Impact investing has witnessed a surge in popularity in the last few years, as investors seek positive results for the planet in tandem with positive profits.
According to the Global Impact Investing Network 2017 Annual Impact Investor Survey, the size of the impact investment market was estimated at $114bn as of 2016, up significantly from $77.4bn in 2015.
But of the $114bn pumped into impact investing assets around the world in 2016, the share of assets under management in the MENA region stood at around $1.8bn – just shy of 2 percent of the global market size.
But the MENA region is catching up, insists Zahara Malik, founder and CEO of Dubai-based investment advisory Grosvenor Capital.
“The region is very well positioned for impact investing. It’s a geographical hub and transit point for emerging markets,” says Malik, who is the former head of GCC and Middle East for Invest Africa, a global platform of investors into Africa.
“I think people are seeing that businesses can be the driver of overcoming so many world issues. We are privy to so much information today that we feel more accountable – the news of people in dire need is everywhere,” she adds.
Referring to a survey on high net worth individuals (HNWIs) released by UBS last year, Malik points out that the UAE has one of the highest rates of adoption of sustainable investing for positive change.
In its ‘return on values’ report, UBS noted that economies such as China (60 percent), Brazil (53 percent) and the UAE (53 percent) have the highest rates of adoption of sustainable investing, far ahead of the US (12 percent) and UK (20 percent).
What’s more, 80 percent of the UAE’s wealthy investors said they believe it’s very important to use their time and resources to help create a better world – markedly above the global average of 65 percent.
With the launch of Grosvenor Capital, Malik says she is working to educate local and global investors about the merits and returns of impact investing. She also aims to provide clients with bespoke commercial strategies from impactful business development to capital introduction.
She says: “My clients are private family offices, investors and groups that want to expand into certain markets and build strategies. What deals should they be looking at? What is the capital level they should be looking at? And what countries should they be looking at? I hope to bridge those gaps.”
With her background at Invest Africa, Malik says she is particularly keen to explore synergies for impactful investment between the UAE and Africa.
“I’ve had a lot of focus on Africa to date. I have been discovering how we can shape the investment scene for Africa and what that means. It was incredibly inspiring to learn what investors need to get to market and make a positive change. Having learnt this has allowed me to start building a network and have that exposure to these investors,” she says.
Malik is also keen to help her clients understand the finer details of market entry into emerging markets.
She says: “Among those that work in African investment, it’s a bit of a gripe that people tend to lump Africa together as one entity. There are 54 countries in Africa and it’s important to respect the different languages and cultures.
“To navigate the African investment landscape, you have to build good relationships and understand the nuances.”
Malik says she would also like to take her learnings from Africa into other key markets globally, with a GCC focus, particularly Saudi Arabia.
Malik says investors need to be ‘creative’ in mobilising private capital to help meet the UN’s Sustainable Development Goals (SDG). The SDGs currently require around $7 trillion annually, including $4 trillion for emerging markets alone.
She says impact investing has the potential to raise trillions to address the world’s most pressing development needs and mitigate issues ranging from climate change to delivering the education and health services needed for lasting global prosperity.
Malik says: “We are seeing a shift in investor mindset – you can say to investors ‘your investment may not be a traditional real estate class asset but what you will see is the opportunity to break the cycle of poverty’. Ultimately, it makes people feel good and who doesn’t want to feel good?”
The CEO says that in many ways driving acceptance of impact investing is no longer the main challenge. She says ‘deal flow’ is now the main focus within the sector.
According to Malik: “It’s about being able to have access to quality deal flows that make positive impact across sectors like education, healthcare and climate change, while still making returns. These kinds of deals have long-term measurable impact and you can really build on that legacy.
“That’s why I do what I do – I want to promote that beautiful blend between people, the planet and profit. It’s so important and a lot of family offices and private individuals are keen.”For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.