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Mirai Maruo

By Mirai Maruo

Wicked problems, innovative solutions

The impact investing sector is thriving. The Global Impact Investing Network (GIIN)’s research shows that 158 leading impact investing organizations collectively managed USD 77.4 billion in impact investing assets and committed USD 15.2 billion to 7,551 deals in 2015, and these figures are expected to be even higher this year.

As the sector grows, many international NGOs have initiated or are thinking about doing impact investment related work, either through providing pre-investment support or investing directly in enterprises through debt or equity. NGOs are entering this sector for various reasons but one of the main reasons is to harness new partnerships to meet complex needs and to leverage new resources. Please see Amplify Report published by the INGO Impact Investing Network for capturing the full sense of INGO’s value preposition for impact investing. Access to Capital for Rural Enterprises, ACRE, is one example of an innovative approach that NGOs are exploring.

ACRE, a platform of five international NGOs (Christian Aid, Challenges Worldwide, Practical Action, Traidcraft and Twin), envisions a world without poverty, where people in rural communities can achieve their full potential, quality of life and better opportunities. ACRE helps small to medium sized enterprises (SMEs) with tailored business support and facilitates their access to affordable finance. The strengths of ACRE are the extensive local networks and reach of the five NGO’s involved, our focus on social impact and our partnership approach. To date, ACRE has identified over 200 enterprises as prospects and supported more than 30 enterprises in 15 countries.

What has added value to ACRE has been the linkage with its existing programmatic work. For Christian Aid, all enterprises are identified at a country level to ensure that the support provided to enterprises contributes it its thematic programme outcomes. For example, an eco-lodge ACRE/CA supports in Bolivia was identified as a catalyst actor in promoting indigenous land rights in the Amazon region and in providing job and income opportunities for the indigenous community. Similarly, another business supported by ACRE/CA is an organic herb and spice business in Zimbabwe which supports farmers with organic and fairtrade certifications, whilst providing job opportunities for communities in drought prone rural areas where alternative income generation activities are limited.

In 2015, two ACRE members attended the Oxford Impact Investing Programme to get further insight of this sector and to exchange learning with other participants. It was an interesting to learn from others but also to share lessons we shared. For example, many felt that impact investing is not all black and white. Unlike normal investments where the focus is placed on financial performance (and tools to look at that are quite common – balance sheets, cashflow, etc.), impact investing, on the other hand, envisages not only financial returns but social and environmental returns and there are no clear guidelines or standards on social impact measurement. Yes, there are different types of social impact metrics and tools we use, such as IRIS metrics, but there are no global standards agreed by all. This makes impact investing much more complex and challenging.

Our development challenges are wicked problems – there are no one size fits all solutions. We must apply innovative solutions and continue to try new things. Impact investing can be one part of a solution, but to observe impactful changes (and not detrimental ones), we will adapt, challenge and persevere. ACRE looks forward to sharing further lessons and contributing to the impact investing sector as it continues its learning journey.

 

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