Businesses urged to impact social lives of people
The Rector of Ghana Institute of Management and Public Administration (GIMPA), Professor Franklyn Manu, has stressed the need for local businesses to play a proactive role in impacting the social lives of people.
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He said although it was the prime objective of businesses to make profit, investors should make it a civic duty to consider the social impact of their investments.
In a speech read on his behalf at GIMPA Centre for Impact Investing (GCII) stakeholders’ breakfast meeting in Accra, Professor Manu said considering the huge foreign direct investment (FDI) in Africa, one would have expected investments to have multiplier effects on the African economy by now “but clearly that is not the case”.
“One can look at the investment patterns in Ghana and Africa over the past 15 years and it will be obvious that the continent has attracted quite a chunk of foreign direct investments.
“According to the latest figures from UNCTAD to the beginning of 2013, African FDI grew to about $50 billion, from $48 billion the year before,” he said.
GCII stakeholders meeting
The breakfast meeting brought together about 15 institutions and businesses to deliberate on how best to ensure that their investments impact directly on the social lives of people.
The participants included representatives of telecommunication companies, non-governmental organisations and corporate institutions.
No major impact made
Prof. Manu said although the volume of FDIs had improved over the past 20 years, poverty remained a major canker on the African continent.
According to him, the vast majority of investments benefited only few people, “mostly corrupt political leaders and bureaucrats”.
Prof. Manu said there were arguments in certain quarters that FDIs in Africa did not follow the traditional path predicted by classic economics as they tended to focus on financing specific projects, often in the extractive industries.
“This would not be bad if Ghana and other FDI recipient countries had the high skilled personnel required in the extractive industry. Jobs would be created,” Prof. Manu observed.
Essence of impact investing
Impact investing refers to investment intended to create positive social impact beyond financial return. Unlike the traditional forms of investments that would tend to focus on oil, gas and mining, impact investments consciously incorporate strategies for solving social and environmental challenges as an integral part of any business model, placing it at par with the desire to achieve a financial return.
Prof. Manu said impact investing “challenges private investors and entrepreneurs to develop innovative businesses to deliver effective and lasting solutions to the social and environmental challenges while making profit at the same time.”
“It is this vision of impact investing and the potential for socio-economic transformation that motivated GIMPA and its sponsors to set up GCII,” he said.
Role of Venture Capital Trust Fund (VCTF)
The Head of Investments of VCTF, Mr Percival Ampomah, said the institution sought to collaborate and work with the GCII and the private sector to develop and expand impact investment activities within the country.
He proposed the establishment of a centre to advocate the activities of investors in the economic development of Ghana.