OpenUCT :: Browsing by Author "Dhlamini, Xolisa"

Browsing by Author "Dhlamini, Xolisa"

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Open Access
Embracing climate transition beyond green debt: exploring the obstacles and enablers to transition bonds
(2021) Pietri, Alessandro; Dhlamini, Xolisa
Financial markets have shown that there is a growing interest in funding investments that help address the climate challenge alongside financial returns. As the market has developed, so too has the need to cover a wider sector of the global economy. High carbon emitters, however, are still absent and this presents an opportunity for financial actors to support their sustainable transition towards a greener economy through transition bonds. Transition bonds represent an evident market opportunity to provide financing to companies, whose business is not environmental-friendly today, but who have plans to become sustainable in the future. The study followed an inductive design method to explore the determinants for using transition bonds and the outlook towards the instrument. Moreover, it aimed at identifying the practitioners' approach in valuing transition bonds. The author of this dissertation undertook a qualitative exploration through interviews with investment practitioners to assess what constructs are considered to understand investments in and the issuance of transition bonds. The analysis found that sustainability-linked incentives for engagement with transition bonds are the most cited determinants, signalling the willingness to support the transition plans of brown industries. The establishment of clear standards and disclosure was perceived to be of crucial importance to enhance the credibility of transition bonds. Moreover, practitioners confessed to not yet being equipped with the specific tools and knowledge to measure and report transition objectives. The findings further highlighted that supportive policy and regulation were considered to play an enabling role for the success of transition bonds. The author recommends intensifying the development of transition bond guidelines, enhancing disclosure and implement measurement and reporting procedures. The author also urges public and private institutions to cooperate in the establishment of appropriate institutional arrangements that facilitate the growth of transition bonds. The author suggests expanding the geographical scope of the research and widen the segments of market participants, thus incorporating practitioners residing in other regions and retail investors. Another area of research would be to gain insights into the transition measurement techniques. Future research could also explore the emergence of a pricing premium compared to traditional bond instruments and any pricing discrepancies with green bonds.
Open Access
Examining Development Impact Measurement: A case of South African Impact Investors
(2019) Bennett, Erin Elizabeth; Dhlamini, Xolisa
Over the past decade impact investing has gained much traction as a lucrative category of investments that strive for positive social and environmental impact alongside financial gains. Measurement of the intended impacts is gaining importance as this field of investing grows, requiring increased focus on non-financial performance of investment portfolios by impact investors. Improved measurement practises allow impact investors to not only understand and manage the social and environmental impacts effected through conscious intentions, but also provides an opportunity to proliferate existing positive impact. This report provides empirical insight into the impact measurement techniques employed by South African public and private institutional impact investors, using data collected through over 20 semi-structured research interviews, as well as publicly available impact measurement methodologies. In addition, it contributes to a limited collection of impact data and research that is critical in evidencing the most effective impact investments. Growing this area of research aids in the decision-making of development finance capital allocation to the most impactful investments – particularly those significantly contributing to achievement of the Sustainable Development Goals (SDGs) and the National Development Plan (NDP). A single case-study method was employed in analysing the empirical findings of the primary data sample, with South Africa as the case analysed. The general inductive approach was applied in the analysis of primary and secondary data collected. Categorisations of the data were made using the code-to-theory model. Furthermore, the logic model was employed as a theoretical lens to study the context of the measurement frameworks utilised by participants. The study also investigates the level of transparency in measurement and reporting within South Africa’s growing impact investing industry, for knowledge-sharing and recognition of positive impact. The findings demonstrate that South African impact investors are less inclined to use internationally recognised impact measurement tools such as IRIS and GIIRS rating systems. They currently utilise customised metrics and indicators as well as ESG risk and opportunity identification in measuring and tracking their impact. It also provides evidence of the influence of funders in driving the impact objectives and measurement practises employed by impact investors. The findings further show that there is greater focus on the shorter-term outputs and outcomes of investments, and less consideration of long-term sustainable impact. Recommendations made to South African impact investors include clearly articulating impact goals through application of the theory of change and logic model frameworks, as well as selecting measurement metrics that align closely to the intended short, medium and long-term impact objectives.
