Through Alicia Sornson, responsible for programs and partnerships in the MENA region at Capital of the village
Not much is certain when it comes to investing, but it’s safe to say that one trend will continue strongly in 2022: an increasing allocation of funds to impact-driven companies. Global impact investing assets under management reached $ 715 billion in 2020 according to the Global Impact Investing Network and we expect another increase to be reported when 2021 figures become available.
As they travel the world to make a meaningful impact through scalable businesses, we believe impact-driven investors should pay special attention to opportunities in the Middle East and North Africa.
On the one hand, the region is subject to some of the most pressing societal and environmental challenges facing humanity. For example, the scarcity of water threatens agricultural production, while the insufficiency of the educational offer partly explains the status of the region as the most unequal in the world.
On the other hand, the lived experience of such adversity has prompted some of the region’s most creative minds to found companies designed to develop cross-border solutions.
After several years of immersion in the region, we have identified three areas of momentum that have already aroused significant interest from the most forward-thinking impact investors.
1- Fintech solutions that help businesses set up and perform alternative loan transactions and services
FinTech received the largest share of investment (14% of the region’s total funding in 2020, a 19% increase from 2019) and, perhaps unsurprisingly, impact-oriented companies in the fintech space generated the most interest. Borrowing and money management services are made available to a much larger segment of the population to enable people to invest in their future, while e-commerce and electronic payments are helping micro -businesses to serve marginalized populations with food, equipment and remittances.
2- Education and employment solutions
Many new tools are streamlining training and hiring, making learning and earning opportunities accessible. They promise to help a burgeoning young population secure otherwise precarious livelihoods
3- Green technology
Tools that enable sustainable supplies, sustainable food systems and regenerative agricultural practices help prevent environmental degradation, while services are developed to make green energy and renewable products affordable and accessible to all.
Highly promising individual businesses include Kaoun from Tunisia which enables unbanked and underbanked individuals and businesses to access financial services, Zedny from Egypt which is home to over 5,000 hours of learning content, and Akyas Sanitation of Jordan, which offers accessible and affordable waste management. solution to prevent disease transmission.
Health is a fourth area which has great potential but which has not yet received much attention. Hakini de Palestine, for example, is an AI-based mental health app focused on increasing mental health resources and services in the Arab world.
It is important to note that the above examples and several others described in our report, The Promise of Impact Investing in the MENA Region, show that opportunities for impact investors are spread across the region.
Our recommendation for impact investors to take a closer look at the region applies equally to high net worth individuals, diaspora coalitions, and corporate and family foundations, as it does to venture capitalists. All have the capacity to drive lasting and meaningful change in the region through targeted investments. All can help make 2022 the year impact investing has become major in the MENA region.