Impact investment

KIT works with investors, companies and funds to create social impact from investments in small and medium enterprises (SMEs). Alongside financial returns on investments, impact investments deliver social and environmental benefits to communities.

Doing good while doing well

Impact investment supports enterprises that take the wider community into account. A strong business case can be made for doing so: by working with producers, companies can improve the quality and quantity of their supply, build market knowledge or improve access to finance. Working with smallholder groups to formalise marketing arrangements is another way for companies to ensure a more reliable supply. Impact investing is about ‘doing good while doing well’.

Furthermore, clients and consumers increasingly pay more attention to the social and environmental impacts of their purchases. Environmental initiatives such as waste recycling and efficient energy use can also improve cost-effectiveness.

KIT has experience in impact investment as an investor itself through the Annona fund. We also conduct impact assessments for businesses and the large investment funds of major international foundations and investors.

Our approach integrates three key dimensions of sustainability:

  • social
  • environmental
  • financial

Each of these dimensions supports the others, and are in the interests of both the local community and the companies involved. KIT’s approach to impact investment also emphasises joint learning and sharing knowledge.

Accounting for the ‘missing middle’

The number of microfinance organisations in Africa has rapidly increased over the past decades. At the other end of the spectrum, large companies have maintained their ability to raise necessary capital either through domestic banks or international investors.

There are few options between these two extremes. This issue is known as the ‘missing middle’ and refers to the challenges that SMEs face in raising the capital necessary for their businesses to grow.

As SMEs are a powerful driver of economic growth and a major source of employment for Lower Income Countries (LICs), ensuring they have access to financial capital should be a priority. It presents an opportunity to boost domestic economies while realising impact in both economic and social terms.