It has been revealed that the Nigerian financial market has limited capacity to cater to MSME funding demands, such as equity funding, grants, low-cost debt financing, and patient capital. This information comes from a report by the Nigerian National Advisory Board for Impact Investing (NABII) titled “Investing for Impact in Nigeria: A Deep Dive into Agriculture, Education, and Health Sectors.”

The report was unveiled at the 6th Annual Convening on Impact Investing in Lagos. It provides recommendations for investing in MSMEs and women-owned businesses, as well as unlocking pension funds to mobilize capital for driving growth in these sectors.

The study, conducted by the Nigerian Economic Summit Group (NESG) and NABII, with support from the Global Steering Group for Impact Investment (GSG), OTT Impacto, and funding from the International Development Research Centre (IDRC), found that most impact investments in Nigeria come from international investors. The deals are limited compared to the demand, while local investors perceive these investments as not translating into financial returns.

The report offers valuable insights into impact investing with policy recommendations for unlocking the potential of the Agriculture, Education, and Health sectors. It aims to promote the mainstreaming of impact investing in Nigeria and attract private capital to achieve the Sustainable Development Goals (SDGs).

Etemore Glover, Chief Executive Officer of NABII, stated, “This report is an essential step toward understanding the enabling conditions for unlocking investment for impact in Agriculture, Health, and Education. The Impact Investors Foundation and its partners are committed to improving awareness, stakeholders’ acceptance, and the development of enterprises for impact funds.” She added that the report will “further outline the required policies, interventions, and collaboration among key stakeholders to take the Impact Investing market in Nigeria to the next level.”

The report found that the agriculture sector received USD $799.8 million, financial services USD $729.69 million, and the energy sector USD $372.71 million in consistent impact investment from Development Finance Institutions over the past five years. In contrast, investment into Education and Health sectors has halted since 2018. Government DFIs include the Bank of Industry (BoI), Development Bank of Nigeria (DBN), Nigerian Import Export Bank (NEXIM), Bank of Agriculture (BOA), and Central Bank of Nigeria (CBN), while private DFIs are commercial banks.

The study revealed that pension funds allocated to impact investing-related asset classes have been significantly low. The report recommends including impact investing criteria in investment guidelines for pension funds, increased asset allocation to impact investing products, an upgrade of FUND I and VI for the impact investing market, and approval of direct investment in listed local companies that are ESG-compliant.

Speaking at a panel session for the report’s launch, Agudah Oguche, CEO of the Pension Fund Operators Association in Nigeria, stated that pension operators are interested in investing in impact-focused businesses but are more concerned about the safety and returns of their investments. He emphasized that impact is important but not their top priority due to operating in a competitive industry.

Dr Omisakin, Chief Economist at NESG, stressed that evidence-based research is at the core of any policy aiming to reduce poverty and foster a more inclusive economy. He highlighted the importance of asking the right questions to understand the critical stakeholders and how collaboration on this research has strengthened advocacy messaging.

Lolade Awogbade, Sustainability Specialist at DBN, explained that DBN established Impact Credit Guarantee in 2019 to empower banks to lend to MSMEs. She emphasized that the success of MSMEs depends on how prepared they are when approaching financial institutions.

The launch of the “Investing for Impact in Nigeria” report is a significant milestone for the development of the Impact Investing market in Nigeria. The report’s insights and recommendations will inform policymakers and other stakeholders on creating a more conducive environment for Impact Investing to flourish.

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It has been revealed that the Nigerian financial market has limited capacity to cater to MSME funding demands, such as equity funding, grants, low-cost debt financing, and patient capital. This information comes from a report by the Nigerian National Advisory Board for Impact Investing (NABII) titled “Investing for Impact in Nigeria: A Deep Dive into Agriculture, Education, and Health Sectors.”

The report was unveiled at the 6th Annual Convening on Impact Investing in Lagos. It provides recommendations for investing in MSMEs and women-owned businesses, as well as unlocking pension funds to mobilize capital for driving growth in these sectors.

The study, conducted by the Nigerian Economic Summit Group (NESG) and NABII, with support from the Global Steering Group for Impact Investment (GSG), OTT Impacto, and funding from the International Development Research Centre (IDRC), found that most impact investments in Nigeria come from international investors. The deals are limited compared to the demand, while local investors perceive these investments as not translating into financial returns.

The report offers valuable insights into impact investing with policy recommendations for unlocking the potential of the Agriculture, Education, and Health sectors. It aims to promote the mainstreaming of impact investing in Nigeria and attract private capital to achieve the Sustainable Development Goals (SDGs).

Etemore Glover, Chief Executive Officer of NABII, stated, “This report is an essential step toward understanding the enabling conditions for unlocking investment for impact in Agriculture, Health, and Education. The Impact Investors Foundation and its partners are committed to improving awareness, stakeholders’ acceptance, and the development of enterprises for impact funds.” She added that the report will “further outline the required policies, interventions, and collaboration among key stakeholders to take the Impact Investing market in Nigeria to the next level.”

The report found that the agriculture sector received USD $799.8 million, financial services USD $729.69 million, and the energy sector USD $372.71 million in consistent impact investment from Development Finance Institutions over the past five years. In contrast, investment into Education and Health sectors has halted since 2018. Government DFIs include the Bank of Industry (BoI), Development Bank of Nigeria (DBN), Nigerian Import Export Bank (NEXIM), Bank of Agriculture (BOA), and Central Bank of Nigeria (CBN), while private DFIs are commercial banks.

The study revealed that pension funds allocated to impact investing-related asset classes have been significantly low. The report recommends including impact investing criteria in investment guidelines for pension funds, increased asset allocation to impact investing products, an upgrade of FUND I and VI for the impact investing market, and approval of direct investment in listed local companies that are ESG-compliant.

Speaking at a panel session for the report’s launch, Agudah Oguche, CEO of the Pension Fund Operators Association in Nigeria, stated that pension operators are interested in investing in impact-focused businesses but are more concerned about the safety and returns of their investments. He emphasized that impact is important but not their top priority due to operating in a competitive industry.

Dr Omisakin, Chief Economist at NESG, stressed that evidence-based research is at the core of any policy aiming to reduce poverty and foster a more inclusive economy. He highlighted the importance of asking the right questions to understand the critical stakeholders and how collaboration on this research has strengthened advocacy messaging.

Lolade Awogbade, Sustainability Specialist at DBN, explained that DBN established Impact Credit Guarantee in 2019 to empower banks to lend to MSMEs. She emphasized that the success of MSMEs depends on how prepared they are when approaching financial institutions.

The launch of the “Investing for Impact in Nigeria” report is a significant milestone for the development of the Impact Investing market in Nigeria. The report’s insights and recommendations will inform policymakers and other stakeholders on creating a more conducive environment for Impact Investing to flourish.

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