Africa offers a strong investment case, and the impact investing industry has grown into a global movement with thousands of organizations and billions of dollars in investments globally. In Sub-Saharan Africa, where philanthropy and the business sector increasingly see social impact investing as an inventive solution to global development, sustainable investment has formed a strong niche. Impact investment is developing naturally, especially in East Africa. Similar to other developing markets, East Africa's private sector is anticipated to be essential in fulfilling societal demands, leading to a rising understanding that these investments are essential for addressing the social and economic issues facing the region.
Kenya: Given that it has the highest number of impact investors and the highest amount of impact money dispersed, Kenya continues to be the focus of impact investing in East Africa. The Global Impact Investment Network found that, excluding DFIs, there are at least 136 impact capital vehicles operating in Kenya. These vehicles are run by 95 impact investors who have at least USD 240 million invested in Kenya.
Uganda: Over the past ten years, Uganda's GDP has grown significantly, and the World Bank projects that as their purchasing power parity rises over time, Uganda will become more attractive to foreign investors. The Global Impact Investment Network's research indicates that, after Kenya, Uganda has the second-largest impact investment market in East Africa. Uganda has the second highest number of deals and capital disbursed for social and environmental impact, with 119 impact capital vehicles and USD 54 million committed. Challenges include a less favorable business environment, talent acquisition difficulties, and informal businesses, which can impact investors' ability to invest.
Rwanda: Rwanda has experienced rapid economic growth due to its Asian Tiger-like model and efficient, least corrupt government. Impact investors have listed Rwanda as a key target country, with around 3% of non-DFI impact capital disbursed in East Africa being placed in Rwanda. However, allegations of paramilitary relations and ethnic hostilities remain a major concern.
Tanzania: Tanzania has grown in popularity as a destination and is a key component of the East African impact investing scene. Notwithstanding encouraging developments, Tanzania continues to face a number of unfavorable circumstances, including the challenge of finding skilled workers, the sizeable number of unofficial enterprises, and the erratic and sporadic nature of government engagement in the private sector. With at least 129 impact capital entities run by 92 non-DFI impact investors who actively explore Tanzania and more than USD 2.5 billion in regionally committed capital that might be deployed in Tanzania, the nation has the third-highest number of impact investments in East Africa.
Africa is positioned as the impact sandbox of the world, with a compelling investment case driven by a growing recognition of the importance of addressing root causes of social and economic challenges. East Africa, in particular, is emerging as a hub for impact investing, with countries like Kenya leading in the number of impact investors and capital deployed. Uganda and Rwanda also present significant opportunities, despite some challenges, while Tanzania is gaining traction in the impact investment landscape.
If you are an investee from Kenya, Uganda, Rwanda, or Tanzania seeking to make a meaningful impact through your initiatives, we invite you to contact us. Let’s collaborate to drive sustainable growth and address the pressing challenges facing our communities.