The Nigerian National Advisory Board for Impact Investing (NABII) has unveiled a report titled "Investing for Impact in Nigeria: A Deep Dive into Agriculture, Education, and Health Sectors." The report sheds light on the limitations of the Nigerian financial market in meeting the funding requirements of Micro, Small, and Medium Enterprises (MSMEs), which include challenges related to equity funding, grants, low-cost debt financing, and patient capital.
This report was introduced at the 6th Annual Convening on Impact Investing in Lagos. It presents recommendations for investing in MSMEs, particularly those owned by women, and suggests leveraging pension funds to mobilize capital to foster growth in these sectors.
The research, conducted in collaboration with the Nigerian Economic Summit Group (NESG) and NABII, supported by the Global Steering Group for Impact Investment (GSG), OTT Impacto, and funded by the International Development Research Centre (IDRC), reveals that a substantial portion of impact investments in Nigeria are driven by international investors. However, there is a local perception that these investments fail to yield significant financial returns.
The report provides valuable insights into the realm of impact investing, offering policy suggestions for unlocking the potential of the Agriculture, Education, and Health sectors. It aims to promote the integration of impact investing into the Nigerian financial landscape and attract private capital to assist in achieving the Sustainable Development Goals (SDGs).
Etemore Glover, CEO of NABII, underscores the importance of this report in understanding the prerequisites for unlocking investments with impact across these crucial sectors. She stated, "The Impact Investors Foundation, along with its partners, remains committed to enhancing awareness, garnering stakeholder support, and promoting the development of enterprises designed for impact funds." Glover also expressed that the report would chart the course for necessary policies, interventions, and collaborations among key stakeholders to elevate the Impact Investing sector in Nigeria.
The report's findings demonstrate that, over the past five years, the Agriculture sector has received $799.8 million in impact investment, the Financial Services sector has secured $729.69 million, and the Energy sector has attracted $372.71 million. Nonetheless, investments in the Education and Health sectors have diminished since 2018.
The report also highlights the insufficient allocation of pension funds to asset classes associated with impact investing. It proposes including impact investing criteria in investment guidelines for pension funds, increasing asset allocation to impact investing products, enhancing FUND I and VI for the impact investing market, and permitting direct investment in locally listed companies that adhere to environmental, social, and governance (ESG) standards.
During a panel discussion at the report's launch, Agudah Oguche, CEO of the Pension Fund Operators Association in Nigeria, shared that pension operators express a keen interest in investing in impact-focused businesses. However, their primary concerns revolve around the safety and returns on their investments, a natural consideration given the competitive nature of their industry.
Dr. Olusegun Omisakin, Chief Economist at NESG, emphasized the fundamental role of research founded on evidence in shaping policies designed to reduce poverty and cultivate a more inclusive economy. He stressed the significance of posing pertinent questions to comprehend the needs of key stakeholders and strengthen advocacy efforts.
Lolade Awogbade, Sustainability Specialist at the Development Bank of Nigeria (DBN), elucidated the bank's funding model and the creation of Impact Credit Guarantee, a subsidiary of DBN established in 2019 to empower banks to extend loans to MSMEs. She accentuated the vital importance of preparedness among MSMEs when approaching financial institutions.
The release of the "Investing for Impact in Nigeria" report marks a significant milestone in advancing the Impact Investing sector in Nigeria. The insights and recommendations contained within the report are poised to inform policymakers and other stakeholders on how to create a more favorable environment for Impact Investing to thrive. The full report is accessible for download here: [Link to the report].
Play audio
No comments