South Africa: New facility to incentivise fund managers to back green SMEs
The R488 million (about $26.8 million) Green Outcomes Fund (GOF) has officially been launched to help grow green businesses in South Africa.
The GOF is a first of its kind structure, which incentivises local South African fund managers to increase investment in green small, medium and micro-sized enterprises (SMMEs).
Through a partnership between National Treasury’s Jobs Fund and GreenCape, the GOF provides outcomes-based matched (concessional) funding to local investment funds to support investments into SMMEs that make a demonstrable contribution to South Africa’s green economy, as well as job and enterprise creation in priority impact areas. This has been made possible by catalytic grant support from the RMB Fund, a division of the FirstRand Foundation. The local catalytic finance partners of the GOF are: Mergence Investment Managers, Edge Growth Ventures, Conservation International Ventures and Business Partners South Africa.
National Treasury’s Jobs Fund partners with innovative, high-impact projects that contribute to accelerated job creation and offer practical and lasting solutions to South Africa’s employment challenges. According to Najwah Allie-Edries, head of the Jobs Fund, “Through the Green Outcomes Fund partnership with GreenCape, we seek to be a catalyst for innovation and investment in activities which directly contribute to sustainable job creation initiatives, as well as long term employment creation in the green economy.”
Investment funds partnering with the GOF can choose from a portfolio of green outcomes metrics when selecting green SMMEs to invest in. The green outcomes have been developed in line with international impact investing standards.
“The Green Outcomes Fund aims to achieve clearly defined green outcomes, encourage greater capital allocation to green businesses by local fund managers, and catalyse increased and higher quality, consistent, reporting of green impacts,” said Megan van Vlaanderen of GreenCape. “GreenCape is the Green Outcomes Fund implementation partner, primarily accountable to the Jobs Fund for delivery and reporting on the green outcomes measurement and evaluation.”
UCT GSB’s Bertha Centre for Social Innovation led the design and fundraising for the Green Outcomes Fund development and continues as the primary knowledge partner. “We are excited about the ground-breaking role of the GOF in demonstrating an innovative financial model that combines de-risking SMME investing with demonstrated positive social and environmental impact. It’s a first of its kind in the international impact investing landscape and we are thrilled to launch this unique blended finance partnership in South Africa, which is made possible through local contributions only,” said Tine Fisker Henriksen, innovative finance lead, Bertha Centre for Social Innovation.
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