Entrepreneurs are becoming aware of the daily social and environmental challenges people face and are designing interventions to tackle them. These interventions, which are in form of businesses, are incubated to check their viability. These business models are sustainable because a means for financial returns is provided.

However, the impact investment required to start these social enterprises are not easily accessible as the available impact investors are small, given the size of the economy.

A report by Global Impact Investing Network and Darlberg highlights how these enterprises can attract the funds to launch and scale their initiative.

The report, titled ‘The Landscape of Impact Investing in West Africa’, describes impact investments as investments made into companies, organisations and funds with the intention to generate social and environmental impact alongside a financial return.”

According to it, impact investors target a range of enterprises, both large and small; while Development Finance Institutions tend to favour larger enterprises due to their ability to absorb the large amounts of capital they provide.

Result from the survey indicates that most impact investors operating in Nigeria are headquartered outside the country, and most of the funding for impact investors originates from foreign sources.

It explains that the majority of identified DFIs involved in Nigeria are headquartered in the United States and Europe. This, according to findings of the survey, is because of the high cost of living and operating businesses in the country. More so, most of the investors are not from Nigeria because the research team identified that only four impact investment firms were founded in Nigeria, among others.

The report says Alitheia, Doreo Partners, Sahel Capital Partners and Tony Elumelu Foundation are the non-DFIs founded in Nigeria, while Proparco, International Finance Corporation and African Development Bank are foreign DFIs with local presence in Nigeria.

While the precise breakdown of funding for many investors is sensitive information, the report says interviews indicated that non-DFI investors rely almost exclusively on a combination of these DFIs, family foundations, and high-net-worth individuals from outside the country.

The Tony Elumelu Foundation – funded through the personal wealth of a Nigerian national, Tony Elumelu – was the only identified impact investor that relied significantly on local sources of capital.

Opportunities for deploying impact investment

The report says despite the various challenges encountered by impact investors in Nigeria, there is considerable excitement over the country’s investment prospects.

It adds that although interviewees did mention ways in which the process of investing could be improved – for example, through greater coordination between impact investors – their overwhelming focus was on high-potential sectors.

Microfinance and other financial services

According to the report by GIIN and Darlberg, microfinance continues to be a focal point for impact investors with developed business models and knowledge of the industry.

It observes that low-income and rural populations continue to be underserved by existing financial institutions, leaving ample space for both the establishment of new microfinance entrants and the expansion of existing ones.

It adds that there are also opportunities to further financial inclusion through expanding the services of commercial banks and other financial institutions to different market segments that do not currently have access.


Agriculture, agro-processing in particular, is widely viewed as a sector with high potential for social and financial return, due to its ability to drive job creation and increased food security as well as its strong growth prospects.

While the sector remains underdeveloped, the report says with fragmented supply chains and limited support from commercial lenders, agricultural enterprises have the opportunity to benefit from high food prices, increased governmental support and technical assistance from development agencies.

It adds, “Interviewees noted that for investors willing to make the effort to understand agricultural value chains and the types of finance needed to strengthen them, agriculture offers exciting prospects.”

FinTech (financial technology)

The report says the success of the Lagos-based mobile money enterprise, Paga, has driven renewed confidence in the combination of technology and financial services. This trend, sustained by the Central Bank of Nigria’s ambitious cashless Nigeria initiative, aims to reduce the use of cash in the economy by Nigeria, it adds.

Alternative payment systems

According to the report, electronic payment platforms such as CashEnvoy, Quickteller, eTranzact, and ReadyCash are paving the way in providing individuals and businesses with innovative means of buying and selling both online and through mobile devices.

Infrastructure and energy

Nigeria faces chronic infrastructure problems and energy shortages that, while presenting challenges to the country’s development, provide a large opportunity for investment.

According to the report, the recent effort by the Federal Government to privatise the electricity sector, which saw majority ownership of the state electricity company pass to private buyers in 2013, bode well for private investors interested in the space.

Findings from the survey show that the Lagos State Electricity Board partners with the United Kingdom Department for International Development to provide solar power for clinics and schools.

It says, “For DFIs able to invest in large deals, investments such as those in power plants, roads, and ports represent a critical intervention to build and support the economy. For non-DFIs, smaller-scale energy solutions such as off-grid and renewable energy provide an intriguing opportunity.”