The Federal Government in collaboration with impact capital investors are proposing the establishment of a $1 billion, but naira dominated Nigeria Wholsesale Investment Fund for businesses to make impact investment for the country’s socio-economic development.
The fund has been described as a fund of funds that will focus on early and growth stage business, frontier markets and particularly female-owned businesses. The focus sectors are agribusiness, education, health, energy transition, creative industry, and climate with gender cross-cutting.
Patrick Okigbo, founding partner, Nextier, speaking at the session on “Expanding Frontiers of Impact Capital” hosted by the Nigeria National Advisory Board for Impact Investing (NABii) at the ongoing NES 28 summit, said the proposed fund is also receiving strong support from key partners.
He said the federal government has set up a committee to review and start up contributions. He disclosed that the first and final close of the fund would be June 2023 and December 2024 respectively. Okigbo also said that NABii is reviewing the structure of the fund; and according to him, while government will have 70 percent participation, the private sector will have 30 percent participation.
Okigbo noted that wholesaler funds are increasingly attractive as solutions to socio-economic changes, adding that Nigeria faces persistent socio-economic challenges despite several interventions by successive governments.
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Wholsesale impact investing has been described as a growing interest and an ever increasing global market size clearly indicates growth. The Global Impact Investing Network estimates the global impact investing market at $1.164 trillion. In Nigeria the market has proven to be promising with a 147 percent increase in size from $1.9 billion in 2015 to $4.7 billion in 2019, according to official statistics.
Speaking, Clem Agba, minister of State for Budget and National Planning said that Wholesale funds are a sustainable way to solve development challenges by channelling massive capital from the private sector and made with the intention to generate positive social and environmental impact as well as financial returns.
The minister stressed that the fund has huge potential to address development challenges and a veritable source for bridging the Sustainable Development Goals (SDGs) financing which is estimated to be at $2.5 trillion annually. Agba, decried that impact investing is faced with challenges including the dearth of data for investment decisions, low incentives for investors, insufficient policies, limited knowledge and lack of investment ready businesses.
He also said the ministry is working to remove constraints to ensure that the private sector drives the economy. The Federal Government has identified 18 laws and 10 policies that need to be changed, and work has already started to produce something more comprehensive, he said.
