Thursday, March 21, 2019

Some truths about impact investing

Development impact investing - social enterprises that seek to combine financial returns with positive impact predominantly on the lives of poor or those at the bottom of the pyramid - has been around for nearly two 15 years. What is its balance sheet?

1. How many predominantly poor focused businesses supported by impact investors have reached $1 bn $100 mn $50 mn in revenues?

2. How many low-cost school or hospital or diagnostic or restaurant or grocery chains have reached thousands hundreds tens of franchises?

3. How many social enterprises have had significant enough impact on hundreds tens of millions of poor people?

4. How many social enterprises have created millions thousands hundreds of productive jobs?

5. How many innovations with meaningful impact on persistent development challenges have been scaled up by impact investors through social enterprises?

6. How many development impact investors have consistently made money outside of micro-finance?

7. How many impact investors have made money in any sector in Africa?

8. How many social enterprises have been able to create a widely-use labour market matching platform for unskilled jobs in any local market? 

9. How many social enterprises have been able to build a commercially viable business out of making available information for different kinds of stakeholders - farmers, traders, fishermen etc?

10. Even on fintech, what innovation has impact investing realised on financial inclusion that has gone beyond the success of microfinance? Give one example of a financial instrument that has scaled  (into becoming a mainstream instrument like micro loans) from fintech that responds to the specific requirements of poor people?

Clearly something wrong with the existing model. Metaphorically, impacting the Bottom of the Pyramid (BoP) requires looking below the submerged ice-berg. Conventional impact investing is all about seeing and searching only the tip of the ice-berg.

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