Open Access
Examining the effect of school development loans on education capacity and quality: evidence from Ghana and Uganda
(2020) Sheridan, Scott; Dhlamini, Xolisa
Increased investment in education to build capacity and quality is essential if the world is to meet its ambitious targets on Sustainable Development Goal (SDG) 4: Quality Education. There are 258 million school aged children out of school, of which 98 million are in Sub-Saharan Africa (SSA). Low-income countries are experiencing dramatic growth in their populations and have severe limitations on their ability to fund the required infrastructure development. The financing gap is estimated to be US$ 1.8 trillion to achieve SDG goals (Education Commission, 2016). Low-Cost Private Schools (LCPS), accessible to children from poor families, are growing rapidly in SSA to fill this gap. This study is focused on the potential to increase the use of innovative financing to improve capacity and quality for LCPSs. Most innovative finance schemes utilise some form of a School Development Loan to achieve greater investment in capacity and quality of education. The study evaluates the effect of School Development Loans on several indicators which have been directly associated with capacity and quality, using data from Ghana and Uganda, countries estimated to need a combined 5 million new seats for children by 2023 (7% of their combined population) to account for population growth. Capacity indicators include the Number of Students enrolled in the school and the Number of Classrooms available for use. The indicators of school quality were Pupil Teacher Ratios (Lower), the Number of Washrooms, the Number of Washrooms Dedicated to Girls and the Number of Extracurricular Programmes Offered by the school. The study leveraged pairwise correlation and regression analysis to identify the most directly linked indicators, followed by a mean difference analysis. The study finds that schools taking out School Development Loans have more classrooms, higher enrolment, greater amounts of washrooms and extracurricular activities on offer, indicating that School Development Loans increase both capacity and quality at LCPSs. Despite the encouraging findings, it is early to assess whether the significance of the increase over time. The study recommends a fully coordinated Randomised Control Trial (RCT) for further research, where data is collected prior to the school receiving its first loan and again at the conclusion of the loan.
Open Access
Examining the factors impacting small and medium enterprises (SMEs) in accessing development debt finance in the kingdom of Eswatini
(2020) Dlamini, Zanele F; Dhlamini, Xolisa
SMEs are conduits for the transformation of economies because they act as catalysts for private sector development. However, they face several constraints to accessing finances for their growth and development. Hence, by using a secondary dataset from the Central Bank of Eswatini that comprises 1,390 loan applicants, an empirical analysis was done using a binary logistic regression analysis to assess credit rationing factors preventing SMEs in the Kingdom of Eswatini to access DFIs loans for their growth and development. Thus, the objectives of the study are to examine the relationships between credit rationing factors and their effects on accessing DFI loans in the Kingdom of Eswatini. Descriptive analysis provided an explanation as to how these factors influence the financing of SMEs in the Kingdom of Eswatini. Pearson's correlation coefficient was, therefore, employed to determine the relationships between credit rationing factors and binary logistic regression analysis to examine the effect of these factors on DFIs loans accessibility. This method was used to determine the strength of the relationship between loan access and credit rationing factors. The findings show that the age of SMEs and loan amounts are some of the major negative factors impacting access to DFIs loans in the Kingdom of Eswatini. A mature SME is less constrained to access DFIs loan compared to start-ups and growing SMEs. Furthermore, SMEs that apply for sustainable loans are less constrained to access DFIs loans than those that apply for unsustainable and very high amounts. It is, therefore, concluded that DFIs in the Kingdom of Eswatini apply credit rationing in dispersing loans to SMEs. DFIs should link their loan amount to demands and to the period of existence, as only well established and matured SMEs have an added advantage in accessing DFIs loans. For these reasons, it is recommended that economic policy makers should devise loan access policies that suit start-ups and growing SME for their conducive development and growth. This policy is vital because SMEs have a pivotal role to play in the overall economic growth of the Kingdom of Eswatini.
