Taskforce launch for establishment of the Zambia National Advisory Board: An Impact Revolution movement has arrived in Zambia.

On 12 December, 2018, the Global Steering Group on impact investment (GSG) with support from IIX Chapter Lusaka and 4IP Group brought together 45 various stakeholders[1] of the ecosystem to discuss the impact investing movement in Zambia and constitute a taskforce for the establishment of a National Advisory Board (NAB)[2].

Among the dignitaries’ present were the Hon. Minister of National Development and Planning (MNDP), the permanent secretary for the MNDP, Chief Executive Officer and Marketing Development Director for GSG, Head of Economic Growth, DFID and the Chairperson of the taskforce of the NAB.

In his welcoming speech, Amit Bhatia, CEO of GSG thanked everyone present and expressed strong optimism about the future of impact investment movement in Zambia. The GSG is present to fully support the impact investment movement in Zambia. He further expressed his belief that the establishment of a NAB will be a necessary vehicle between local and global actors focused on directing private capital to public purpose. The Honorable Minister also expressed strong interest and pledged his support on behalf of the Government of The Republic of Zambia for the initiative.

After the welcoming speeches from DFID’s Representative and the Chairperson of the GSG Taskforce for the Zambia NAB, Krisztina Tora, the Marketing Development Director for GSG delivered a presentation on state of impact investment industry in Zambia which is estimated as of 2015 at USD 1.8 billion[3]. Further breakdown indicates that USD 157 million accounts for capital deployed by private impact investors while the remaining amount of USD 1.7 billion accounts for capital deployed by Development Finance Institutions (DFIs). She further highlighted the purpose and activities of the NAB and shared a few key success stories from already existing NABs particularly the South African NAB which currently is the only operational NAB on the African continent.

After the presentation, the moderator opened the floor for an interactive discussion on the matters arising from the presentations and the speeches. Some of the observations and contributions made include;

  • Pension funds are among the biggest suppliers of capital in Zambia. However, their current focus is limited to liquidity and capital preservation. Therefore, there is need to have them on a board and influence their decisions approach to risk, return and impact. 4IP Group stands ready to share its on-going experience engaging the Swiss Pensions funds with the Zambian GSG-NAB Taskforce.[4]
  • In order to have a successful NAB in Zambia, there is need to involve the government from the onset. In addition to the already expressed support from MNDP at the GSG event in Lusaka, however the GSG Taskforce will need to follow-up with the Ministry of Finance (MOF) as a follow-up to IIX Chapter Lusaka’s presentation of the GSG idea earlier this year for the Director of Economic and Finance Management and her whole department.
  • When it comes to the demand for capital, there are many growth-oriented enterprises in Zambia, however they need more hands-on support to become investor ready as 4IP Group is already doing with its Zambia Portfolio companies.
  • There is need to create a special vehicle to leverage the funds laying idle in Zambia for impact. For example, The UK government seizes millions of pounds from dormant bank and building society accounts to help it to meet existing funding commitments to “build a fairer society”.[5]
  • Another way of leveraging is to educate young social entrepreneurs about these windows of opportunity.
  • Among the biggest challenges facing Zambian impact investing opportunities are;
  1. Access to big pipeline (i.e. most enterprises are early stage and therefore in many cases not yet investment ready)
  2. Angel investment and Angel networks are not present in Zambia.

Upon the forthcoming establishment of the Zambian NAB the following issues could be addressed:

  • Day by day, Impact is becoming more important. Young people don’t want to work with companies that are not purpose driven[6]. In Zambia, human capital is also a challenge. Impact investing present an opportunity to address these concerns.
  • It is important to stress that impact measurement is an integral part of Impact investment. At the same time there is need to be clear on what impact investment is NOT.
  • There are several ways to make organizations (investees) measure their impact, for example by making it mandatory to report impact. Another way is the financial incentive because ESG measurement will open the investees for ESG oriented investors. This in turn will make it easier for 4IP Group to match the purpose driven enterprises with ESG investors such as Family Office and Pension Funds who we are currently engaging.
  • There exists no trade-off between short term and long-term impact.

The meeting ended with a call from all invited guests to volunteer to be part of the proposed Taskforce for the NAB. Without hesitation, 18 people stemming from 5 building blocks of the Impact Investing Eco-System expressed an interest in participating. Consequently, the meeting led to the Constitution of the GSG taskforce which will commence drafting a business plan for the establishment of a GSG NAB in 2019.

The constituted Taskforce team met for the first time on the 21st of December at Yemeni leadership centre, at Stanbic Bank, where they planned for the exciting Impact Revolutionary tasks ahead in Zambia as well as in collaboration with the sister NABs in Accra, Nairobi and Cape Town.

Haggai CHOMBA

4IP Group Zambia

 

 

[1] Stakeholders represented players from 5 pillars of the ecosystem namely supply of capital, demand for capital, market builders, intermediaries and policy/government.

[2] National Advisory Board is that national go- to organisation for impact investment, leveraging the power of the collective for increased impact.

[3] Zambia is a favoured destination for impact investors in the southern Africa region. It’s the second highest recipient ( after South Africa ) of DFI capital and third highest (after SA and Angola) of private impact capital

[4] See the following 4IP Group resource: http://4ipgroup.org/wp-content/uploads/2018/10/Supply-of-Impact-Capital_Pension-Funds-Next-Frontier.pdf

[5] Source : https://www.ft.com/content/395216fc-f096-11e7-ac08-07c3086a2625

[6] Source: https://businessfightspoverty.org/articles/most-millennials-will-only-work-for-purpose-driven-firms/

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