The global trend of impact investing – investments aimed at generating social and environmental impact, along with a financial return – has experienced exponential growth over the last decade. However, despite South Africa having been flagged as a high-potential region for this booming industry, impact investing is typically viewed as being reserved for large institutional or ultra-high-net-worth investors.
This is according to Grant Field, Group Chief Executive Officer of Fedgroup, who points to a report on the landscape for impact investing in Southern Africa, conducted by the Global Impact Investing Network in 2016. “The international report found that impact investors globally have developed substantial and particular interest in sub-Saharan Africa, anchored by South Africa, where approximately US$15 billion of impact investment has occurred.”
Demonstrating that financial and social return are not mutually exclusive, Field says that there is a growing body of evidence that supports the correlation between sustainable impactful investment and superior long-term returns. “However, because these investments often translate into some type of sustainability/impact fund, they often come with a hefty minimum capital requirement or an array of high fees that ultimately extract investment value.
“Furthermore, the increasing ‘financialisation’ of impact investments through these funds has, over time, distanced them from their original core purpose – to have a real-world impact in solving the sustainability challenge.”
Acknowledging these high barriers to entry for individual investors, Field says that Fedgroup is taking responsible investment to the next level by making it accessible to the masses via a mobile app that focusses directly on the products or services that are making an impact. “We have launched a classic peer-to-peer type model, which allows individuals to invest directly into sustainable ventures, instead of on a stock exchange.”
Through the Impact Farming app, Field says that investors can actually own a physical asset from accredited farming partners. These include blueberry bushes, sustainable beehives and urban solar farms – all available on the app.
“In the case of the solar panels, at the end of the 20-year period, they could take physical ownership of the panel, should they not wish to take advantage of our buy-back offer. With our beehives, they own the hive and the bees. This completely closes the perceived separation between the ‘investment’ and the ‘impact’ being made.”
By significantly lowering not only the perceived barriers to entry for impact investing, but also the more practical financial barriers, Field explains that individual socially-conscious investors will now be able to make an impact with their money, regardless of their financial standing. “Investors can start up their own impact investment portfolio from as little as R300.”
“And with projected returns of between 10% and 16%, Fedgroup’s Impact Farming app offers regular investors the opportunity to reap the financial benefit available from impact farming as well,” he adds.
Field concludes that it is through this unusual combination of people-centric, yet technologically-driven solutions, that Fedgroup is able to make typically institutional-grade investments available to individual investors. “By driving impact investing at a grassroots level, our aim is to open up access to a growing network of local crowd-farming ventures that generate solid profits to deliver competitive returns.”