‘We don’t lack money, we lack risk capital (in the global impact space and in efforts to address the UN Sustainable Development Goals financing gap),’ says Dr Frank Aswani, CEO of the African Venture Philanthropy Alliance (AVPA).

Dr Frank Aswani, CEO, African Venture Philanthropy Alliance

We are speaking on zoom as AVPA launches its Catalytic Pooled Fund, ahead of its flagship conference from 4 – 6 November in Nairobi.

AVPA’s mission is to increase the flow of capital into African social investments and drive sustainable growth in Africa. Bringing more risk capital into the African impact space is key to this, believes Aswani, who’s been in the role for nearly six years.

To this end, AVPA has launched its catalytic pooled fund (CPF), which he hopes will attract those all important risk funders. The CPF is designed to pool catalytic capital, i.e risk capital (that which requires low or no financial return), that will serve to bring in – in particular – domestic private capital into social investments, says Aswani.

AVPA is aiming to build a USD $200 million CPF in the next five years, sourced from African and global philanthropies, as well as government donors. The hope is that this will then leverage up to ten times its value in private capital – potentially unlocking up to $2 billion for impact across Africa.

‘Philanthropic organisations, aid agencies and governments are the ones with the biggest power,’ he says. ‘They’re sitting on this risk capital that can unlock private capital. It depends on how quickly we can get them to see themselves at catalytic investors.’

Aswani comes across as especially warm and open. He lives in Johannesburg and holds a Veterinary Medicine Degree from the University of Nairobi and an MBA from GIBS (Gordon Institute of Business Studies), University of Pretoria, South Africa.

He’s worked in the private and social sectors, spending 14 years at U.S pharmaceutical company Eli Lilly, with his last role being as the area director for Sub-Saharan Africa and sales director for South Africa. He’s also worked at international children’s charity ARK and The African Leadership Academy.

In addition, the CEO currently sits on the investment committee of the MasterCard Foundation Africa Growth Fund, and is on the advisory board of fund of funds, Oryx.

Aswani is very clear on what Africa needs and how it can be achieved. ‘Aid to Africa is declining, public debt is growing, philanthropy can’t keep up with demand and we have a growing, young population,’ he says.

‘We therefore have to look for money from elsewhere to finance our social investment needs and private capital is that source,’ he adds. ‘There have been pooled funds and there have been catalytic funds and this is putting them into one vehicle to meet our needs.’

He feels strongly that this being an African-led initiative, African capital should play a key role. ‘We want African capital to lead; we want it to precede any international investment,’ he says. ‘As an African, I want our solutions to be locally seed-funded and led; it makes sense.’

Aswani says the fund is looking to tap into some of the $1.8 trillion of dormant domestic private capital held by insurance companies, pension funds and dormant bank accounts in Africa.

It will initially prioritise four key sectors for Africa’s sustainable economic growth: agribusiness; education; healthcare; and jobs/livelihoods. At full scale, The fund will be sector agnostic, he says.

He has a dream for what Africans will do with that new knowledge, envisaging many more catalytic pooled funds tackling specific issues in Africa in the coming years.

It will also address five cross-cutting themes: inclusive supply chains; climate change; women’s economic empowerment; youth empowerment; and large-scale job creation.

Aswani hones in on one theme in particular which feels critical: ‘We are talking about large job creation,’ he says. ‘We are a young population in Africa and there are massive job deficits. It will be a real calamity if we don’t take advantage of this youth bulge’.

The response has been good so far, with AVPA bringing in the Children’s Investment Fund Foundation (CIFF), which has offices in multiple locations around the world, including Nairobi, and Prosper Africa, as partners. ‘We’ve also had encouraging responses from a couple of other global and local foundations too,’ says Aswani.

He wants this fund to be a learning opportunity for the continent. And he has a dream for what Africans will do with that new knowledge, envisaging many more catalytic pooled funds tackling specific issues in Africa in the coming years.

‘Africans will get the opportunity to learn through this fund,’ he tells me. ‘We have intentionally made the threshold lower for African foundations wanting to join.’

His grand ambition is that tens of these pooled funds will be set up in Africa in the next five to ten years, led by Africans, ‘contextualised around our challenges and seeded by African money’.

‘We want there to be a catalytic pooled fund tackling the challenges of fishermen in the Western Cape in South Africa, or around women fish sellers on Lake Victoria in Kenya or Uganda. Or focused on education in Ethiopia or for women entrepreneurs in a particular country or region,’ he says suggesting potential areas of funding.

For the initial 18 month scale up preparation phase, the CPF will aim to raise $5 – $10 million dollars, unlocking $10 – 15 million of private capital. It will fund early stage unproven intermediaries which are employing innovative finance mechanisms, to help them build a track record and scale up.

He believes Africa is an excellent place to innovate and test solutions to social challenges. ‘Some might say we’re underdeveloped, but we are the perfect place to test global solutions. If it works in Africa, its most likely globally scalable.’

There’s another piece of the picture that really needs to come together to make all this work, says Aswani. ‘We have 54 countries in Africa and only one university teaches the subject of impact and sustainable finance.

‘We’re not going to be able to move forward if we don’t have a critical mass of impact-competent human capital, especially in the field of sustainable finance.’

To help address the challenge, AVPA runs a number of capacity building programs, amongst them the Africa Impact Investing Fellowship Programme, the Africa Healthcare Funders Forum and the Africa Climate Investors Forum. It will soon be rolling out a catalytic capital investing program for grant makers, concessional capital providers like foundations, aid agencies, family offices and governments.

Finally, Aswani urges the impact sector not to ‘leave policy makers behind in the work we do as impact leaders.’ He says: ‘In so doing, they can better support us. We must be a lot more deliberate to include policy makers as we transform how to build sustainable growth on the continent. We need to help our policy environment to evolve and keep up.’

Learn more about AVPA, their membership benefits and upcoming capacity-building programmes here. 

Claudia Cahalane is the Investment Editor at Alliance magazine.