Impact Investing and Financial Development in Africa

Florian LÉON * Chargé de recherche, Fondation pour les études et recherches sur le développement international (FERDI) ; chercheur associé, Université Clermont-Auvergne, CNRS (Centre national de la recherche scientifique), IRD (Institut de recherche pour le développement), CERDI (Centre d'études et de recherches sur le développement international). Contact : florian.leon1@ferdi.fr

This article explores the promising relationship between impact investing and financial development in Africa. Impact investing is a financial innovation that seeks to balance financial profitability with impacts (economic, social and environmental). Although this industry is beginning to take root in Africa, its growth remains limited. The article points out that in order to develop, impact investing needs to be supported by a sound financial system, which is lacking in many African economies. In turn, this new asset class could strengthen the financial sector by providing greater access to bank loans and financial innovation. In this way, impact investing and the rest of the financial system are closely linked, and the development of the former cannot be achieved in isolation.