The Landscape for Impact Investing in East Africa Acknowledgments
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THE LANDSCAPE FOR IMPACT INVESTING IN EAST AFRICA ACKNOWLEDGMENTS This project was funded with UK aid from the UK Government though the Department for International Development’s Impact Programme. The Impact Programme aims to catalyse the market for impact investment in sub-Saharan Africa and South Asia. www.theimpactprogramme.org.uk The Bertha Center at the University of Cape Town contributed to this report by providing their database of active impact investors operating across sub-Saharan Africa. We would further like to thank the tireless Open Capital Advisors (OCA) research team—Nicole DeMarsh, Rodney Carew, Getrude Okoth, Christine Njuguna, Charles Njugunah, Jerioth Mwaura, and Ann Munyua—for interviewing impact investors, eco-system players, and entrepreneurs, and for conducting rigorous data collection under tight timelines. We would especially like to thank our interview participants–without their key insights this report would not have been possible. We include a full list of interviewees in the Appendix. GIIN Advisory Team Amit Bouri, [email protected] Abhilash Mudaliar, [email protected] Hannah Schiff, [email protected] Laura Gustafson, [email protected] Open Capital Advisors Annie Roberts, [email protected] David Loew, [email protected] Neal Desai, [email protected] AUGUST 2015 ii TABLE OF CONTENTS EXECUTIVE SUMMARY ......................................................1 Introduction ........................................................................2 Sector Opportunities Across East Africa ......................................11 Challenges and Opportunities for Impact Investors ..........................15 Recommendations for Future Study ............................................18 Call Out Boxes Country summary: Kenya..................................................4 Country summary: Uganda ...............................................4 Country summary: Tanzania ...............................................6 Country summary: Ethiopia ...............................................6 Country summary: Rwanda ...............................................8 Country summary: Burundi ................................................8 Country summary: Sudan .................................................10 Country summary: South Sudan ..........................................10 Country summary: Djibouti ...............................................12 Country summary: Eritrea .................................................12 Country summary: Somalia ...............................................14 INTRODUCTION & METHODOLOGY ...................................19 Focus and Scope ..................................................................20 Methodology ......................................................................23 Report Structure ..................................................................25 EAST AFRICA ..................................................................26 Introduction ........................................................................27 Regional Context .................................................................28 Supply of Impact Capital .........................................................33 Demand and Need for Impact Investing Capital .............................47 Enabling Impact Investing: The Ecosystem ....................................52 Sector Opportunities Across East Africa ......................................55 Challenges and Opportunities for Impact Investors ..........................56 Background and Methodology ..................................................60 Incentives and Drivers ............................................................63 DFI Impact Approach and Influence on Impact Sector ......................65 DFI Direct Investment Activity..................................................69 Future Trends ......................................................................74 iii KENYA ...........................................................................75 Introduction ......................................................................76 Country Context ..................................................................77 Supply of Impact Investing Capital ............................................82 Demand and Need for Impact Investing Capital .............................91 Enabling Impact Investing: The Ecosystem ....................................96 Challenges and Opportunities for Impact Investors .........................101 UGANDA ........................................................................104 Introduction ........................................................................105 Country Context ..................................................................106 Supply of Impact Investing Capital ............................................109 Demand and Need for Impact Investing Capital .............................118 Enabling Impact Investing: The Ecosystem ....................................123 Challenges and Opportunities for Impact Investors .........................127 TANZANIA ......................................................................131 Introduction ........................................................................132 Country Context ..................................................................133 Supply of Impact Investing Capital ............................................136 Demand and Need for Impact Investing Capital .............................145 Enabling Impact Investing: The Ecosystem ....................................150 Challenges and Opportunities for Impact Investors .........................155 RWANDA ........................................................................159 Introduction ........................................................................160 Country Context ..................................................................161 Supply of Impact Investing Capital ............................................165 Demand and Need for Impact Investing Capital .............................174 Challenges and Opportunities for Impact Investors ..........................182 ETHIOPIA .......................................................................186 Introduction ........................................................................187 Country Context ..................................................................188 Supply of Impact Capital ........................................................192 Demand for Impact Investing Capital .........................................200 Enabling Impact Investing: The Ecosystem ....................................204 Challenges and Opportunities for Impact Investors ..........................207 iv BURUNDI .......................................................................210 Introduction ........................................................................211 Country Context .................................................................212 Supply of Impact Investing Capital ............................................216 Demand for Impact Investing Capital .........................................218 Enabling Impact Investing: The Ecosystem ....................................222 Challenges and Opportunities for Impact Investors ..........................225 SOUTH SUDAN ................................................................228 Introduction ........................................................................229 Country Context ..................................................................230 Supply of Impact Investing Capital ............................................235 Demand and Need for Impact Investing Capital .............................237 Enabling Impact Investing: The Ecosystem ....................................240 Challenges and Opportunities for Impact Investors ..........................242 SUDAN ...........................................................................245 Introduction ........................................................................246 Country Context ..................................................................247 Supply of Impact Investing Capital ............................................252 Demand and Need for Impact Investing Capital .............................255 Enabling Impact Investing: The Ecosystem ....................................260 Challenges and Opportunities for Impact Investors .........................263 ERITREA .........................................................................265 Introduction ........................................................................266 Country Context ..................................................................267 Supply of Impact Capital .........................................................271 Demand and Need for Impact Investing Capital .............................274 Enabling Impact Investing: The Ecosystem ...................................279 Challenges and Opportunities for Impact Investors ...................................................................281 DJIBOUTI .......................................................................283 Introduction .......................................................................284 Supply of Impact Capital .........................................................289 Demand and Need for Impact Investing Capital .............................291 Enabling Impact Investing: The Ecosystem ...................................296