Open Access
Exploring the catalytic influence of development finance institutions (DFIs) on South African venture capital (VC)
(2022) Hunter, Renée; Dhlamini, Xolisa; Alhassan, Abdul Latif
Development finance institutions (DFIs) have various roles to play in capital markets. Specifically, the three theoretical principles according to which DFIs are supposed to operate are 1) Financial sustainability, 2) Additionality and 3) Catalytic influence. The latter principle means that DFIs are expected, through using the financial and non-financial interventions at their disposal, to influence the investment activities and decision-making of other (private) sector investors, to enter into new markets, change their view on investment risks, or focus on achieving particular types of impact with their investment. Among others, this influence is theoretically aimed at venture capital (VC) activities. This research investigates the extent to which DFIs engage with VC activities in South Africa, and the extent to which these engagements may lead to influencing these VC activities. The data is collected through semi-structured interviews with VC stakeholders with activities in South Africa, and a thematic analysis is employed to uncover common themes and insights. The findings show that DFIs engage with equity in VC funds' establishment and investment decisions, and with debt in VCs' value creation; and that general market support influences the frameworks adopted, and market approaches used in VC funds' strategies and investment strategies. These engagements are experienced in both negative (due to slow and bureaucratic processes, feelings of dependency and risks of crowding out) and positive ways (due to good collaborative practices, practical benefits of DFIs investing in VC funds, and the skills and experience contributed by DFIs). The themes around influence of DFI mechanisms on VC activities are as follows: DFI investments enable VC funds to come into existence; VC funds' parameters are influenced by DFI requirements; DFIs' interests in direct investments influences VCs' investment decisions; DFI frameworks are adopted by VCs; DFIs' market and impact perspectives inform VCs' perspectives; DFIs' due diligence informs VCs' investment decisions; and VC investees receive DFI technical assistance. Ultimately, the study concludes that DFIs have catalytic influence on VC activities only in some respects. Specifically, DFIs do have catalytic influence on VC activities through their equity investments, in that these activities inform and direct the focus areas, parameters and exclusions of VC investments. However, DFIs do not have catalytic influence on VC activities through their general market support, since VCs that are likely to engage with DFIs are already sufficiently aligned in terms of market and impact outlook. Based on the findings, and to ensure that DFIs are as impactful and catalytic as they can be, this research recommends that DFI activities focus on and specialise in those areas where they can have most catalytic influence. This means focusing on funding VC funds, rather than making direct investments into early-stage ventures. Moreover, DFIs would be advised to adapt their structures and processes to be more aligned with the operating realities of VC activities - specifically to be more nimble and less bureaucratic, allowing DFIs to meaningfully and productively contribute to a fast-moving part of the industry.
