Launch of social investment exchange set to raise activity

Sunday June 5 2011

By COSMAS BUTUNYI, Special Correspondent

The East African region is set to see more capital inflows with the launch of the Kenya Social Investment Exchange, a platform for brokering deals between entrepreneurs and foreign investors.

This will see the flow of more investments that consider social and environmental impact as well as financial returns as key.

A recent report prepared by JP Morgan and the Rockefeller Foundation shows impact investment is on its way to becoming the world’s “emerging asset class of the decade,” raking in up to $667 billion in profits during the period under review.

With the launch of the Kenya Social Investment Exchange (KSIX) in Nairobi, the region is positioning itself to ride on this new wave.

According to Justus Macharia, the chief executive of KSIX, the firm, which was formally registered as a company limited by guarantee in 2009, will not only play an active role in brokering social investment deals, but also find varied uses in information sharing, academia, and even private companies.

“Through a central institution like KSIX, there will be a discovery of many social enterprises that prior to this launch were unknown,” Mr Macharia told The EastAfrican. Social enterprises will undergo a thorough customised vetting through the exchange before being presented to impact investors to identify and invest in them.

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He added that this would make it easier for investors, ranging from foreign and domestic investors to private companies looking for an alternative way of utilising corporate social responsibility funds, to support social enterprises.

Among the growth areas that the KSIX boss sees for impact investment in the region is in addressing gaps in social infrastructure.

“With an increased appetite for sustainable development projects, many developmental organisations will have to embrace business approaches in delivering their social mission,” he said.

The increase in the number of venture capital firms operating in the region is also expected to translate into the emergence of more small and medium enterprises, some in the social services sector.

The launch of the exchange heralds the intensifying of research into impact investing in the region, in which it is partaking. Already, KSIX has released a market survey report on impact investing in Kenya, the first ever in the country, and which reached 40 investors and 70 social enterprises.

The exchange is providing leadership to the impact investment sector in the region in more ways than one, which includes the formation of the East African Social Enterprise Network (EASEN), which has been undergoing incubation under the KCA University over the past one year. It has also held workshops in Kenya, Uganda and Tanzania.

Mr Macharia said that although impact investing is currently budding in the country and in East Africa, it is attracting a keen interest from the academic world, with universities taking an interest in the subject and sector.

“In Kenya for example we now have a one-year MBA degree programme on Social Entrepreneurship and Management, he said.

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