An innovative new fund has been launched in South Africa to incentivise fund managers to invest in small, medium-sized and microenterprises (SMMEs) that are able to generate verifiable green outcomes and jobs in the energy, water, waste, infrastructure and land-management sectors.
The R488-million Green Outcomes Fund (GOF) is a partnership between the National Treasury’s Jobs Fund and green-economy nonprofit GreenCape, the fund’s implementation partner. The two entities officially signed a partnership agreement for the GOF on January 31.
The ground-breaking scheme is also being supported by the University of Cape Town Graduate School of Business’ Bertha Centre for Social Innovation, which led the design and fundraising for the development of the fund.
A grant from the RMB Fund, a division of the FirstRand Foundation, facilitated the official launch of the fund on April 7.
The GOF will provide outcomes-based matched, or concessional, funding to local investment funds to support investments into qualifying SMMEs, with Mergence Investment Managers, Edge Growth Ventures, Conservation International Ventures and Business Partners South Africa having been appointed as finance partners.
Investment funds partnering with the GOF can choose from a portfolio of green-outcomes metrics, developed in line with international impact investing standards, when selecting an SMME to invest in.
“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,” GreenCape’s Megan van Vlaanderen explains.
Jobs Fund head Najwah Allie-Edries believes the GOF will support innovation and investment in activities which directly contribute to sustainable job creation in the green economy.
“This initiative will also provide the Jobs Fund with valuable learnings and appealed to us as public funds will only be triggered by the delivery of independently verified jobs,” Allie-Edries adds.
The fund emerged from a World Bank Climate Technology Program pilot initiated in 2016, which the Bertha Centre, GreenCape and WWF-SA used to test whether a green outcomes-based impact investing fund-of-funds mechanism could stimulate growth in the South African green economy.
Bertha Centre for Social Innovation innovative finance lead Tine Fisker Henriksen says the fund combines the de-risking of SMME investing with demonstrated positive social and environmental impacts.
“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,” Fisker Henriksen adds.
Green SMMEs can find more information and apply to be considered for funding online at: https://www.greencape.co.za/content/sector/the-green-outcomes-fund.