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Impact Investing in Kenya: An Assessment of Practises and Potential

Broomé, Carl and Lundberg, Albert (2015) MIO920
Production Management
Abstract
Background There is a widespread consensus that aid alone will not be able to
solve the development challenges facing Africa, with Kenya being no
exception. The challenges are simply too great. One potential way to
facilitate growth while also making it more inclusive is to use impact
investing. Impact investing could be defined as investments made
with the intention of yielding a financial return while also having a
positive social and/or environmental impact that is continuously
measured. East Africa is one of the centres of global impact investing
and Nairobi is the regional hub of East African impact investing.
Purpose
The purpose of this Master’s thesis is to examine how the
phenomenon of impact investing is practised in... (More)
Background There is a widespread consensus that aid alone will not be able to
solve the development challenges facing Africa, with Kenya being no
exception. The challenges are simply too great. One potential way to
facilitate growth while also making it more inclusive is to use impact
investing. Impact investing could be defined as investments made
with the intention of yielding a financial return while also having a
positive social and/or environmental impact that is continuously
measured. East Africa is one of the centres of global impact investing
and Nairobi is the regional hub of East African impact investing.
Purpose
The purpose of this Master’s thesis is to examine how the
phenomenon of impact investing is practised in Kenya, mainly from a
fund manager’s perspective. From the main purpose four subpurposes
are derived.
• To explore whether impact investing fills a gap in Kenya’s
investing market and what that gap may look like.
• To examine how impact investors in Kenya weigh social impact
against financial return.
• To investigate what role DFIs play and how they differ from
impact investors.
• To explore what incentives exist for impact fund managers as
well as how impact investing itself could change market
incentives.
Delimitations • In line with the stated purpose of using a fund manager’s
perspective as well as limited time and resources, pure asset
owners and entrepreneurs were not interviewed.
VII
• In agreement with the qualitative nature of the study as well as
du to limited data access, financial statements such as annual
reports were disregarded.
• The authors have no ambition to compare practises of different
funds in a normative way, consequently such comparisons are
absent.
Method The thesis combines an exploratory & descriptive, abductive and
stakeholder focused approach. The study is qualitative and based on
16 in-depth interviews with people active in the Kenyan investing
space. Findings are analysed and discussed based on data gathered,
and a conceptual framework developed, through a literature study.
Conclusions • Impact investing in Kenya is in an early stage but growing
• Practises vary across firms, with funds still trying to figure out
how to best practice the phenomenon
• Impact investors claim that they accept higher risk and exercise
more patience than traditional investors
• Impact funds tend to be structured in similar ways to traditional
PE and VC funds
• DFIs play an important role by influencing actors and shaping
the market
• Impact funds do not incentivise employees based on social
and/or environmental impact
• Impact investing implies a stakeholder model of governance that
takes the needs of several stakeholders into consideration
• Impact investing moves beyond strategic CSR and puts social
impact at the heart of the business model (Less)
Please use this url to cite or link to this publication:
author
Broomé, Carl and Lundberg, Albert
supervisor
organization
course
MIO920
year
type
M1 - University Diploma
subject
keywords
Impact Investing, CSR, Kenya, DFI, Stakeholder
other publication id
15/5526
language
English
id
7869318
date added to LUP
2015-09-18 09:58:22
date last changed
2015-09-18 09:58:22
@misc{7869318,
  abstract     = {Background There is a widespread consensus that aid alone will not be able to
solve the development challenges facing Africa, with Kenya being no
exception. The challenges are simply too great. One potential way to
facilitate growth while also making it more inclusive is to use impact
investing. Impact investing could be defined as investments made
with the intention of yielding a financial return while also having a
positive social and/or environmental impact that is continuously
measured. East Africa is one of the centres of global impact investing
and Nairobi is the regional hub of East African impact investing.
Purpose
The purpose of this Master’s thesis is to examine how the
phenomenon of impact investing is practised in Kenya, mainly from a
fund manager’s perspective. From the main purpose four subpurposes
are derived.
• To explore whether impact investing fills a gap in Kenya’s
investing market and what that gap may look like.
• To examine how impact investors in Kenya weigh social impact
against financial return.
• To investigate what role DFIs play and how they differ from
impact investors.
• To explore what incentives exist for impact fund managers as
well as how impact investing itself could change market
incentives.
Delimitations • In line with the stated purpose of using a fund manager’s
perspective as well as limited time and resources, pure asset
owners and entrepreneurs were not interviewed.
VII
• In agreement with the qualitative nature of the study as well as
du to limited data access, financial statements such as annual
reports were disregarded.
• The authors have no ambition to compare practises of different
funds in a normative way, consequently such comparisons are
absent.
Method The thesis combines an exploratory & descriptive, abductive and
stakeholder focused approach. The study is qualitative and based on
16 in-depth interviews with people active in the Kenyan investing
space. Findings are analysed and discussed based on data gathered,
and a conceptual framework developed, through a literature study.
Conclusions • Impact investing in Kenya is in an early stage but growing
• Practises vary across firms, with funds still trying to figure out
how to best practice the phenomenon
• Impact investors claim that they accept higher risk and exercise
more patience than traditional investors
• Impact funds tend to be structured in similar ways to traditional
PE and VC funds
• DFIs play an important role by influencing actors and shaping
the market
• Impact funds do not incentivise employees based on social
and/or environmental impact
• Impact investing implies a stakeholder model of governance that
takes the needs of several stakeholders into consideration
• Impact investing moves beyond strategic CSR and puts social
impact at the heart of the business model},
  author       = {Broomé, Carl and Lundberg, Albert},
  keyword      = {Impact Investing,CSR,Kenya,DFI,Stakeholder},
  language     = {eng},
  note         = {Student Paper},
  title        = {Impact Investing in Kenya: An Assessment of Practises and Potential},
  year         = {2015},
}