Inception meeting 3 May 2018 Agenda 1.30-1.45pm Welcome and - - PowerPoint PPT Presentation

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Inception meeting 3 May 2018 Agenda 1.30-1.45pm Welcome and - - PowerPoint PPT Presentation

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Inception meeting 3 May 2018 Agenda 1.30-1.45pm Welcome and introductions 1.45 2.05pm Private development and the NDP Elias Masilela 2.05-2.45pm Current landscape Bertha Centre and guest contributors 3.00-3.30pm

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Inception meeting 3 May 2018

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Agenda

1.30-1.45pm Welcome and introductions 1.45 – 2.05pm Private development and the NDP Elias Masilela 2.05-2.45pm Current landscape Bertha Centre and guest contributors 3.00-3.30pm Global initiatives in Impact Investing Sir Ronald Cohen 3.30-4.30pm Role and constitution of Task Force 4.30pm Cocktails and canapés

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3 IMPACT INVESTING SOUTH AFRICA | MAY 2018

HOW DO COMPANIES CONTRIBUTE TO IMPACT?

MARKET FRAMING

Source: Impact Management Project, 2017

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4 IMPACT INVESTING SOUTH AFRICA | MAY 2018

HOW DO INVESTORS CONTRIBUTE TO IMPACT?

MARKET FRAMING

Source: Impact Management Project, 2017

+ Signal that impact matters + Engage actively + Grow new or undersupplied capital markets + Provide flexible capital

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5 IMPACT INVESTING SOUTH AFRICA | MAY 2018

WHERE DO YOU FIT?

IMPACT MANAGEMENT CONVENTION

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6 IMPACT INVESTING SOUTH AFRICA | MAY 2018

LINK TO EXISTING TERMINOLOGY

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7 IMPACT INVESTING SOUTH AFRICA | MAY 2018

TASK FORCE PROCESS

WHERE WE ARE WHERE WE WANT TO BE HOW WE WILL GET THERE DIAGNOSTIC

Secretariat and research partners with support from Task Force

GOAL SETTING

Task Force with support from secretariat

ACTIONING

Task Force and Working Groups with support from secretariat

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8 IMPACT INVESTING SOUTH AFRICA | MAY 2018

WHERE WE ARE

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9 IMPACT INVESTING SOUTH AFRICA | MAY 2018

MARKET MAP

WHERE WE ARE

EQUITY DEBT IMPACT SECTORS

IMPACT PURCHASERS NON PROFITS FOR PROFITS

CHANNELS OF CAPITAL SOURCES OF CAPITAL DEMAND INTERMEDIATION SUPPLY

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10 IMPACT INVESTING SOUTH AFRICA | MAY 2018

DEMAND FOR IMPACT CAPITAL

Theme Domains Themes Domains

  • I. Health
  • HIV/AIDS & Tuberculosis
  • Maternal and Child Health
  • Non-Communicable Disease
  • Systems Strengthening
  • 4. Infrastructure
  • Education Infrastructure
  • Information & Communications Technology

Water and Sanitation

  • Energy access and low-carbon energy

infrastructure

  • Transport & Logistics
  • Affordable Housing & Spatial planning
  • Health
  • 2. Education & Skills

Development

  • Early Learning & Grade R
  • Quality Learning Materials
  • Systems Strengthening
  • Post-Secondary Education & Training
  • 5. Ecosystems Services &

Biodiversity

  • Sustainable Use
  • Environmental Intelligence
  • Pollution and waste management
  • 3. Agriculture & Food

Security

  • Supporting Agrarian Transformation

Agricultural technologies

  • Improved food security
  • 6. Social Protection
  • Improving household food and nutrition

Community Safety

  • Social Sector Sustainability

Source: Investing in the SDGs, Schmidt-Traub, 2015

NATIONAL DEVELOPMENT PLAN AND UN SDG ALIGNED

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11 IMPACT INVESTING SOUTH AFRICA | MAY 2018

SUPPLY OF IMPACT CAPITAL

Source: BEEconomics Annual Transformation Survey,2017

SAVINGS AND INVESTMENT INDUSTRY

500000 1000000 1500000 2000000 2500000 3000000 3500000 Retirement funds Life companies CIS Short term insurance

R’m Sources of capital

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12 IMPACT INVESTING SOUTH AFRICA | MAY 2018

