Achieving the SDGs through African Private Equity and Venture Capital

A special case study series by AVCA

Introduction

Over the past 20 years, AVCA has remained committed to tracking, monitoring, and reporting on the wide-reaching positive impact of private equity and venture capital across the continent.

To celebrate 20 years of championing private investment in Africa, we are delighted to launch Achieving the SDGs through African Private Equity and Venture Capital – a series that we hope will encourage greater collaboration between fund managers, institutional investors, and entrepreneurs to drive sustainable growth in Africa.

It is now six years since the United Nations (UN) launched a global call to institutions and individuals to commit to creating a future of prosperity and peace for all by 2030, through the Sustainable Development Goals (“SDGs”). The 2030 Agenda for Sustainable Development (“the 2030 Agenda”) established 17 SDGs with 169 targets and 232 indicators to enable progress tracking as key global actors, including investors, businesses, civil society, and governments, implement the 2030 Agenda.

According to the United Nations Conference on Trade and Development (UNCTAD), meeting the SDGs in emerging markets will require investment up to the value of US$4.5 trillion annually, primarily for infrastructure, education, healthcare, and agricultural development. Globally, the private sector is responsible for most investments and has played a historic role in addressing structural, social, and environmental challenges in Africa.

The SDGs provide a practical framework to achieve inclusive growth on the continent, and the private sector has a vital part to play in mobilising African countries to achieve the 2030 Agenda while strengthening the economy.

Africa's role in meeting the 2030 Agenda

Africa-focused fund managers and institutional investors have risen to the challenge as they continue to deploy and allocate capital to support the businesses driving long-term economic growth across the continent.

Recognising the importance of businesses and investors in realising the 2030 Agenda, the UN Development Programme (UNDP) launched the SDG Impact Standards for Private Equity Funds to outline a clear system to support private equity (PE), venture capital (VC) and other private market funds to achieve impact and contribute toward sustainable development through their investments.

Where Africa is concerned, responsible investing has always been at the heart of private equity due to the origins of the asset class. As Environmental, Social, and Governance (ESG) principles became more prominent in the global investment landscape, AVCA set out to tell the story of impact in Africa. In 2018, we published our first special report, An Untold Story: The Evolution of Responsible Investing in Africa, to highlight the role of development finance institutions (DFIs) and private equity fund managers in creating sustainable growth on the continent.

DFIs have demonstrated how investments in the private sector in emerging markets can have significant positive effects on job creation and economic growth. Furthermore, with the majority of private investors in Africa promoting and achieving both impact objectives and commercial returns, Africa-focused fund managers are uniquely positioned to contribute to achieving the 2030 Agenda by investing in companies that advance the SDGs.

Inaugural case study: Goal 1 - No Poverty

End poverty in all its forms everywhere

The first case study in this series focuses on the pan-African PE fund manager, Metier, and their commitment to building a world free of poverty through their investment in South African FMCG company, Nature’s Choice (Pty) Ltd.

Metier is driven by a commitment to supporting local communities and minimising adverse effects on the environments in which the Fund and its portfolio companies operate. The environmental, social and governance (ESG) policies established for Metier’s fund provide a framework for managing and communicating impact objectives with portfolio companies. Metier selects portfolio companies that are aligned with the mandate and strategy of the fund and are well-positioned to address the numerous social and environmental challenges prevalent across Africa.