Why you should consider impact investment in Nigeria – Sandra Eke

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Intellectual Property

30th December 2019.

Sandra Eke[1]


Why You Should Consider Impact Investment in Nigeria

If you have ever clamoured against the increasing socio-economic and environmental problems in Nigeria or wondered how you can generate profitable returns from your investments while simultaneously contributing to the development of the society, you should consider impact investment.

With a population of over 190 million people,[2] the second largest and fastest growing economic market in Africa, Nigeria is an ideal place for impact investment. The socio-economic and environmental challenges in Nigeria create an opportunity for impact investors.

What is Impact Investing All About?

Impact investing refers to an investment that aims to generate measurable beneficial social or environmental returns in addition to financial gain.[3] It is centred on making a positive impact through investments in projects that better the community.[4] Impact investing is

usually categorised under sustainable investing, which also encompasses socially responsible investing (SRI).[5]

The role of the impact investor is different from a classic investor. Firstly, the impact investor expects real and tangible social impact from its investments, without which the goal of financing won’t be achieved.[6] Secondly, unlike the classic investor who is motivated by maximization of profit and therefore anticipates returns above market average on capital invested, an impact investor is driven by the need for a significant social impact. An impact investor may accept below market returns – provided the projects invested in follow through on their promises of social and environmental change.[7]

The development of impact investment was necessitated by the Sustainable Development Goals,[8] adopted by the United Nations in 2015 which called for a collaboration of the private, public, and philanthropic sectors to end poverty and ensure environmental sustainability by 2030.

Legal Regime for Investing in Nigeria

There are a plethora of laws and regulations governing investments in Nigeria. They include: The Companies and Allied Matters Act,[9] the Nigerian Investment Promotion Act,[10] the Investments and Securities Act,[11] Consolidated Rules and Regulations of the Securities and Exchange Commission, the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act,[12] the Industrial Inspectorate Act,[13] National Office for Technology Acquisition and Promotion Act,[14] the Rulebook of The Nigerian Stock Exchange 2015 etc.

The Corporate Affairs Commission (“CAC”) oversees the formation and administration of all business entities in Nigeria. Every investor who seeks to set up a business in Nigeria which does not fall under any of the categories of business exempted from registration must register his/her business in Nigeria with CAC. The Nigerian Investment Promotion Commission (“NIPC”) is the principal body that regulates all foreign investments in the country and a foreigner seeking to invest in Nigeria is also required to register with the NIPC.

Due to the number of regulatory compliances expected to be met by a foreigner who seeks to do business in Nigeria, there is a One Stop Investment Centre (OSIC),[15] which houses all the relevant regulatory bodies.[16] Prospective investors who wish to do business in Nigeria can visit the OSIC to obtain all regulatory permits and registrations required to invest in Nigeria.

Operating Principles for Impact Investing

The International Finance Corporation, World Bank Group, recently launched some operating principles for Impact Management. The nine (9) principles identify the key characteristics of investment fund management, with the aim to positively contribute to measurable socio-economic or environmental impact.[17] The goal behind the principles is to ensure that investing decisions are made with consideration to socio-economic impact.[18] The principles include: definition of strategic impact objective(s) consistent with the investment strategy; management of strategic impact on a portfolio basis; establishment of the Manager’s contribution to the achievement of impact; assessment of the expected impact of each investment, based on a systematic approach; assess, address, monitor, and manage potential negative impacts of each investment. Others are: monitoring of the progress of each investment in achieving impact against expectations and respond appropriately; conducting exits considering the effect on sustained impact; reviewing, documenting, and improving decisions and processes based on the achievement of impact and lessons learned; and publicly disclosing alignment with the Principles and provision of regular independent verification of the alignment.[19]

Why Impact Investment Matters in Nigeria

Nigeria is a country faced with an avalanche of socio-economic challenges like hunger, poverty, unemployment, poor healthcare, poor/inadequate infrastructural facilities, illiteracy, among others, which largely affects its growth and development. However, these challenges create an opportunity for impact funds and impact investment.

