August 1, 2023

Bridgespan Research Elevates Three Approaches for Closing the Impact Investing Gap in Africa

The study found that asset owners and managers with flexible investment horizons and mandates can unlock greater social impact on the continent and achieve financial returns.

JOHANNESBURG—August 1, 2023—Africa-based and -led fund managers face unique obstacles that impede their ability to access capital for social impact, according to a research report published today by The Bridgespan Group. These hurdles leave on the table opportunities to address global social and environmental challenges, and Bridgespan’s report surfaces ways asset managers and owners can help close the capital gap while achieving their financial goals.

Bridgespan interviewed 25 stakeholders for the study, including a range of private market investors, philanthropists, and other field experts.

The research notes that bias is a significant hurdle to unlocking these funds’ potential. Nkanyiso Hlongwa, Bridgespan partner and co-author of the study, said: “While the challenges of scaling the African impact investing industry have been well documented, the on-the-ground experiences of African fund managers have received less attention. We believe African general partners (GPs) can and should play a prominent role in impact investing, whereby their proximity, lived experience, networks, access to opportunities, and leadership can inform how impact capital shapes the continent.”

African GPs’ experiences, shared with Bridgespan, highlighted three additional constraints to accessing impact capital:

  • The traditional “rules” of due diligence work against African GPs receiving capital. Time-honoured due diligence criteria effectively bar African GPs from receiving capital. Those criteria, designed to identify strong fund managers, include a track record of successful investments, an experienced and motivated team, and an attractively sized fund target.

  • The “impact” label deters, rather than spurs, investor engagement with African GPs. While seeking investment capital, many African fund managers either downplay or avoid calling themselves “impact funds,” citing that it drives limited partners (LPs) away, even as evidence from the global impact investing market shows that impact investors can do good and perform well financially.

  • Impact-first capital is not reaching the African GPs who need it. One way for African GPs to bolster their case, they say, is for “first-mover” limited partners to kickstart their credibility amongst other LPs by providing patient, risk-tolerant “catalytic capital.” Philanthropists, typically regarded as the most likely supporters of catalytic capital, have been reluctant to provide it.

The study found that “first-mover funders”—asset managers and owners with longer investment horizons and more flexible mandates—can help close the capital gap African GPs face, and the continent’s Sustainable Development Goals finance gap, if they are willing to try new approaches, including:

  • Seeding GPs directly: First-mover funders can seed African GPs directly, serving as an important source of capital, especially for new funds. For example, the Mastercard Foundation launched the $200 million Africa Growth Fund with a consortium of partners in late 2022. The fund seeks to invest in African-owned and -led investment fund managers, particularly those focused on youth and women’s employment.

  • Building GPs’ track record: First-mover funders can enable GPs to “warehouse” deals, which involves investing in a handful of deals before a fund reaches its first fundraising close. Low-interest loans can also provide access to liquidity to cover administrative expenses as GPs work towards the close. In addition, African GPs can build a track record by managing a portion of another fund’s investment pool. For instance, Barka Impact Capital is building its investment track record by managing a $3 million mandate on behalf of philanthropic investors to invest in restoration champions, as part of the AFR100 TerraFund.

  • Reevaluating approaches to due diligence: First-mover funders have both the position and the opportunity to rethink approaches to standard diligence criteria. For example, Oryx Impact has developed proxies for evaluating track records that take previous individual experience into account.

“Africa has abundant natural resources, vast potential for sustainable agriculture, transformative pan-African free-trade agreements, and other soaring opportunities,” said Bernard Chidzero, senior advisor to Bridgespan and one of the report’s authors. “There are challenges ahead, to be sure, and more LPs who can adopt these approaches will be needed to make a difference.”

Read the full report at .

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About the Bridgespan Group

The Bridgespan Group ( is a global nonprofit that collaborates with social change organizations, philanthropists, and impact investors to make the world more equitable and just. Bridgespan’s services include strategy consulting and advising, sourcing and diligence, and leadership team support. We take what we learn from this work and build on it with original research, identifying best practices and innovative ideas to share with the social sector. We work from locations in Boston, Johannesburg, Mumbai, New York, and San Francisco.

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