Investing for Sustainability is the Way to Go!

von Donnas Ojok
In Uganda, many companies engage in some form of social responsibility mostly as a form of corporate benevolence. Unfortunately, such social responsibility by companies are not sustainable. To induce sustainability and also give companies the opportunity to do well while doing good, companies can invest to create social impact, a term technically referred to as Corporate Social Impact Investment (CSII).

In light of this, we have partnered with ACTADE to launch a series of activities on the subject starting with a private sector forum in 2019 which attracted private sector players to have discussions on how they can invest for social impact.

In 2019, we launched a tracer study to assess the CSII landscape in Uganda. At a small expert discussion to share insights generated from the report, Dr. Joseph Balikuddembe noted that CSII offers an opportunity for increased investments in Uganda, given that the market is big and the investments limited. However, he also noted that there is generally a low level of awareness about the concept and how to technically make it work. “Thus, more still needs to be done to sensitize companies and let them know that it is possible to both make profits and create social impact” he said.

Despite the general lack of awareness, impact investment firms like Pearl Capital have been able to tap and test the market. Catherine Mirembe, an investment analyst at the firm emphasised that many opportunities are in Uganda which make it a ripe market for impact investment. For instance, the existence of technical assistance facilities which can be tapped for pre-investment preparations; increasing collaborations with various stakeholders in key impactful areas like agriculture, fintech, health, renewable energy and education.

Miremebe also advised that companies shouldn’t focus their impact investment drive only in urban areas (particularly Kampala) but also consider investing in rural areas. In fact, this confirms one of the study findings which highlighted that most impact investment projects were being implemented in Kampala and central Uganda.

During the discussion, it was noted that it’s almost impossible to have a discussion about corporate social impact investment without reference to corporate social responsibility. On this note, Mr. Simon Kaheru from Century Bottling Company, a Coca-Cola franchisee in Uganda argued that CSR still matters, but sustainability is key. Coca Cola Uganda for instance, transitioned from Corporate Social Responsibility to Sustainability. “For Coca Cola, investments in sugar reduction, a world without waste, water stewardship and empowering the community connected to its business, are its sustainability priorities” Kaheru emphasized.  Thus a range of products without sugar have been introduced to the market such as Rwenzori Mineral Water, Coke Zero among others. The company invests in refilling bottles, cares about the risks of broken bottles by putting out a team that cleans up in record time; and recovers plastics by buying them back from the community for recycling. “For the last two priorities, Coca Cola replenishes water back to communities and nature; and economically empowers especially women, in the community” Kaheru said.

A key component of impact investment is that it must significantly contribute towards facilitating better services to people in an inclusive manner. In Ugandan financial inclusion, especially for vulnerable groups such as refugees is still a struggle. Cognizant of this fact, UGAFODE, one of the microfinance institutions in Uganda decided to design a special financial product targeting refugees in Uganda. Hannington Thenge who head the project noted that when UGAFODE started interacting with refugees, they realized that there was a big opportunity to help a large number of people while also making money as a business. To date, the financial service provider has given affordable credit to up to 1,200 refugees who initially found it very difficult to get loans from other banks.

Thenge decried the general narratives and sentiments that refugees are elusive, untrusted and thus not credit worthy. “In fact, the success of the loan product for refugees has taught us that what people think about refugees are wrong. In fact, because we constructively engage, the refugees pay back their loans quite effectively” he said.

Teddy Ruge whose social enterprise, Rain Tree Farms - a value-added grower and processor of Moringa is an impact investment recipient shared his company’s journey mostly about tapping such opportunities. Teddy noted that the painstaking processes involved in tapping impact investment funds make it almost impossible for many Ugandan companies to access such instrumental resources. For instance, “Pearl Capital Partners did a due diligence process on Rain Tree Farms for a period of about one year before committing to invest 3BN in the company”