Some distinctive attempts at impact investing in Nigeria can be seen in the growing focus of the Federal and State government on bond issuance projects centred on solving socio-economic and environmental challenges and the increasing emergence of small and medium scale enterprises (SMEs) which are significant contributors to social and economic growth and development. Entrepreneurs are more aware of social and environmental challenges and are innovating ways to tackle them. Examples include LifeBank, an SME that saw an important opportunity in making sure patients who need blood can get it in due time. LifeBank developed proprietary software to tackle blood shortages and quick access to medical products in hospitals in Lagos.[20] Wecyclers, a company that powers social change in the environment, provides household recycling services with the use of low-cost cargo bikes, which allowes people in low-income communities to capture value from their waste.[21] Andela, a technology company, recruits and trains local software developers at little or no cost, who in turn work remotely for them for various international companies, thereby generating employment opportunities for thousands of the unemployed populace in Nigeria.[22]

Furthermore, a good number of impact investing funds have been made available by some foreign development institutions and bodies. For instance, the African Development Bank invested in the Africa Food Security Fund (AFSF) to boost agri-business SMEs and enhance food security in some African countries like Nigeria.[23] Also, the International Finance Corporation made an investment in Hygeia Nigeria Limited to improve the healthcare infrastructure in Nigeria and to facilitate access to quality healthcare services.[24] Locally, the Nigerian Capital Development Fund (NCDF) launched an Impact Investment Note and Fairshares investment platform to enable impact investors make investments and become stakeholders in NCDF, to drive sustainable impact projects in the country.

A couple of Federal and State government bonds which can be characterised as social impact bonds are additions to impact investment funds in Nigeria. For example:

  1. Issuance of Sukuk (Islamic Bonds)

Sukuk or Islamic bonds are structured in such a way as to generate returns to investors without infringing the tenets of Islamic law that prohibits “riba” (interest). As an investor your money is put into the assets of a project or investment in order to generate profits and not interests. However, the Federal Government of Nigeria and a State government have been involved in the successful issuance of Sukuk Bonds as impact investment. Osun State government through a wholly owned Special Purpose Company, (Osun Sukuk Company Plc) was the first in sub-Saharan Africa to issue Sukuk bonds worth N11.4 billion as an education project to finance construction of some High Schools in the state.[25] More recently, the Federal government issued a N100 billion Sukuk bond for the construction of federal roads across the six geopolitical zones in Nigeria.[26]

  1. Issuance of Sovereign Green Bonds

A sovereign green bond is a debt security issued by a national government for climate and environmental projects. They can be denominated in a foreign currency or the government’s own domestic currency. In 2017, the Federal Government of Nigerian issued a climate bond certified sovereign green bond worth N10.69bn, making it the first issuer of sovereign green bonds in Africa and the 4th in the world.[27] The bond was issued to finance three (3) major projects: the energy education programme, renewable energy micro utilities, and afforestation.[28] In 2019, a second tranche of the bond was issued.[29]

  1. Euro Bonds

Eurobonds are bonds that are issued in a currency not native to the country where it is issued, e.g., where the Federal Government of Nigeria issues a bond denominated in US Dollars in Nigeria and invites investors from all over the world to subscribe to it. Nigeria issued its 6th Eurobond in 2018 worth $2.86 billion, following issuances in 2011, 2013, and 2017 in different tranches.[30] The Eurobond was issued to help fund Nigeria’s budget deficit, reduce the risk of inflation and to improve the financial health of the country. Its sale was said to have been three times oversubscribed.