SUPPLY OF IMPACT CAPITAL

Source: Barometer,2017 and GIIN, 2017

IMPACT INVESTMENT

500000 1000000 1500000 2000000 2500000 3000000 3500000 Retirement funds Life companies CIS Short term insurance Impact Investment DFI

R'm Capital sources vs impact investment

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13 IMPACT INVESTING SOUTH AFRICA | MAY 2018

INSTRUMENTS AND CHANNELS OF CAPITAL

INTERMEDIATION

4.7%

57 out of 1200 funds employ a high Impact strategy

63%

760 out of 1200 funds employ an Investing for Impact strategy

Investing for Impact Barometer, 2017

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14 IMPACT INVESTING SOUTH AFRICA | MAY 2018

POLICY ENABLERS

ENVIRONMENT

Policy initiative Market target Title Type of instrument Supply Demand Environment B-BBEE Legislation X Preferential procurement Procurement reform X Regulation 28 Pension reform X Section 12J VCC Tax incentive X Financial sector charter Voluntary code X King IV Voluntary code X FSB directive Reporting X

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15 IMPACT INVESTING SOUTH AFRICA | MAY 2018

WHERE WE WANT TO BE

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16 IMPACT INVESTING SOUTH AFRICA | MAY 2018

GOALS

Startups Foundations Top 30 JSE listed companies 50 Fort Impact Funds G 10% impact businesses Measure and report impact 5 Pension funds + 5 Insurance companies 10% Impact allocation DFIs 10% funds high impact Leverage 4X private capital 10% Endowment

allocation

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17 IMPACT INVESTING SOUTH AFRICA | MAY 2018

HOW WILL WE GET THERE

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18 IMPACT INVESTING SOUTH AFRICA | MAY 2018

GROW PIPELINE OF INVESTABLE OPPORTUNITIES

DEMAND

  • Support capacity building in profit-with-purpose/social enterprises
  • Develop sectoral or thematic strategies
  • Develop infrastructure pipeline
  • Enhance municipal funding
  • Support early stage businesses
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19 IMPACT INVESTING SOUTH AFRICA | MAY 2018

IMPROVE MATCH BETWEEN CAPITAL AND INVESTABLE OPPORTUNITIES

INTERMEDIATION

  • Create Impact Investment Wholesaler
  • Use technology to speed development
  • Create more impact Funds
  • Develop Innovative finance products/vehicles/tools
  • Better match capital in early stage deals
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20 IMPACT INVESTING SOUTH AFRICA | MAY 2018

INCREASE SUPPLY OF PRIVATE SECTOR IMPACT INVESTMENT CAPITAL

SUPPLY

  • Unlock institutional capital
  • Unlock retail capital
  • Align Foundation asset base with mission
  • Better utilise DFI capital to attract savings
  • Plug gaps in early stage finance
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21 IMPACT INVESTING SOUTH AFRICA | MAY 2018

CREATE ENABLING ENVIRONMENT TO FACILITATE DEPLOYMENT

ENVIRONMENT

  • Standardise Impact Measurement
  • Create more transparency
  • Build strategic leadership
  • Use policy levers to unlock funding
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22 IMPACT INVESTING SOUTH AFRICA | MAY 2018

OPPORTUNITIES FOR COLLABORATION/ALIGNMENT/ADVOCACY/SUPPORT

EXISTING INITIATIVES

Supply Demand Intermediation Environment Defining and mapping Existing sector research eg Water (NBI) Policy

  • Sustainable Finance Initiative
  • ASISA RI working group

Municipal funding WG (NT)

  • FSB/FSCA Directive Sustainable

reporting

  • ASISA CRISA WG

Investment infrastructure

  • President’s Investment Envoys
  • CEO Initiative
  • PIC VC Fund

CEO Initiative Tertiary Funding DBSA Green bank + LAB Best practice exchange

  • Global Steering Group working

groups

  • Impact Management Project

Education/ Advocacy

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ROLE OF IISA TASK FORCE

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TIME FOR ACTION

THE ROLE OF THE IISA

  • The purpose of the South African National Task Force for Impact Investing (IISA) is to bring together

leaders from across sectors to develop a clear and dynamic understanding of the local eco-system,

  • bstacles to development and opportunities to remove these obstacles; and to create enabling

infrastructure.

