Complex Made Simple

The opportunities for impact investors in MENA in 2022

Few things are certain in investment, but it is safe to say that one trend will continue strongly in 2022 – an increasing allocation of funds to impact-oriented businesses

Impact-oriented businesses in the fintech space have received the most interest Services are being developed that are making green energy and renewable products accessible to all Health has great potential but has not yet benefitted from much attention

By  Alicia Sornson, Manager of Programs & Partnerships in MENA at Village Capital

Few things are certain in investment, but it is safe to say that one trend will continue strongly in 2022 – an increasing allocation of funds to impact-oriented businesses. Global impact investing assets under management surged to $715 billion in 2020, according to the Global Impact Investing Network and we are expecting another hike to be reported when 2021’s figures are available.

 As they scour the world to have a significant impact via scalable businesses, we believe that impact-focused investors should give due 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, a scarcity of water threatens agricultural production, whilst insufficient educational provision is partly behind the region’s status as the most unequal in the world.

On the other hand, lived experience of such adversity has prompted some of the most creative minds in the region to found businesses that are geared to developing solutions that cross borders.

 Following years-long immersion in the region, we have identified three areas with momentum that have already warranted significant interest from the most forward-thinking impact investors.

Alicia Sornson

1- Fintech solutions that help businesses set up & transact and alternative lending services

Fintech has received the highest single share of investment (14% of the region’s total funding in 2020, a 19% increase from 2019) and unsurprisingly perhaps, impact-oriented businesses in the fintech space have received the most interest. Borrowing and money management services are being made available to a much broader swathe of the population to enable people to invest in their futures, whilst e-commerce and e-payments help micro-businesses serve marginalized populations with food, materials, and remittances.

2- Education and employment solutions

Many new tools are streamlining training and hiring, by making learning and earning opportunities accessible. They promise to help a burgeoning youthful population secure otherwise precarious livelihoods

3- Green Tech

Tools that enable sustainable sourcing, sustainable food systems, and regenerative farming practices are helping to prevent environmental degradation, whilst services are being developed that are making green energy and renewable products affordable and accessible to all.

Individual companies that show great promise include Kaoun from Tunisia that enables unbanked and underbanked individuals and businesses access to financial services, Zedny from Egypt, which houses over 5,000 hours of learning content, and Akyas Sanitation from Jordan, which offers an accessible and affordable waste management solution to prevent disease transmission.

Health is a fourth area that has great potential but has not yet benefitted from much attention. Hakini from Palestine, for example, is an AI-based mental health app focused on increasing mental health resources and services in the Arab world.

 

 Importantly, the examples above and several more besides outlined in the report, The Promise of Impact Investing in MENA, show that the opportunities for impact investors are spread throughout 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 venture capitalists. All have the ability to drive lasting and meaningful change in the region through targeted investments. All can help make 2022 the year that impact investment came of age in MENA.