  1. Corporate Green Bonds

A corporate green bond is a bond issued by a corporation other than a government or municipality, in order to raise financing for climate and environmentally friendly projects. In March 2019, Access Bank Plc., issued a 5-year fixed rate senior unsecured green bond, making it the first ever Climate Bonds Standard Certified Corporate Green Bond to be issued in Africa.[31] The bond issued was worth N15bn and was for the financing of new loans and refinancing of existing loans in accordance with the Bank’s Green Bond Framework and the Climate Bonds Initiative standards, and to support projects directed at flood defence, solar generation facilities and agriculture.[32]

  1. Housing Funds

These are funds established by private or government agencies to support the preservation and production of affordable housing, particularly for low income earners to access decent and affordable homes. A good example is the National Housing Fund and Family Homes Fund. The Family Homes Fund is a social intervention program that provides access to affordable housing, home loan assistance funds, rental housing funds and infrastructure development funds for millions of Nigerians within the low to medium income bracket, through strategic partnerships with various categories of investors.

From the foregoing, it can be deduced that the future of impact investing in Nigeria is very bright. More recently, the Bank of Industry, African Capital Alliance, Business Day Media Limited, Ford Foundation and Dalberg Advisors formed the Impact Investors Foundation (IIF). The foundation was registered as a non-profit entity to foster the development of impact investing in Nigeria and promote cooperation amongst relevant stakeholders active in the sector.[33] It is anticipated that this strategic collaboration would boost the growth of impact investing in Nigeria.

Challenges Faced by Impact Investors

Regardless of the potential to boost the development of critical infrastructure and supplement government spending, several fundamental challenges exist that have slowed investment activity. To grow the sector in Nigeria, these obstacles would need to be addressed. Some of these challenges include: difficulty sourcing viable investments that meet both financial and social or environmental objectives; negative perception about sustainable investing that value must be sacrificed for profit and that these funds underperform compared to traditional funds; shortage of high-quality investment opportunities with strong track records; limited innovative funds and deal structures; lack of appropriate capital across the risk/return spectrum; difficulty exiting investments due to foreign exchange control, are some of the major challenges.


While impact investments have continued to grow in Nigeria, its impact might not be significant amidst the plethora of challenges faced across the country. This myriad of challenges impedes the expansion and maximum realisation of its potential to deliver social, economic and environmental returns at scale.

Nevertheless, these perceived challenges shouldn’t serve as an excuse to bury the idea of impact investment. On the contrary, it is a time for us to revaluate our guiding principles and collaborate to build a strong socio-economic society. We need to consider impact investment and ask ourselves these questions: What if we redefine wealth and prosperity not in terms of how much money we are able to amass but how much positive impact we are able to make in our community and in the lives of others? What if we changed our perception of investment from a principal goal of yielding profit to one of contributing to reduce deficits in social infrastructure? The new world we have dreamt about is possible; one where impact investing provides some of the answers to changes we have long desired.



For further information on this article and area of law, please contact Sandra Eke at: S. P.A. Ajibade & Co., Lagos by telephone (+234 1 472 9890), fax (+234 1 4605092) mobile (+234 8112491286) or email (seke@spaajibade.com).



[1] Sandra Eke, Associate Intellectual Property & Technology Law, SPA Ajibade & Co., Lagos, Nigeria.

[2] World Bank, “World Development Indicators: Google Public Data Explorer” available at: https://www.google.com/search?q=population+of+nigeria&rlz=1C1CHBD_enNG735NG736&oq=population+of+&aqs=chrome.1.69i57j0l5.6662j0j7&sourceid=chrome&ie=UTF-8 accessed 6th November 2019.

[3] Global Impact Investing Network, “Impact Investment in Africa” available at: https://www.impactatafrica.org/sites/default/files/publications/impact_investment_in_africa_action_plan_2016_english.pdf accessed on 20th April 2019.

[4] Investopedia, “What is impact investing” available at: <https://www.investopedia.com/terms/i/impact-investing.asp> accessed on 18th April 2019.

[5] Bloomberg, “Quick take: Sustainable Investing” available at: https://www.bloomberg.com/quicktake/sustainable-investing accessed 10th September 2019.

