Exploring the dynamics of impact investments in Botswana: the case of asset managers and owners

Mpowe, Refilwe Maggies

Exploring the dynamics of impact investments in Botswana: the case of asset managers and owners

Thesis / Dissertation

2022

Abstract

Mobilising adequate finance remains an unbending challenge to socio-economic development. And amidst the current recovery from the slow-down that ensued in the last two years because of the Covid19 pandemic, never has there been a greater need to find inclusive, and impactful solutions to funding development. Fortunately, impact investing is a means through which investors ‘can put their principal where their principles are' and still be able to generate both social and financial returns, making it a revolutionary instrument for delivering blended value. Since development in Botswana has largely been financed using public sector funds, to better understand how private capital has been used to create value beyond private profit, the author undertook a phenomenological descriptive qualitative study to identify and provide a detailed description of the market characteristics, investor preferences and measurement practices of Botswana's impact investing sector. Purposive sampling was used to collect data through interviews with 14 participants operating as supply side actors in the asset management industry, the data of which was evaluated using thematic and content analysis. From the analysis, this study found that; (i) impact investing in Botswana is not a well specified construct, with varying interpretations; (ii) the local market is relatively small, underdeveloped and predominantly led by institutional investors the bulk of which prefer to use private capital to fund impact; (iii) the most frequently used approach to sustainable responsible investing is ESG investing; and (iv) popular impact themes include job creation, financial inclusion, quality healthcare, poverty eradication and infrastructure development. Impact investors are motivated by both monetary and non-monetary incentives influenced by ecological, ethical, political, social, and/or other predispositions, the former of which appears to be a primary consideration. The degree of influence is however dependent on investor specific attributes such as investor type, ownership structure, objectives, and risk appetite. Moreover, whilst considered contextual, local investors seem to favour the use of both customised approaches to impact measurement such as organisational specific theory of change models and standardised approaches with a penchant towards aligning impact goals and measurement frameworks with national and global priorities. Our assessment also revealed that the growth and productive capacity of the sector is limited by definitional, measurement, data, regulatory, governance, market, capital, and capacity constraints amongst others. Our findings suggest that for the impact investment market to function optimally; institutions ought to invest in enabling technologies and implementation frameworks, multi-layered partnerships, as well as establishing requisite policy, structural, governance and regulatory reforms to facilitate evidence-based policymaking, industry standardisation, infrastructure development, and capacity building. Recommendations for future research include conducting a quantitative study to assess the correlation of key variables, a study that is representative of other ecosystem actors as well as others that focus on sector or problem specific factors.

Keywords

development finance

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