For Financial Investigator, Iris Lijkendijk wrote an article about impact investing in Africa. In it, she warns pension funds and asset managers about the illusion of safety in globally passive investing, while highlighting the untapped opportunities the African continent offers.
Despite its demographic growth, its crucial raw materials for the energy transition, and its relatively low debt levels, less than 1% of pension assets flows to Africa. This stands in sharp contrast to the MSCI All Country World Index (ACWI) – the benchmark for passive global investing – which consists of as much as 64% of U.S. equities.
Precisely for this reason, Africa, with its vast development and investment needs, provides an ideal environment for impact investments. The marginal benefits – both financial and societal – are often significantly higher there than in the mature markets where most capital is currently allocated.
The article explores why Africa remains a blind spot for many investors. It examnies in greater depth how cognitive biases, rating models, and overly rigid governance frameworks hinder investment, and how forward-looking investing, innovative financing structures, and a broader investment perspective can instead create room for profitable as well as impactful investments in Africa.
In the next phase of this research project, we will engage with African stakeholders to explore the extent to which the perceptions of Dutch investors align with reality. We will also examine how investment opportunities can better fit the investment policies of pension funds. At the same time we aim to broaden the perspective of Dutch pension funds as well: what is needed to structurally integrate Africa into investment policy?
Are you interested to learn more about this project or become part of it? Please contact iris.lijkendijk@deruijter.net.
