From Foraging to Domestication
A trip down history lane reveals that all humanity was once engaged in similar activities of hunting and gathering. Yes, some many years ago depending on which history book you read, we were all hunters and gathers doing what is commonly referred to as foraging. However, due to climatic changes and need for more food for the growing population, human beings started domesticating some plants and animals in order to meet their food requirements. Continue reading “Path To Civilization: The Agricultural Revolution Simplified”
The impact investing space is growing in Africa and could be the trigger this developing continent needs for faster sustainable development. As the MDGs are being replaced by the SDGs in 2015, new development concepts and policies are being floated for Africa to adopt. Impact investing could be one of the best strategies if embraced and well implemented across the continent.
Most African economies have poor basic public services in terms of healthcare, education, infrastructure, water, energy, housing and technology[i]. Efforts by the governments to improve the conditions in the past have been met with budget constraints and lagging implementation marred by corruption.
Nevertheless, many African countries have in the recent past adopted the Public Private Partnerships strategy as a way of bringing on board the private sector into the national development agenda. There is also increased democratization of governments as well as concerted efforts to tackle the security scare in most African countries. Both these initiatives have led to an increase in Foreign Direct Investments to the continent and especially in Sub Saharan Africa[ii]. This has eventually contributed a great deal to improving the situation on the ground, but still left some social gaps unattended to.
NGOs and other donors on the other hand have been doing a lot of work in Africa in trying to alleviate the poor economic status and fill the social gaps left. Major areas covered by donors and NGOs usually are in healthcare, education and sanitation[iii]. However, these interventions have been coming in terms of short-term projects that die out after a while, thus leaving the people drawing back slowly to their former poor economic state.
Based on the shortcomings from the donor dependency and the short-term effect of NGO projects, Africa therefore needs an alternative strategy to boost its economic development sustainably. It is on this background that impact investing is being advocated for; due to its focus on both financial returns and social good for the communities involved and the economy as a whole[iv].
Gaining momentum from 2007, the impact investing concept has made major milestones both in terms of funds mobilized an invested as well as the geographical coverage. South Asia and Sub Saharan Africa are the current major target regions by the asset managers and investors in the impact investing space. The focus is on improving livelihoods, conserve the environment and help mitigate some of the chronic social problems in those regions.
That combined focus on social benefits and financial returns fits well to the challenges facing Africa as a continent. The capitalistic economies in most countries in SSA have resulted in a few individuals growing wealthier each day at the expense of social welfare of the masses. With the requirement under impact investing to specifically measure the social impact from investments; investors will then be obliged to factor in environmental and social benefits to their investment plans. This will ultimately help to sustainably deal with the social challenges Africa faces, even as the investors grow their wealth through financial returns.
Africa is a frontier market and the opportunities it presents can best be capitalized on when the social welfare of its population is at the core of the development agenda. Impact investing presents such a strategy that is all inclusive in terms of social benefits and financial returns. As we focus on having sustainable economic development, it will be a great idea to have governments in Africa embrace the idea and formulate legislation that supports impact investing.
Article originally published on www.economywatch.com
[i] Liz Patterson (2014), ‘Building the impact investing market in sub-Saharan Africa and south Asia’ http://www.trust.org/item/20140408111517-zqns7/?source=spotlight
[ii] Ernst & Young (2014), ‘Foreign direct investment in Sub Saharan Africa on the rise’ http://www.ey.com/GL/en/Newsroom/News-releases/News-foreign-direct-investment-in-sub-saharan-africa-on-the-rise
[iv] Global Impact Investing Network (2014), ‘WHAT IS IMPACT INVESTING?’ http://www.thegiin.org/cgi-bin/iowa/investing/index.html
By AKIN OYEDELE:
Byron started the tradition in 1986 when he was the Chief U.S. Investment Strategist at Morgan Stanley. Byron joined Blackstone in September 2009 as a Senior Advisor to both the firm and its clients in analyzing economic, political, market and social trends. Continue reading “Byron Wien’s 10 Surprises for 2015”
Commission for Revenue Allocation intends to change the way revenues are allocated to counties. Their proposal, no. 1 below has however been countered by another allocation formula, no. 2 that has been floated by IBP.
- Allocate revenue based on the achievement of revenue collection targets for each county – the high achievers get high revenue allocation from the central government.
- Allocate revenue based on the marginal growth in revenue collection for each county – the higher your revenue margins grow year-on-year, the higher the allocation you get from the central government.
African continent is an emerging market having a myriad of investment opportunities with potentially very high returns. It is an economic power-house that has all it requires to sustain itself through intra-Africa trade. As a continent, we are rich in natural resources that should be utilized properly through wise investment in the continent. Continue reading “The Pan-African Investment Dream”
On 8th July 2014, the Central Bank of Kenya set the first KBRR at 9.13% and it became effective from that very same day. As a move to foster transparency in Kenyan financial sector, the reference rate is both timely and effective. Continue reading “Kenya Banks’ Reference Rate (KBRR) Explained”
The battle between Equity Bank and Safaricom seem to just have started. Even after the CAK approved the issuing of the slim SIM cards by Equity Bank for a trial period of one year, the parliamentary committee on Energy, Information and Communication on Wednesday differed with them and requested for a technical audit to be done first before the commercialization of the project.
It appears that Equity Bank has the regulator’s backing whereas Safaricom is lobbying through parliament. Whoever wins this battle is yet to be determined as the tag-of-war continues to take new shape everyday. However, the economic implications of the same can easily be forecasted.
In the event that Equity Bank gets its wishes granted and the roll out of the slim SIM cards is successful, the bank will see its top line (read revenues) increase. With efficient management of its costs, the bank will also experience a growing bottom line (read profits). As investor sit and watch the top and bottom line expand, their appetite for Equity Bank shares will be aroused and as they demand more of it, its share price will shove up.
Things will not be bright for Safaricom in this case as it loses its customers to Equity Bank on the money transfer business line (Mpesa). Both its top line and bottom lines will shrink significantly bearing in mind that Mpesa contributes about 36% of its total revenues. The investors watching this stock will opt to shift their money to other investment vehicles or better still to other growing stocks in the market. The obvious outcome of this shift will be a decline in Safaricom’s share price and this goes down together with its shareholders’ wealth.
In my opinion, the one year trial period is too long and Equity Bank will do all it can to make sure that it registers as many clients as possible to the new slim SIM card within the given time frame. Once numbers are large enough, the project will be too big to terminate for any “minor” errors that might be noticed during the trial period. Simply put, once Equity Bank launches the slim SIM card registration, the project will be as good as sealed into perpetuity and Safaricom will have to look for other innovative ways of combating the threat and maintain its revenue growth trajectory.
However, the two companies are not the only players in their industries. The threat will be felt by other banking sector and telecommunication sector players who will in return come up with counter measures to secure their market shares and profitability. It therefore means the battle is wider than it appears with only the two leading players representing their various sectors in the just began corporate war.
For investors, its time to go back to your financial planner and take a strategic position before its too late. Remember, you make money when buying and not when selling!