The Impact Investing Approach
IMPACT INVESTING–AN EMERGING MARKETS APPROACH TO BAM by Dell Hines
Frontier Markets – The new emerging market – investment in Frontier-Africa is increasing rapidly partially due to economic downturn in North America. Impact investing fills the space between philanthropy and traditional investing. The focus is positive financial, social, and (for us) kingdom impact; an opportunity to disciple investors.
How it works:
- Screening/Due Diligence
- Management Assistance
- Exit – Repayment of debt
Barriers - Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa by Dambisa Moyo
– an argument against aid that encourages corruption and is not helpful to the African people.
Types of Aid:
- Humanitarian/Emergency Aid
- Charity-based Aid
- Systematic Aid – government to government transfers – encourages corruption and is not helpful. Micro-people want things “gifted” – such aid is considered to be the curse of Africa. It discourages free enterprise.
It was noted that in crisis situations, Westerners go in to a country and do all the work which puts the nationals out of business. We should be helping the national business people get on their feet again so they can put their country back together.
IMPACT INVESTING – AN EMERGING MARKETS APPROACH TO BAM
We need to go from donor-based charitable projects to private investments via pooled investments.
- On the ground team
- Overcoming the “aid” mindset
- Enabling the national mid-class to lead; Africa equity participation
What’s in it for Jesus?
- On the job training/discipleship
- Back-loaded incentives to fund mission work
Targeted support from the West
- Financing pooled investment
- Board seats
- Paid Consulting
- Control of Key Operational Business Processes, i.e., accounts payable
How do we hook people for investment?
- Some may want to go see the project
- Security issues need to be confronted
- Either address an item above (after repeating the issue in the note) or
- Add a problem statement to the mix above.
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