Module 1 – Introduction


This is a course on evaluating impact investing in Africa. Impact investments, the Global Impact Investing Network states, “are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.” In this $80-billion industry worldwide, asset owners and asset managers deploy debt, equity and hybrid financing in viable businesses that create social and environmental value in sectors as diverse as agriculture, health, housing, renewable energy and water. Often these investors pool their capital with others in structured investment funds with thematic specializations and professional management.

Impact measurement is an integral component of impact investments, and the GIIN notes that “A hallmark of impact investing is the commitment of the investor to measure and report the social and environmental performance and progress of underlying investments, ensuring transparency and accountability while informing the practice of impact investing and building the field.” Systematically and independently evaluating the performance of fund portfolios and individual investments along what is termed the impact value chain is essential for accountability, learning, improvement and de-risking. Innovative and cost-effective methods and tools for assessing results can be drawn from both the profession of development evaluation and the impact analysts in the industry.

The key to achieving good results, in fact, lies in business models of social-purpose investee funds or firms, like Business Partners Limited, a fund that targets growth-oriented SMEs in southern Africa and Farm Shop, the Kenya-based social enterprise that manages a network of community-level agribusiness dealerships that provide inputs and advice for smallholder farmers. Effective evaluation is also crucial for building the broader field of impact investing in countries and regions. In Africa, it is especially important to develop industry ecosystems with strong local ownership and control and substantial and sustainable scale.

There are other questions that need to be addressed, as well, including: How can impact investing evaluation be designed and executed with a bias in favor of the poor? How does evaluation relate to three key investment-decision drivers—risk, return and exit? How can evaluation provide insights into and advance the issue of gender equality in impact investing? And who should pay for what types of evaluations and monitoring activities? There are many indications that impact investing can play an important role in mobilizing private, public and philanthropic capital for Africa’s sustainable development. And evaluation, for its part, can play an important role in holding all stakeholders to account and in optimizing the benefits generated by the industry.


Fauziah is a 26-year-old mother of four primary-school-age children (two boys and two girls) living in a village in northern Ghana. With an annual household cash income of $900, she and her husband farm small plots of dry, savannah land leased to them by the local Chief. Fauziah badly wants access to affordable electricity. For one thing, it would enable her children to read and do their school work in the evenings, and perhaps go on to secondary school, and maybe even further. For another, it would enable the local health clinic to refrigerate critical medicines to fight malaria, diarrhea and other deadly diseases. Consequently, even though the clinic is crowded and under-staffed, her family’s prospects of staying healthy would improve substantially.

There are two ways she may be able to access the electricity her family requires. First, she has heard that a local microfinance program will soon offer low-interest loans to help households buy and install their own solar panels. This system would power their lights at night. Second, she has also heard that a large-scale solar farm is to be built outside the regional capital, Tamale, to supplement existing megawatt capacity. But it isn’t clear whether the solar farm’s electricity will be made available to her health clinic 50 kilometers away, or whether the project will serve only government offices, bigger businesses and the residents of Tamale itself.

Far away, in Ghana’s national capital city, Accra, and in the capitals of America and Germany, the designers of impact investment funds are calculating the risks and returns of mobilizing and deploying capital for these two purposes. Will they design these funds so that Fauziah’s family can thrive, or will they focus more on the needs of middle class and elite consumers and institutions in the urban areas? Will they aim to contribute directly, and more rapidly, to achieving the targets of the Global Goals, or will they design funds that will contribute indirectly and over a longer period of time? For their part, Fauziah and her family need deep results, and they need them now, not later.


Form small groups and choose a chair and rapporteur for each. Take five minutes to read the foregoing scenario. Please discuss the following questions and record your responses on flip charts or slides. What are the advantages and disadvantages of setting up an impact investment fund that will make loans to microfinance institutions to make low-interest loans to poor households to buy their own solar panels? What are the advantages and disadvantages of major development finance institutions and banks investing in a large-scale solar farm to supplement the power supplies of public and private institutions in the regional capital? Are there creative solutions for meeting Fauziah’s needs and those of the institutions? Your rapporteur will have five minutes to present your group’s ideas in a facilitated plenary session.


Bannick, M., P. Goldman and M. Kubzansky. Frontier Capital: Early Stage Investing for Financial Returns and Social Impact in Emerging Markets, Omidyar Network, 2015.

Global Impact Investing Network website:

Harji, K. and E.T. Jackson. Accelerating Impact: Achievements, Challenges and What’s Next in Building the Impact Investing Industry, Rockefeller Foundation, New York, 2012. Accelerating-Impact-2012 full report

Jackson, E.T. and K. Harji. Evaluating Impact Investing Website. 2016.

Mudaliar, A., H. Schiff and R. Bass. Annual Impact Investing Survey 2016: The Sixth Edition, GIIN/J.P. Morgan Chase & Co., 2016.

Reisman, J. and V. Olazaba Situating the Next Generation of Impact Measurement and Evaluation for Impact Investing, Rockefeller Foundation, New York, 2016.