Good with money?
Delivering green social investment in rural Africa
15th Mar 2016 by John Weakliam, Green Impact Fund Guest Authors
The world is reaching its ecological limits, especially concerning carbon emissions, while concurrently inequality is rising with the bottom of the wealth pyramid lacking access to basic services, resources and markets. Markets including capital markets place no value on ecological costs nor on social and environment equality but act in the short term to maximise return on investment. These integrated social and ecological crises require integrated solutions which can transform how development happens.
Technological advances are creating unique opportunities to invest in people living in natural resource poor environments, enabling them to adopt technologies and practices in their place of origin and right in their homes. Communities can create their own resource solutions rather than depending on government or private service providers. Making sustainable energy, water and sanitation, communications, micro-finance, insurance accessible in the home provides a base to build sustainable livelihoods on-farm and off-farm. It also allows for more orderly and dignified migration from rural communities when such migration happens.
Vita Green Impact Fund
In 2015, the 2016-2030 SDGs launched in New York and the COP21 Conference in Paris declared the world’s collective intent to tackle the three interlinked global issues of climate change, poverty & social justice. In response Vita, an Irish-based international development agency, has created a social investment fund opportunity that is designed to mitigate against climate change while providing extremely resource poor communities with local, low-carbon, high-impact energy and water solutions.
The Vita Green Impact Fund (hereafter called “the Fund”) is a not-for-profit fund that provides loan investors with a triple bottom line of social, climatic and financial returns. This is achieved by commoditizing carbon credits generated through the provision of sustainable energy and water for rural African households and using the revenue to provide investors with a financial return.
The Fund’s local footprint and delivery capability in Eritrea and Ethiopia can be gauged from the ability to mobilise local communities to build over one million latrines and over 50,000 cook stoves in recent years. This impact has strong endorsement from local communities, government and partners such as EU and Irish Government.
Our long term program
Our aim is to create a socially responsible, self-supporting and locally-owned mechanism for provision of sustainable energy and water for climate-affected rural households.
Therefore, our immediate objectives are:
- First, to enable the scaling up of programmes providing cooking and lighting energy and water for households in Eritrea and Ethiopia and elsewhere in Africa
- Second, to generate sustainable revenue inflows for investment in climate smart programmes
- Third, to provide leadership in Ireland and for the international development sector in generating social impact investment based on carbon finance
The Fund will layer and integrate three distinct business strategies – “from impact to green to fund” - to provide rural African households with sustainable and affordable energy as well as providing a triple bottom line to investors.
- Impact: The Fund uses a community-led delivery approach which creates universal demand from households. Future income from carbon sales enables subsidization and affordable pricing for energy and water and ensures full
- Green: The Fund, as a project developer delivering high social impact, will directly participate in wholesale and retail voluntary carbon markets, creating a more attractive seller profile for carbon buyers, avoiding leakage to commercial interests and thus enhancing income from sale of carbon emission reductions
- Fund: The presentation of Green Impact in the form of an investment fund will attract a new profile of socially responsible investor looking for repayment and a return on their investment. This can bring substantial new funding into development, draw NGOs across the sector in and enable massive scale-up
The Green Impact Fund will apply a two-stage funding model, raising €2m in Phase One (2016) to support 200,000 households reducing CO2 emissions by 400,000 tons. This will comprise €1.5m in Private Loan Capital with a six-year repayment and earning 10% cumulate interest. In the second stage, €20m in Phase Two (2018) will support 2 million people while reducing carbon emissions by 4m tons.
Progressive social and green investors can participate from March 2016 in Phase One of the Vita Green Impact Fund and can expect a modest financial return alongside well-evidenced and high value-for-money social and green impact.
John Weakliam, Director, Vita Green Impact Fund
For further information, visit www.vitagreenimpactfund.com