Welcome to Impact Investing Month on Marketlinks!
This post is authored by Gatsby Africa, Lawrence Camp, and Autumn Gorman.
This April is about developing a deeper understanding of impact investing and finance for development - and how the development community can facilitate and channel that capital. We look forward to engaging and hearing from you, the Marketlinks community, throughout the month.
Investing for Impact is more important than ever. The already large Sustainable Development Goal (SDG) financing gap has been widened by COVID-19, and is now estimated to be $4.2 trillion annually. And with official development assistance (ODA) estimated at $161 billion, it is not nearly enough. The development community must look beyond ODA to achieve the SDGs – and that includes being much more deliberate about directing more capital towards impact.
Thankfully, we have a couple of trends in our favor.
- Impact Investing is becoming a larger share of the total investment capital available – $715 billion of $380 trillion – and continues to grow, including in developing countries.
- Growth in emerging markets is outpacing that of developed economies (6.5 percent compared to 5.0 percent, respectively), and this trend is likely to continue.
This means that emerging markets represent an increasingly attractive investment opportunity for the huge and growing pools of both foreign and domestic (local currency) capital. This provides development practitioners with the opportunity to help ensure that a greater portion of capital flows are channeled to investments that support our development goals.
Throughout this month, you will hear from people inside and outside USAID on a range of issues related to this topic, including a study commissioned by British International Investment (formerly CDC) and Gatsby Africa that looks at the opportunity for greater collaboration between donors and private sector development programs and DFIs and other impact investors. This study–and more–will be featured in a webinar towards the end of April.
For more, check out Global Impact Investing Network’s (GIIN) overview of impact investing.