Nedbank has set up its Green Economy Fund with an initial capital of R10-million.
Poovi Pillay, executive head of corporate social investment at Nedbank, says the fund is intended to provide funding for up to 100 start-ups in the waste, water, energy and agricultural sectors – the four sectors targeted by Nedbank’s Green Economy Strategy to create sustainable jobs and build wealth while furthering the United Nations’ Sustainable Development Goals.
“Too many start-ups fail to last more than a year, and one of the main reasons is that they are not eligible to receive finance via conventional funding models. Our fund has been created specifically to provide this vital lifeline to enable more green-economy SMEs to survive until they are ready for conventional funding,” Pillay says.
The recent Nedbank Green Indaba celebrated the success of Nedbank’s Green Economy Strategy, which was announced as the centrepiece of its corporate social investment (CSI) programme at the end of 2021.
Pillay stresses that Nedbank’s Green Economy Strategy aims to make substantial changes to the way in which the bank seeks to drive positive change in South Africa. He said Nedbank aimed to create sustainable jobs with a focus on the youth and rural communities, two groups that are marginalised.
In that regard Nedbank is also focusing on measuring the impact its investments in the green economy are making. The bank has developed a method of assessing a project’s social return on investment (SRoI), which covers the financial impact it makes on the beneficiary, the economic impact of the jobs and skills created, the impact on the environment and, lastly, the amelioration of social conditions. The latter includes improved standard of living and an increase in average household income.
“South Africa faces many challenges, but each one of them is a potential set of opportunities for those with the vision to see them. One of our key success levers is that we believe that green businesses have to create wealth and grow the total economy; the green economy has the potential to kick-start the economy,” Pillay says. “We also believe very strongly that the green economy has to be inclusive, opening up more opportunities for those who are currently excluded.”
He stresses the fact that the green-economy concept is more than the framework for Nedbank’s CSI spending – ultimately it will be the guiding principle for how the bank does business, in line with its aim of being financial experts who do good.
Financing was the theme of the keynote speech at the event, delivered by Dr Frank Aswani, CEO of the African Venture Philanthropy Alliance (AVPA). Dr Aswani argued that innovative financing approaches have the potential to increase the flow of investment capital towards making an impact on Africa’s challenges.
A key point of his presentation was that while the solutions to problems would inevitably change as new data and methodologies become available and progress is made, not enough time and thought are spent on properly understanding the problem. At the broadest level Africa is too dependent on aid and has a dramatically high youth unemployment rate. Contributing factors include the impact of climate change, escalating government debt and educational systems that are not fit for purpose.
“We have unacceptably high rates of stunted malnutrition: 27% in South Africa and 40% in Nigeria. This means that we are raising huge numbers of people who are cognitively impaired and fit for nothing more than casual labour,’ he says. ‘We also need to recognise that conventional aid is reducing – this is a problem that we as Africans must solve.”
What’s needed, he argued, is risk-based investment that will help social enterprises take their products or services to market successfully and pay a return, or investment that helps to create a market for the social enterprise’s goods. Business needs to make these kinds of investment a priority because it is an investment in future customers and a way of realising the opportunities hidden by challenges.
Such investment needs to focus on providing funds where other funders will not venture in order to generate benefits that would otherwise not be delivered.
“It’s going to be key to develop collaborative networks across the continent to change the investment mindset, making the upliftment of everybody a part of how we do business and not just a separate activity covered by corporate social investment,” Dr Aswani says. “Reaching the Sustainable Development Goals is critical to our societies’ success – and to the opportunities available for business.”