Immediate past Minister of State for Budget and National Planning, Prince Clem Ikanade Agba has underscored the need for both the federal and subnational governments to create domestic investment funds in aid of existing efforts to direct public and private resources to small businesses and low-income communities.
Agba said that the small businesses and low-income communities faced limitation in meeting the needs of underserved communities and populations.
According to him: “New Domestic Investment Funds by federal and subnational governments can address these limitations and promote greater and more resilient inclusive economic growth.
“These funds should be dedicated solely to providing public catalytic capital to enable scaling up of private investment to address domestic social and economic development needs and national economic priorities.”
He spoke at the 6th IIF Annual Convening on Impact Investing, which held in Lagos from October 31 to November 1, 2023. The convention centred on the theme: “Catalytic Capital for Inclusive Growth and Development.”
Agba also listed other policy options for unlocking catalytic capital to include the need for both federal and sub nationals to develop a funding model based on outcomes, adding that funding of new areas should thus be on improving social outcomes and creating meaningful changes.
He said at the event that catalytic capital was one of the key strategies to create opportunities for the marginalized communities, women, youths and underserved regions so as to reduce inequalities, and contribute to sustainable and inclusive economic development.
“It will accelerate the process of achieving government ambitious target of moving 100m Nigerians out of poverty over the next decade. It will help both the public and the private sectors to be focused on creating jobs, deepening economic activities and providing an enabling environment for participation and a thriving private sector,” he stated.
He added: “Catalytic capital, being a subset of impact investing, is a more sustainable way to solve our development challenges by channeling massive capital from the private sector into social investments.
“This is even more critical now since we have less than ten years left to achieve the Sustainable Development Goals (SDGs). Unfortunately, the SDG programmes remains substantially underfinanced.”
He continued: “Government’s role in promoting catalytic capital in Nigeria will include building an ecosystem of regulatory framework and oversight by strengthening the industry infrastructure through appropriate regulation, as well as establishing sufficient leadership to monitor the market.
“Beyond providing oversight, the government should actively participate in catalytic capital by sowing seed capital and working with social enterprises through social impact bonds.
“Government should be actively promoting Catalytic capital through de-risking impact projects and putting seed capital as counterpart funding. Nigeria has started the process of midwifing seed capital. It is my hope that this process will be completed soon.
“Furthermore, there is need for policies to scale up the impact investing market by unlocking catalytic capital. These policies should drive increase to the supply of catalytic capital in order to unlock private capital and accelerate market growth in low- and middle-income communities.
“While the impact investing market has grown in recent years, additional sources of catalytic capital are needed to mobilize traditional return-seeking capital at scale to address the pressing social needs and promote inclusive economic growth in Nigeria.”
Agba posited that impact investing presented opportunities for local and state governments and private investors, explaining that impact investments at the local level included building affordable housing units, investing in community-based social entrepreneurs, and supporting environmental interventions with economic benefits.
According to him, “This field is large and growing, and have clear incentives for engagement.”
He had earlier appreciated the effort of the CEO, the Impact Investment Foundation, Etemore Glover, the National Advisory Board for Impact Investment and other groups partnering IIF such as, the EU, UNDP, Kuramo Capital Management, GIZ, LEAP Africa, AVPA, and EHA for organizing the convention in Lagos.
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