Lowering private investor risk to build a healthier country.

A slew of highly inno vative, private local and international, socially conscious companies are starting to improve health care outcomes in southern Africa – with some garnering investor returns of between 8% and 10% on debt funds and up to 35% in equity returns. This emerged in a panel discussion entitled ‘Investing for impact’ during the Inclusive Healthcare Innovation Summit organised late last month by the University of Cape Town’s Graduate School of Business (GSB), based at the Mother City’s Foreshore. On the panel were several pioneering social financiers whose forte is unlocking and sourcing funding while minimising risk to enable projects that provide financial and social returns across a wide spectrum. These are specialists in ‘bang-for-buck’ social impact through new financing instruments that identify the interests of each party and align them to achieve outcomes that all can commit to. The global trailblazer in social impact bonds (SIBs), the UK-based Social Finance, has now begun a feasibility study on boosting local job creation with the GSB’s Bertha Centre for Social Innovation and Entrepreneurships and Genesis Analytics, funded by the South African National Treasury and the Flanders Development Agency. The research coalition is also looking at education and health as potential areas for SIBs. With donors cutting back funding since the global financial meltdown 6 years ago, governments, especially in developing countries, are looking for new ways to pay for services provided traditionally by nongovernmental organisations. Jane Newman, the International Director of Social Finance, told the Cape Town seminar that in the UK preliminary data suggest that the first SIB is contributing to a relative decline in re-offending among former prisoners. There are 14 SIBs currently commissioned in the UK. Other areas of exploration for SIBs include early identification and self-management of diabetes, and social clubs and programmes for elderly people to mitigate the burden of mental health disorders and accidents/ emergencies. ‘We’re a financial inter mediary – our philanthropic-leaning founders’ challenge to us was, “can you bring a financial lens to tackle social issues, and use that to raise broader capital?” We don’t divert money already available in any sector, but rather look at modest investment costs in prevention to generate savings and social benefit down the line – for which it’s much easier to make a case,’ she stressed.