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The African Venture Philanthropy Alliance, or AVPA, a network of investors focusing on social impact projects across the continent, announced the Catalytic Pooled Fund on the sidelines of the recent United Nations General Assembly. The CFP, which aims to raise $200 million over five years, is backed by the Children’s Investment Fund Foundation in London and USAID’s Prosper Africa.
The fund of funds will back fund managers, impact bonds and projects with sustainable, replicable and scalable impact, and provide grants and concessional capital to renewable energy, agribusiness, education and healthcare projects.
“We’re short of risk capital,” AVPA’s Frank Aswani tells ImpactAlpha. Upping that financing means that “we can derisk social investments, and in the process, crowd private capital into the impact space.”
Institutional capital for social investments
CFP is eyeing African and global philanthropies and government donors to help lower the risk of high-impact social development projects. One big target: $1.8 trillion of dormant private capital in African insurers, pension funds and forgotten bank accounts.
Aswani tells ImpactAlpha that the fund’s soft commitments will close after an official launch next month. “The 18-month scale preparation phase will raise and deploy $20 million seeking 10X leverage, then we can ramp up towards the $200 million,” he says. Job creation, women’s and youth empowerment, climate change and supply chains are the focus.
Pension funds and social risk
African pension funds “are starting to realize that some of these social issues are not just someone else’s problem,” Aswani says. “They’re also becoming business risks for them. If, for example, the rate of youth employment continues to be high, very soon pension funds will cease to exist because there’s been no one to contribute to pension funds.”
Longer term, CPF wants the impact ecosystem connecting demand and supply to be efficient across countries, sectors and ticket sizes and to unlock $2 billion in private capital for social investments on the continent.
