COVID-19 Africa Watch talks to Dr. Frank Aswani about ways to bolster Africa’s social investment ecosystem to help the continent’s economic recovery from the pandemic.

Key Takeaways

Below are some of the main takeaways from COVID-19 Africa Watch’s conversation with Dr. Frank Aswani, CEO of the African Venture Philanthropy Alliance: AVPA, a pan-African network for social investors collaborating to increase the flow of capital into social investments across Africa, and working to ensure that capital is deployed as effectively and innovatively as possible for maximum social impact.

Foreign aid and government spending will not suffice to fill Africa’s SDG financing gaps, particularly as aid to Africa has been declining and public finances across the continent have been severely impacted by the pandemic. The private sector, which is the other potential source of capital, have not traditionally funded social investment. AVPA is trying to tap into that sector by bringing together different types of investors and enabling the de-risking of social investments and the crowding-in of private sector capital. AVPA’s vision is that in the next 2-5 years, its network will have significantly contributed to closing the African SDG financing gap by becoming the most comprehensive network of social investors active in Africa.

AVPA has faced three major challenges in its efforts to increase capital flow into social investments during the pandemic. First was the unavailability of information on the African social investment space, which they sought to remedy through a landscape mapping study spanning 18 countries. Second was the fact that collaboration platforms for different types of social investors operated in silos. AVPA moved to solve this by bringing together debt, equity and grant funding onto a deal-share platform that can support interaction across various forms capital and investors. The third challenge was a lack of investor education on innovative finance, for which AVPA is developing an investor education program.

Looking ahead, from an economic perspective, AVPA recommends that African governments consider investing in creating and supporting an ecosystem that is conducive to growth of Small and Medium Enterprises, and especially of women-led businesses. Successful laws and policies in some jurisdictions could also be replicated across multiple African countries, to stimulate the social economic sector and to mobilize more capital for an inclusive post-COVID recovery.

The interview was conducted by Anthony Murimi, an IFC-Milken Institute Capital Market Program Scholar from the Central Bank of Kenya. A transcript is available below.