionally public sector initiatives. Those are the types of projects that will see the US$20-trillion to US$30-trillion transference of wealth to millennials and will undoubtedly become a large portion of their asset allocation.

The United Nations’ sustainable development goals will also drive a lot of economic activity. These 15 goals are the mandate of the UN for the next five years, focusing on access to capital and quality healthcare, which translates to poverty alleviation for African countries.

Impact investing is about more than seeing a return on your money. It offers the chance to break down barriers to education and entrepreneurship and promote sustainable economies. Africa is the final frontier for opportunity, and with a collective effort, impact investors can bridge the digital divide and combat poverty — all while making a smart investment.

Frontier 100 Forum recap: African business in the world-class space

IGD’s Frontier 100 Forum took place in Washington D.C. from Oct 19-21, 2015. The forum focused on strengthening the African private sector and bringing African business into the world-class space.

Contact Information:

Vincent Molinari

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