Knowledge Pele (KP), South African research, development and advisory company, has launched its first social impact investments in the community of Touwsrivier in the Western Cape. The investments address key needs in township, peri-urban and rural communities: social infrastructure and industrial development.

The investments, a 20kw off-grid rooftop solar system and hydroponic farm qualify as impact investments as they deliver both social and financial returns. The solar system powers the no-fee paying school, Touwsrivier Primary School and will deliver free, clean and reliable electricity to the school for at least 20 years. This will allow the school to redirect roughly R100 000 per annum away from electricity expenses towards core educational needs. The solar system is designed to pay itself off within 12 years, which will enable reinvestment in other social needs. The hydroponic farm is commercial and will create 2 permanent jobs. An additional, larger scale farm is to be built in Touwsrivier in the first quarter of 2019, creating 30 permanent jobs. The farms have secured offtake agreements with large retailers.

The capital for these investments was provided by CPV1 and KP.  CPV 1 is a 36MW solar plant located in Touwsrivier. It is licensed under the renewable energy independent power producers procurement programme (REIPPPP). It was one of the first 28 projects to be licensed under the programme in 2011. It began operating at the end of 2014 at which point it hired Knowledge Pele to design and implement a social investment strategy on its behalf. Since then, KP has implemented a set of human capital development programmes, empowering 161 community members to become active participants in the economy. Collectively, the investments in people and their social infrastructure, are converting the community into a self-sustaining economic hub.

Through this approach, KP, has unlocked a sustainable investment model that can be scaled for replication across a wide range of township, peri-urban and rural communities. To scale this effort, KP is establishing an impact investment fund with a target fund size of R1 billion. At the target size, the fund, managed through a licensed financial services provider, Bayakha Infrastructure Partners, will be able to invest in 25 communities, which amounts to 100 under-privileged schools taken off the grid and 1000 new, permanent jobs created through hydroponic farms. The fund is targeting corporate foundations, trusts and pension funds for its capital raise.

Fumani Mthembi, MD of Knowledge Pele explains that "KP's work seeks to provide a response to the Inclusive Growth challenge of South Africa. The key insight of our approach is portfolio deconstruction- rather than investing in one or two mega infrastructure projects, the same size investment can be deployed in smaller packages across multiple communities, exponentially increasing the direct social impact."

KP's insights and capabilities are drawn from a 9-year operational track record. In this period, the company has interviewed over 8000 members of under-served communities and is actively implementing development programmes in Gauteng, the Western Cape, Northern Cape and North West provinces.