Mobilising private capital for public good
Government spending and philanthropy alone are not enough to drive positive societal and environmental outcomes at scale. However, there is enough capital managed in the private sector that can and must be mobilised for public good if we are to deliver on the SDGs and the global climate agreements.
A fairer, more equitable and stable world requires greater capital flows to emerging markets. They are the most vulnerable to climate change and where most people are affected by extreme poverty. They are also where some of the greatest opportunities exist.
Around half of all impact funds already invest in emerging markets, but much more needs to be done to mobilise private sector capital into solutions with the pace and scale required to achieve the SDGs by 2030.
There are already many proven financial structures that have the creation of positive impact as a goal, alongside risk and return considerations. These include:
Impact wholesalers are market developers that provide debt and equity investment through financial intermediaries. Through our work these have been established across Africa, Asia and Europe. Cumulatively they are channelling over US$2.5bn to address issues such as homelessness, elderly care or a just energy transition.
Results based finance instruments, including social impact bonds, now exist in over 40 countries. They address structural social and environmental issues. In the UK, it has been demonstrated that every £1 spent by the government has generated over £10 of public value.
Many further financial innovations have been proven to channel private capital at scale to deliver public good. Through-out the GSG Impact Partnership, we are collectively working on replicating and scaling them.
The SDG and Just Transition financing gap has increased, and capital is still failing to go where it is needed, at the volumes required.
The GSG Impact Partnership is designing and implementing SDG aligned investment vehicles. These are designed to address structural challenges to SME financing in emerging markets.
The $75m Ci-Gaba Fund of Funds, sponsored by GSG National Partner, Impact Investing Ghana, is designed to support the development of the West African venture capital ecosystem.
The Nigeria Wholesale Impact Fund, designed to scale to $1bn, and sponsored by the GSG National Partner in Nigeria, will ultimately finance social enterprises and MSMEs in sectors including agriculture, education, health and energy.
A $150m credit guarantee scheme in Zambia, sponsored by GSG National Partner Impact Investment Zambia, aims to enable financial institutions to extend credit to smaller businesses.
Green, Social, Sustainability and Sustainability-Linked (GSSS) Bonds could play a key role in helping developing countries fund progress towards the sustainable development goals (SDGs) and a Just Transition to Net-Zero.
Governments have a key role to play. Acting as a direct market participant, regulator or market builder, the public sector can support each of the key pillars in the economy to move faster towards creating positive impact.
They can incentivise greater pools of capital to flow towards tackling key societal and environmental issues, from the delivery of better health and education outcomes, to quality job creation or building urban environments with quality habitat for all.
Impact transparency is on a powerful path. There are over 150 disclosure measures now in place across 35 countries. The International Sustainability Standards Board has opened its first two consultation drafts, and with GSG Impact engaging with low-and-middle income countries, we can ensure that all leaders, in all kinds of countries, have a voice.
Green, Social, Sustainability and Sustainability-Linked (GSSS) Bonds could play a key role in helping developing countries fund progress towards the sustainable development goals (SDGs) and a Just Transition to Net-Zero.
The SDG and Just Transition financing gap has increased, and capital is still failing to go where it is needed, at the volumes required.
The 2024 Africa Impact Summit will bring together over 500 international delegates and thought leaders, providing both promising and established impact practitioners, fund managers, asset owners and institutional investors with an opportunity to disseminate their work, share ideas and interact with innovators, entrepreneurs, project promoters, multilateral institutions, foundations and policymakers in Africa.
The summit provides a platform for the Ghanaian financing ecosystem to make significant progress on local ecosystem-building initiatives that can increase the supply of funds for impact and drive the attainment of the SDGs.
Time to accelerate the full potential of DFIs to mobilise private investments for the SDGs and a Just Transition
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