[6] Optimy Wiki, “Impact investment” available at:https://wiki.optimy.com/impact-investing/ accessed 18th April 2019.

[7] Ibid

[8] Common Fund for Commodities, “The Sustainable Development Goals and Impact Measurement – A CFC Journey” available at: http://www.common-fund.org/wp-content/uploads/2019/01/AR-2017-Sustainable-Development-Goals-and-Impact-Measurement.pdf accessed 12th October 2019.

[9] CAP C20 Laws of the Federation of Nigeria 2004.

[10] CAP N117 LFN 2004.

[11] CAP T22, LFN. 2004.

[12] CAP F34 LFN 2004.

[13] CAP I8 LFN 2004.

[14] CAP N68, LFN 2004.

[15] NIPC, “Guide to investing in Nigeria: Getting started” available at: https://nipc.gov.ng/iguide/getting-started/#osic accessed 12th December 2019

[16] ibid

[17] IFC, World Bank Group, “Investing for Impact: The Principles” available at: https://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/Impact-investing/Principles/?utm_source=hootsuite&utm_medium=&utm_term=&utm_content=&utm_campaign= accessed 12th September 2019.

[18] ibid

[19] ibid

[20] Desola Ososami, “How Impact Investments can develop Nigeria?” available

at:https://www.stearsng.com/article/how-impact-investments-can-develop-nigeria accessed 20th April 2019.

[21] ibid

[22] ibid

[23] African Development Bank, “African Development Bank, partners support smallholder farmers with 17 new project grants” available at https://www.afdb.org/en/news-and-events/african-development-bank-partners-support-smallholder-farmers-with-17-new-project-grants-19222 accessed 8th November 2019.

[24] IFC, “IFC, IFHA II, Swiss Re and CIEL Healthcare Invest in Hygeia Nigeria to Expand Access to Quality Healthcare” available at: https://ifcextapps.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/C1481BDFE4A7586185257F33003E3183 accessed 5th November 2019.

[25] The Nigerian Observer “Osun Sukuk: Driving National Fund for Development Projects” available at: https://nigerianobservernews.com/2019/02/osun-sukuk-driving-national-fund-for-development-pojects/ accessed 5th April 2019.

[26] Debt Management Office, “Press Release on The Second N100 Billion Sovereign Sukuk Issuance.pdf” available at: https://www.dmo.gov.ng/news-and-events/circulars-releases/2672-press-release-on-the-second-n100-billion-sovereign-sukuk-issuance accessed 8th November 2019.

[27] Debt Management Office, “FGN Green Bond Offer for Subscription” available at: https://www.dmo.gov.ng/fgn-bonds/green-bond/2289-fgn-green-bond-offer-for-subscription/file accessed 8th November 2019.

[28] ibid

[29] The Federal Government of Nigeria embarked on an issuance of N15bn Series II Green Bond. The law firm of SPA Ajibade & Co and Austen Peters & Co acted as joint solicitors to the bond issuance project. A subscription level of over 220% was recorded. See: Debt Management Office, “FGN N15bn Green Bond Series II Prospectus” available at: https://www.dmo.gov.ng/fgn-bonds/green-bond/2810-fgn-n15bn-green-bond-series-ii-prospectus/file accessed 8th November 2019.

[30] Nairametrics, “Over $17bn raised from bonds by Nigeria and other African countries – World bank” available at: https://nairametrics.com/2019/05/02/over-17bn-raised-from-bonds-by-nigeria-and-other-african-countries-world-bank/ accessed 5th June 2019.

[31] Access Bank Plc ,”Proposed Bond Issuance” available at: https://www.accessbankplc.com/AccessBankGroup/media/Documents/Proposed-Issuance-Of-Green-Bond.pdf accessed 8th November 2019.

[32] ibid

[33] Impact Investors Foundation, “About Us” available at: https://impactinvestorsfoundation.org/iifconvening2019/

accessed 8th November 2019.


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