  • The IISA will work with other actors from across sectors to identify priorities, scope initiatives, raise

awareness, advocate for development of the field and take other such steps as it determines appropriate ways to drive forward the growth of the impact investment market.

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25 IMPACT INVESTING SOUTH AFRICA | MAY 2018

IISA

IMPACT INVESTING SOUTH AFRICA

Task Force

Working Group Working Group Working Group Working Group Working Group

SECRETARIAT

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TO BE RATIFIED AT FIRST PLENARY MEETING

PROPOSED FUNCTIONS OF TASK FORCE

  • 1. Identify key levers that will accelerate growth of market
  • 2. Join or head up appropriate Working Group
  • 3. Generate report
  • 4. Advocate for recommendations and build engagement across the market
  • 5. Share learnings with international audience

Task Force

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TO BE RATIFIED AT SECOND PLENARY MEETING

PROPOSED FUNCTIONS OF WORKING GROUP

  • 1. Develop strategy and operational plan to action Task Force recommendation
  • 2. Launch intervention (if possible within timeframe)
  • 3. Generate Working Group report to add to final report
  • 4. Share learnings with international audience

Working Group

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PROPOSED FUNCTIONS OF SECRETARIAT

  • 1. Support strategic process and intelligence gathering
  • 2. Provide research/writing capacity + engage external stakeholders
  • 3. Provide coordination and logistical support to Task Force and Working Groups
  • 1. Coordinate public relations and media engagement
  • 2. Link to international best practice

TO BE RATIFIED AT FIRST PLENARY MEETING

SECRETARIAT

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29 IMPACT INVESTING SOUTH AFRICA | MAY 2018

TO BE RATIFIED AT FIRST PLENARY

TIMELINE AND WORK-PLAN

Responsibility Activities Timeline Secretariat IDENTIFY POTENTIAL TASKFORCE MEMBERS APRIL 2018 Secretariat INCEPTION MEETING MAY 2018 Secretariat LAUNCH and 1st PLENARY JUNE 2018 IISA & Secretariat REGULAR MEETINGS Every 2 months for 6 months then every 3 months for 12 months IISA & Secretariat INTERIM REPORT DEC 2018 WG & Secretariat REGULAR MEETINGS JAN 2019 Every 2 months for 12 months IISA & Secretariat PRODUCE STRATEGY & REPORT DEC 2019

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30 IMPACT INVESTING SOUTH AFRICA | MAY 2018

CONSTITUTION OF IISA TASK FORCE

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SELECTION OBJECTIVES

IISA MEMBERSHIP

The IISA will be comprised of highly credible individuals who are leaders in their areas. Nominees have been drawn from the impact and traditional investment field and represent different parts of the market: § Supply (financial institutions, industry bodies, investment organisations, asset owners) § Demand (business, social enterprise, civil society) § Government § Intermediaries (asset managers, consultancies) § Academia

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32 IMPACT INVESTING SOUTH AFRICA | MAY 2018

THOSE WHO HAVE ACCEPTED THE NOMINATION

FOUNDATIONAL MEMBERS

Elias Masilela Pat Pillai Heather Jackson Sizwe Nxasana Isaac Ramputa Taffy Adler Jon Duncan Tracey Austin Mamphela Ramphele Tshediso Matona Martie Janse v Rensberg Wendy Lucas-Bull

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33 IMPACT INVESTING SOUTH AFRICA | MAY 2018

RECOMMENDATIONS

COMMUNICATION CHANNELS

  • Dropbox: To store documents
  • Google Docs: To share documents that multiple parties need to contribute to
  • Slack: Instead of group email
  • impactinvestingsouthafrica.co.za
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34 IMPACT INVESTING SOUTH AFRICA | MAY 2018

THANK YOU

PREPARED BY: BERTHA CENTRE FOR SOCIAL INNOVATION & ENTREPRENEURSHIP (IISA SECRETARIAT)

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ANNEXES

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DIMENSIONS OF IMPACT

IMPACT MEASUREMENT

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BASED ON MARKET MAP (GSG) AND LEVERS (HARVARD)

FRAMEWORK FOR PRESENTING LEVERS

DEMAND INTERMEDIATION SUPPLY ENVIRONMENT DEFINING AND MAPPING POLICY INVESTMENT INFRASTRUCTURE BEST PRACTICE EXCHANGE EDUCATION AND OUTREACH ADVOCACY

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38 IMPACT INVESTING SOUTH AFRICA | MAY 2018

