The Landscape for Impact Investing in East Africa

> Posted by Center Staff

Impact investing in East Africa has grown strongly over the past five years with over $9.3 billion disbursed, more than 1,000 deals, and roughly 150 investors managing about 200 active investment vehicles. These are among the findings outlined in a new report from the Global Impact Investing Network and Open Capital Advisors, which provides a state of the market analysis for impact investing in the East Africa region. The report examines the supply of global impact investment capital, the demand for investment resources, challenges and recommendations, and the country-level markets. What was found?

Here are a few of the report’s key messages:

  • Kenya dominates impact investing in the region, accounting for more than half of its deployed impact capital and having more than three-times the in-country fund staff of any other country.
  • Uganda ranks a distant second in capital received at 13 percent of that of the region, receiving support from its favorable business and regulatory environments.
  • Despite its GDP being 50 percent bigger than Uganda’s, Tanzania claims about 12 percent of the region’s impact capital, owing its stature in part to its low population density, weak transportation infrastructure, and relatively unpredictable government interjections.

  • Ethiopia, boasting the region’s biggest GDP, accounts for only 7 percent of disbursements to-date, hindered by the country’s complex regulatory system’s effects on business ownership and profit repatriation by non-Ethiopians.
  • Development finance institutions (DFIs) have invested the most capital in the region to-date, encapsulating roughly 85 percent of funds.
  • Both DFIs and other investors have allocated more capital in financial services (about 30 percent) than in any other sector.
  • Investments in education and healthcare services have been relatively limited to-date.
  • Common challenges throughout the region include insufficient investment-ready opportunities, insufficient human capital, investment communities being based abroad, difficulty for entrepreneurs accessing bank financing, and few exit examples.
  • Common opportunities for the region include developing better sector expertise among investors, sourcing opportunities outside capital cities, and expanding investment instruments.

For more details and additional findings, read the report, here.

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