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Does Africa Need Sustainable Investment?

| Tuesday June 8th, 2010 | 5 Comments

By David Abraham

The IFC and EMPEA recently hosted the Global Private Equity Conference in Washington, DC.  The annual event draws in hundreds of professionals from both the institutional and investment sides of the private equity world and I was fortunate enough to attend.  Everyone was focused on how how fund managers can best attract capital for business growth in developing countries in the wake of the financial crisis.  For me, the best part of the event was interacting with the many attendees from sub-Saharan Africa to learn more about the ongoing investment trends on the continent.  A venture capitalist from Nigeria even gave me a primer on “post-conflict investing” in Sierra Leone and Liberia.

One of the interesting conversations I had was with Graham Sinclair, the owner of SA based investment advisory firm SinCo.  He has also just launched the Africa Sustainable Investment Forum (AfricaSIF) with 11 other Africa-based advisors.  When I told him about the position I took in my last post on 3P regarding the World Bank loan to Eskom for a coal-fired power plant, he was dismayed.  He not only pointed to the governance issues posed by the ANC (SA’s leading political party) involvement in the deal, but further stressed that, sometimes, South Africa obscures its advanced economic standing to shirk the ideals of sustainability.  This in the face of preparing to host the World Cup – an exercise reserved for only a handful of nations.

With AfricaSIF, Mr. Sinclair is seeking to create an independent network of pan-African investment practitioners committed to the ideals of sustainable investment.  AfricaSIF, a non-profit organization, is aiming to create a forum where private firms, government institutions, venture philanthropists, and individuals (including those in the African diaspora) can begin to think about and act upon the future of sustainable investment on the continent.

AfricaSIF is holding its kick-off event (no pun intended) at the Johannesburg Stock Exchange on June 9.

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David Abraham is an MBA candidate at the Robert H. Smith School of Business at the University of Maryland.  He is a founder of the Emerging Markets Association at Smith which seeks to build a greater understanding of free-market opportunities in frontier markets.


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  • RY

    Thank you for sharing David. As an African passionate about sustainable investing, I strongly believe that through its mission to promote the systematic inclusion of environmental, social, and governance dimensions in the investment process; as well as through its Network / Knowledgebase / Advocacy structure, AfricaSIF will positively contribute to the African continent's sustainable development.

  • KK

    It's great to see so many MBAs like yourself interested in emerging markets investing! Your discussion with Graham regarding the coal-fired power plant touches on an interesting debate – is it necessary to sacrifice ESG factors in order to achieve economic progress? AfricaSIF takes the stance that it's possible to produce profits while investing sustainably. By bringing like minded individuals together and showcasing all of the positive work that has been done to date, hopefully the organization will convince all of the skeptics out there that sustainable investing is not only an option but the only option.

  • BP

    With the start of the World Cup of Friday, the world's eyes will be on Africa. It's extremely important at this point to have a forum where socially responsible investors can meet and share their ideas about sustainable development. AfricaSIF will offer this forum to investors and will provide an extensive knowledge base of SRI on the continent. Only through collaboration will we be able to accomplish what needs to be done.

  • MMH

    If one applies a global lens to the question of sustainable investment in Africa, the answer becomes an obvious yes. It is not difficult to empirically link purely profit driven models in Africa to negative environmental, social, and political consequences and today one can simply turn to the BP oil crisis to advocate the need for an entrenched commitment to sustainability. It seems that Sinclair and AfricaSIF have arrived in a timely fashion as the continent is ‘coming of age’ and that they understand that attractive returns on African investments are generally long-term commitments best matched with models rooted in sustainability. As they advocate for sustainable investment, they are cultivating an improved value chain for all stakeholders.

  • MMH

    If one applies a global lens to the question of sustainable investment in Africa, the answer becomes an obvious yes. It is not difficult to empirically link purely profit driven models in Africa to negative environmental, social, and political consequences and today one can simply turn to the BP oil crisis to advocate the need for an entrenched commitment to sustainability. It seems that Sinclair and AfricaSIF have arrived in a timely fashion as the continent is ‘coming of age’ and that they understand that attractive returns on African investments are generally long-term commitments best matched with models rooted in sustainability. As they advocate for sustainable investment, they are cultivating an improved value chain for all stakeholders.