GROW PIPELINE OF INVESTABLE OPPORTUNITIES

DEMAND

Support capacity building in profit-with- purpose/social enterprises Develop sectoral or thematic strategies Develop infrastructure pipeline Enhance municipal funding Support early stage businesses Defining and mapping Understand investment gaps and opportunities associated with NDP/SDGs Identify sectors suitable for

  • fftake agreements

Policy Build contract/investment readiness funds in government Enhance governance of SOEs Strengthen authority of municipalities to raise finance Improve regulatory efficiency Investment infrastructure Build investment readiness funds in foundations Eg Social housing, water, internationally competitive areas Build credit worthiness Improve financial literacy and investment readiness using technology solution Best practice exchange Involve corporate sector Green economy finance systems approach Centralize investment sector expertise Build local capacity and technical capability Interoperability of public and private platforms to match investment and provide lifecycle support Education/ advocacy Sensitise financial markets Support existing NT efforts

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39 IMPACT INVESTING SOUTH AFRICA | MAY 2018

IMPROVE MATCH BETWEEN CAPITAL AND INVESTABLE OPPORTUNITIES

INTERMEDIATION

Create Impact Investment Wholesaler Use technology to speed development Create more impact Funds Develop Innovative finance products/vehicles/tools Better match capital in early stage deals Defining and mapping Identify capital sources Publish impact performance data + case studies Identify best fund management models Policy Unlock unclaimed benefits for NDP investment Create blended fund using government capital Work in conjunction with JSE to define thematic bonds (as with green bonds) Incentives for impact creation Investment infrastructure Support new intermediaries by providing anchor funding Seed black impact fund managers Disintermediation Develop bespoke approach to each asset class (listed, unlisted) Create link between incubators and funds Standardise tools that could be used to attract institutional capital eg Themed bonds Design alternative fund management models and fee structures Reduce cost of operations (technology) Best practice exchange Commit to transparency of performance Pool due diligence Grade incubators and accelerators Sensitise investors to open ended fund models Share TA/BDS best practice models Education/ Advocacy Provide market building support (eg standardised measures, demand side research)

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40 IMPACT INVESTING SOUTH AFRICA | MAY 2018

INCREASE SUPPLY OF PRIVATE SECTOR IMPACT INVESTMENT CAPITAL

SUPPLY

Unlock institutional capital Unlock retail capital Align Foundation asset base with mission Better utilise DFI capital to attract savings Plug gaps in early stage finance Defining and mapping Identify pension funds, insurance companies, banks Identify millennial preferences in middle income markets Identify HNWIs – develop guidance or support private banks to do so Policy

  • Enhanced tax reduction
  • Clarify fiduciary responsibility
  • Regulate to prevent conflict of

interest between insurance companies and in house asset manager Tax incentives Pension funds require to

  • ffer Sustainable/Impact
  • ption

Clarify fiduciary responsibility Report against CRISA Address currency risk Regulate ED funds in order to attract institutional capital Tax incentives for first loss capital providers Investment infrastructure Blended finance instruments Reporting lines from issuer to asset owner Disintermediation JSE Investable index Secondary market Toolkit of investment strategy to support Develop and test blended finance instruments Leverage capital by creating blended finance products Develop infrastructure asset class Support pipeline development Sectoral approach to ED Funds Lifecycle support for SMEs Blended models that could attract DFI/institutional capital Best practice exchange Increase transparency of reporting Develop impact investment strategy for % of endowment Support coordination and collaboration between DFIs and private sector Education/Advo cacy Trustee training Asset consultant engagement Support shareholder activism Encourage pioneering philanthropic leadership

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41 IMPACT INVESTING SOUTH AFRICA | MAY 2018

CREATE ENABLING ENVIRONMENT TO FACILITATE DEPLOYMENT

ENVIRONMENT

Standardise impact Measurement Create more transparency Build strategic leadership Use policy levers to unlock funding Defining and mapping Clear definitions Investigate policy levers to unlock funding Policy Transparency around impact measurement Publish data on cost of government services/outcomes Support strong policy leadership Create NT position Develop coherent narrative between policies Investment infrastructure Reporting frameworks to disclose impact (not just practice) Best practice exchange Support single impact accounting and management system that incorporates existing initiatives Include RI component across ASISA working groups Education/ Advocacy FSCA and SARB to engage banks