The Landscape

for Social Investments

in East Africa

The Landscape for Social Investment in East Africa

This report maps the landscape of social investments in East Africa with a deep dive focus on Kenya, Uganda and Tanzania, and a high-level assessment of Rwanda, Ethiopia and South Sudan. It analyses strategies used by various international and domestic social investment capital providers.

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Executive Summary

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Overview of Key Social Investors in the Region

Key Findings

The social investment industry in East Africa has evolved significantly over the last decade – from the establishment of the East Africa Philanthropy Network in 2003 to the recent launch of the Social Enterprise Society of Kenya.
The region has witnessed increased activity by the regional corporate social investors driving large social projects.
With a few notable exceptions, individual philanthropy in East Africa remains largely unstructured and private, with a limited number of family foundations based in the region.
The supply of social investment capital in the region is not well aligned to demand from social enterprises and impact businesses.
The East Africa region has a significant proportion of expatriate founded and led enterprises; consequently, more funding in the region has gone to these enterprises at the cost of locally founded enterprises.
Non-profit organisations are seeking more local capital and sustainable operating models, as international grant funding declines.
The guiding framework for social investments and philanthropy remains fragmented, with multiple laws and authorities governing the sector.
The region, however, boasts of a high number of ecosystem support providers, including incubators, accelerators, service providers, and financial intermediaries.

Social Investment Landscape in East Africa

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Key Findings:

Institutional philanthropy in East Africa is becoming more vibrant with the strengthening of networks and philanthropy forums.
Corporates foundations in the region are driving the social investment space, establishing partnerships with other social investors to deliver sustainability programs
Governments in the region, particularly in Kenya, are enhancing collaboration and engagement with philanthropy stakeholders.
Individual and family philanthropy in the region remains largely unstructured; more HNWIs are however, shifting to angel investing
East Africa has recorded the largest share of blended finance transactions across the continent; many investors in the region are leveraging concessional capital, blended finance, and technical assistance facilities to deploy their capital.
The potential for diaspora funds in financing development challenges remains largely untapped with only few innovative structures developed in the region.
Although capital deployed to women-owned or women-led businesses is still relatively limited, more investors in the region are adopting Gender Lens Investing (GLI) in their investment decisions.
Instances of collaboration have been increasing between international and regional local social capital providers.

Deep Dive into Social Investors in East Africa

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Overview of Key Social Investors in the Region

Key Findings:

A highly diverse group of social investors is actively deploying capital in East Africa, with over 317 social investors identified by the research. The majority of social investment capital deployed in East Africa continues to come from international sources.
Activity by corporate social investors headquartered in the region is significant and on the rise.
DFIs have invested US$ 6.6Bn in 326 deals between 2015 and 2019 with a focus on financial services, energy, debt finance, and increasing attention to Ethiopia
Between 2015 and 2019, a total of US$ 1.5Bn was deployed into over 217 SDG-aligned deals by private fund managers with a preference for energy, financial services and healthcare, and strong concentration in Kenya
Between 2014 and 2019, a total of US$ 382.7 Mn was deployed in 69 transactions by East African CSIs while the top five North American CSIs deployed US$ 561Mn in various SDG–aligned sectors.
The research mapped US$ 22.17Mn deployed by the East African family foundations across 27 transactions; operating foundation models are common, and grant making is the dominant mode of capital deployment for family foundations.

Demand for Social Capital in East Africa

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Financing Requirements for Different Demand Actors over Time

Key Findings:

Start-up funders in the region favoured agriculture, healthcare,
energy, and financial inclusion sector, with a strong bias
toward fintechs.
While the number of innovative business models established has
been increasing, funding has been consistently flowing into only
a few enterprises.
Civil Society Organisations (CSOs) in the region performed
poorly in the financial viability score, which indicates limited
funding for CSO activities.with governments and policy makers
can be established.

Enabling Environment for Social Investments in East Africa

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Key Findings:

East African philanthropists have much lower incentives than
their counterparts in Southern Africa. Challenges in applying
for such incentives limit their effectiveness in encouraging
local giving.
Ecosystem support providers, including incubators, accelerators,
service providers, and financial intermediaries, are primarily
located in Kenya and specifically in Nairobi.
While many networks and associations are supporting social
enterprises in the region, only a few networks exist for the
NGOs and philanthropists.