Adrian Merryman, Chief Development & Impact Investment Officer at VisionFund International, shares his experiences from the SOCAP 2018 event
The impact investment movement that SOCAP has been at the centre of, continues to build, and it was a pleasure to meet with such a large group who would like to see our world use its accumulated assets to effect social justice.
The SOCAP18 conference took place at Fort Mason in San Francisco, CA, and brought together over 3,000 global innovators in business, finance, tech, international development and philanthropy, as well as other cross-sector practitioners.
While the event addressed the myriad of development-related topics of today, the conversations that I found most interesting and relevant to the work of VisionFund were those on impact investing, gender, transformative development, blockchain for impact and Africa.
On the topic of impact investment and development, there remains an expectation that impact related investment should be generating commercial returns. While some practitioners did offer that perhaps some of the return on these investments could be taken as impact dividends, it was most often stated as an afterthought and without real conviction.
While it is recognised that there is significant need in regions like Sub-Saharan Africa, there is little funding that has actually been placed there, and very very few seem to be making money in those really difficult contexts.
For example, I sat in a session focused on Investment in Africa. At the beginning of the session the moderator asked the audience if there were any who had invested in Africa. In a room full of about 80, roughly a third raised their hands. When he asked if they had invested for the purpose of impact, the hands remained up. But, when he asked if any had made a profitable investment, I was the only one whose hand remained up.
At VisionFund, our investments in Africa make up over 20% of our microfinance portfolio. The region as a whole is 97% sustainable, generating returns that we are able to re-invest in providing financial facilities to the communities where we work. Nearly 40% of VisionFund’s global borrowers are in Africa, where we operate through 11 microfinance institutions (MFIs) – serving rural areas where the greatest poverty exists, the highly vulnerable agricultural sector (42% of clients) and vulnerable women (57% of African borrowers are women).
Our MFIs continue to create innovative products to meet the needs in the market; from agri-loans to solar to financial solutions for refugees and more. And there is still plenty more work for the impact and development experts to do.
My net take-away is that the first step on the Impact Investment journey has been achieved. We have a large group of investors and hundreds of billions of dollars now focused on the importance of using the global asset base in new and interesting ways to achieve social impact.
However, the next step, I feel, is to seriously contemplate where those funds are most needed, and recognise and address the road-block of not being able to deliver risk-adjusted commercial returns when investing in high-risk contexts.