Open Access
Exploring the influence of funding sources on business incubation in the Western Cape
(2020) Milne, James; Dhlamini, Xolisa
The topic of business incubation has been the subject of considerable academic research, and a focal point in entrepreneurship support ecosystems. Business incubators provide entrepreneurs and start-up businesses with a shared space (either physical or virtual). The incubator offers a systematic shared support structure that enhances businesses' chances of succeeding and growing into entities that eventually graduate to a location beyond the ‘safety net' of the incubator. Academic research in the field of incubation has predominantly focused on (i) understanding business incubation models that are most effective within particular operating environments; and (ii) understanding support services that are most useful to incubatees of the incubator. This research instead explores the influence that funding sources have on business incubators, with a focus on understanding how incubators in turn assist their incubatees in accessing finance. Research focusing on funder influence on incubators, and support provided to incubatees to assist with access to finance, is at a nascent stage within the South African business incubation landscape. The research was undertaken utilising a multiple case study approach, with individual business incubators constituting a case. Incubators were classified into three case typologies, depending on their predominant funding source: mixed; private; or public funded. From the population of business incubators in South Africa, a sample of 8 incubators within the Western Cape Province were selected. Semi-structured interviews with participants were undertaken over a three month period and involved undertaking interviews with 8 incubator managers, and 10 current or former incubatees. Qualitative data from participant interviews were analysed using a combination of NVivo12 and MS Excel, in order to determine responses relevant to the research question and subquestions. The information collected was categorised into themes of relevance using initial and pattern coding methodologies. The research suggests that funders influence the work of incubators through driving their own objectives, utilising the incubator as a tool. Public sector funders set objectives for incubators that were linked to achieving socioeconomic goals (poverty alleviation and economic redress). Public sector funders were found to be strongly focused on achieving their own performance indicator goals, even if these did not align to the work of the incubators. Private sector funders set objectives for incubators that were linked to achieving the goals of their organisation or fund mandate. Private sector funders were found to lack long-term commitment to funding incubators. Communication between public and private sector funders was found to be, in general, poorly co-ordinated. Lack of co-ordination between funders negatively affected the impact of incubators. The cross-case multiple case study methodology revealed that in the Western Cape, similarities exist in the channels of support provided by incubators to assist their incubatees in accessing funding, regardless of the funding structure of the business incubator. However, heterogeneous priorities exist in funding support services provided to incubatees. Bias was identified in the process of sourcing of funding for incubatees. Incubators pursued a blend of proactive and reactive approaches to accessing funding for their incubatees, depending on their relationship with funder(s). The researcher recommends a strengthening of efforts to co-ordinate objectives across the two broad spheres of incubator funding sources (public and private) in order to build effective and sustainable business incubators in South Africa. Financiers of incubators should review stakeholders and other financiers involved in the incubator to clarify policy, commitments and performance metrics. Emphasis must be placed on ensuring alignment (i) between incubator financiers; (ii) between the objectives of the financier(s) and the incubator. The current study is well suited to being expanded in future, both in terms of: (i) widening the interview participant base to include incubator financiers; (ii) a geographic expansion to focus on South Africa as a whole.
Open Access
Sustainable & responsible private equity in Southern Africa: evolutionary strides in a revolution?
(2012) Dhlamini, Xolisa; Giamporcaro, Stephanie
The study primarily explores whether private equity (PE) and venture capital (VC) firms in the Southern African Development Community (SADC) integrate sustainable and responsible investment (SRI) practices in their investment processes. Also examined were the influences, opportunities and challenges associated with Southern African PE and VC firms adopting and implementing SRI towards sustainable growth and development in the SADC region. A field study conducted with 41 PE & VC firms as well as 6 DFI's operating in the SADC region found that PE & VC firms integrated ESG factors in their investment management processes despite the majority having no formal SRI policies. ESG integration was integrated mainly for risk management and as part of the overall business strategy. Corporate governance was top of agenda followed by social and environmental aspects. Awareness for Codes for Responsible Investing in South Africa (CRISA) was very poor amongst the PE & VC firms. PE & VC firms also found little value in becoming signatories of the UNPRI. The PE & VC firms anticipated minimal or no impact to their respective businesses if ESG were to be integrated formally and consistently. PE & VC firms agreed that ESG risks should be actively managed and that the investment holding periods enable them to manage ESG effectively, however, a number of challenges hinder the integration of ESG in SADC such as difficultly in sourcing standard ESG information, translation of the information into quantitative measures, insufficient skills among professionals to assess or link ESG factors to investment performance and the lack of clear regulatory & legislative guidance in effective ESG integration. A recommendation is for PE & VC firms to formalise SRI policies as the first steps towards consistent integration of ESG in investment making processes. Further recommendations are for remuneration of PE & VC professionals to be aligned directly to ESG performance and for investors such as DFI's to be more proactive in monitoring their appointed PE & VC managers (particularly in auditing of ESG performance reports compiled by the PE & VC firms.

Browsing by Author "Dhlamini, Xolisa"

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