“Impact Investing: Investors Perspectives on Africa’s Fastest Growing Companies Revealed”

Date:

Skeptical Investor Perspective:
“Impact investing is nonsense. It’s a distraction from real economic development strategies like export-led growth and infrastructure investment. Instead of focusing on tangible drivers of economic progress, impact investors prioritize feel-good goals like women’s empowerment and financial inclusion, which do little to spur real growth. Look at success stories like China and Japan—they didn’t follow the path of ESG and impact investing. It simply doesn’t work.”

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Insider Investor Insight:
“The real challenge for African businesses lies in the myopic focus of so-called impact investors, particularly on the tech sector. While tech is an enabler, it’s not the end goal. Investors often overlook the importance of actually delivering essential services and products, instead fixating on technological innovation alone. Moreover, there’s an increasing demand for perfect ESG scores, which diverts resources away from addressing pressing issues like food insecurity and affordable housing. Combined with sky-high return expectations, many projects are doomed from the start. The traditional fund structure also fails to support African companies adequately, as exits are rare, and the model lacks the necessary long-term support.”

Amidst the unveiling of Africa’s Fastest Growing Companies for 2024, investors are split on the efficacy of impact investing and the direction of African economic development.

While some voices decry impact investing as a distraction from tangible economic strategies, others highlight its potential to drive meaningful change. One skeptic asserts that impact investing is “nonsense,” arguing that it sidelines critical development avenues like export-led growth and infrastructure investment. They question the relevance of ESG goals like women’s empowerment and financial inclusion, citing the success stories of China and Japan, which did not follow such paths.

In contrast, insiders offer a nuanced perspective, pinpointing the shortcomings in impact investing’s approach. They critique the myopic focus on the tech sector, noting that while technology is an enabler, it should not overshadow the delivery of essential services. Furthermore, they raise concerns about the increasing demand for perfect ESG scores, which they argue divert resources from addressing pressing issues like food insecurity and affordable housing. Combined with high return expectations, many projects face significant barriers to success. Additionally, they highlight the inadequacies of the traditional fund structure, which fails to provide the necessary long-term support for African companies.

As Africa’s entrepreneurial landscape continues to evolve, these divergent viewpoints underscore the complexities and challenges facing investors and businesses alike.

Emman Tochi
Emman Tochihttps://naija247news.com
Emma Tochi is Naija247news Media Northern Bureau Chief, he's based in FCT Abuja. He overseas the northern operations of this business media

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