This guide is intended as an explanatory memorandum surveying the current legal landscape and market standards in South Africa concerning impact investing as well as the current viable impact investment options. This guide will be useful to, amongst others, South African debt and equity investors, grant-makers, foreign investors, incubator/accelerator portfolio managers, small and medium enterprises and social enterprises. The guide examines the laws and policies governing impact investing in South Africa, as well as different types and sources of financing that can be accessed for impact investment, and introduces a term sheet and “dos and don’ts” in carrying out negotiations and drafting term sheets.

South Africa faces significant economic challenges, with youth disproportionately affected by high unemployment rates and limited economic participation. Townships, home to a significant portion of the unemployed population, are now focal points for addressing youth entrepreneurship as a solution. However, sparse data on township youth entrepreneurial activity hinders effective support strategies. This research indicates that proximity issues, such as isolation and lack of access to information, are key barriers for both youth entrepreneurs and business development support providers. Current support efforts often lack relevance and fail to target high-growth potential businesses. To improve outcomes, there's a need to shift focus towards reaching more youth entrepreneurs and tailoring interventions to their needs.

South African politicians frequently refer to entrepreneurship as a potential solution to the economy’s significant unemployment problem. In reality, many entrepreneurs need to come from townships. Numerous reports address challenges faced by South African entrepreneurs. What distinguishes this report from extant studies is that this report features the voices of entrepreneurs and entrepreneur support organisations (ESO) to vividly portray township entrepreneurs’ challenges through in-depth interviews. This report also aims to elucidate the factors that contributed to the success of exemplary township entrepreneurs despite existing challenges and other strategies that ESOs can employ to guide more entrepreneurs to emulate these success stories.

India needs a significant capital injection to achieve the Sustainable Development Goal (SDG) target by 2030 and deal with climate change. Impact investing, catalysing philanthropic and commercial capital, offers promise in addressing critical social challenges. Initiatives like the Social Stock Exchange (SSE) and regulatory amendments aim to increase and broaden the pooled funds available to social enterprises and help them scale. Given this context, ANDE South Asia produced this explainer in collaboration with TrustLaw to provide focused guidance on how local and foreign impact investors can leverage the SSE to make investments in social enterprises in India.

"Access to capital is crucial for fostering entrepreneurship, fueling business growth, and enhancing productivity. Unfortunately, femaleentrepreneurs in developing countries face significant challenges securing formal financial support and making lower profits than maleentrepreneurs. While the evidence on the gendered investment gap is well documented, scant evidence-based studies investigatewhether the disparity arises from investor bias. Authors Shibiru Ayalew, Shanthi Manian, and Ketki Sheth implemented a large-scale field experiment in a high-stakes natural context to identify whether loan officers exhibit discriminatory behavior in capital allocation decisions for businesses inEthiopia. The experimental study showed no evidence that financial providers discriminate against women-owned businesses in reviewing loan applications."

The brief provides an overview of the ongoing impact evaluation on the Impulso Chileno program, which aims to support Chilean entrepreneurs through financial assistance, training, and mentoring. Previous assessments of entrepreneur training interventions have yielded mixed results. The evaluation of Impulso Chileno holds significance as it examines the unique design and components of the program and their potential impact on business success. By evaluating the combined effect of its components, the evaluation of Impulso Chileno aims to uncover the determinants of business success and drive program improvements. The evaluation employs a Randomized Controlled Trial (RCT) design to assess the program's long-term impact on various business growth indicators such as monthly sales, profits, business practices, and employment.

"Female founders raise less capital from investors than male founders, even if their ventures are similar or identical. However, providing systematic evaluation frameworks could encourage investors to assess all candidates equally, thus reducing gender disparities. In this vein, the authors – Amisha Miller and Saurabh Lall – investigated whether changing systematic evaluation practices could close the gender gap in investment decisions. The authors designed and implemented a two-stage experiment in collaboration with Village Capital across different developing regions across Africa, South Asia (India), the Middle East, and Latin America to reduce gender disparities in investment decisions. The experimental findings confirm that using a systematic evaluation framework – prompting investors to consider both risks and growth, as well as progress – reduces or even reverses gender disparities in investment decisions. This study provides strong causal evidence for an intervention that can be implemented right out the gate at a low cost: providing a systematic evaluation framework to investors."

"Uganda's Entrepreneurial Ecosystem Initiative (UEEI) Phase II aimed to address key gaps and opportunities in the entrepreneurial ecosystems of Kampala and Gulu, Uganda. The initiative was designed to work collectively towards addressing interrelated constraints such as limited access to financing, mentorship, and network connections, which were found to be limiting entrepreneurship in Uganda. While progress has been made, challenges such as bureaucratic red tape and a lack of appropriate financial products for small and medium-sized enterprises (SMEs) still exist. The UEEI Phase II serves as a valuable learning opportunity for practitioners and policymakers working to cultivate a thriving entrepreneurship ecosystem in emerging markets."

"COVID-19 has taken a painful toll on numerous aspects of society, including the small and growing business sector. To restrain the spread of the virus, governments in many countries introduced lockdowns, social distancing, and mandatory shutdowns. However, those measures interrupted many commercial activities worldwide, causing major economic disruption.

Although the pandemic necessitated the transition to virtual program delivery, the experience allowed stakeholders in the entrepreneurial ecosystem to discover the benefits and limitations of virtual support. Now that lockdowns have largely ended and economic activity is recovering, support organizations need to decide whether to continue with virtual entrepreneurial support, revert to in-person mode, or adopt a hybrid approach to retain the benefits of both virtual and in-person programming. To understand the effectiveness of virtual support and to synthesize lessons learned during this forced experimentation period, ANDE used surveys and interviews to gather perspectives from both entrepreneurs and intermediaries on what worked - and what did not - in the shift to virtual programming."

"The gender financing gap persists. Women-led startups raise significantly less capital than startups led by only men. According to PitchBook Data, in 2021, 85.4% of global VC dollars went to startups with only men on the founding team.

That number has hardly budged over the past decade — despite the fact that data continues to suggest that women-led startups outperform startups with all-men founding teams. For example, a BCG study found that women-led companies generate more than twice as much additional revenue per dollar invested (78 cents versus 38 cents) and a PitchBook study found that women-led startups reach their exit stage a full year earlier than all-male-founded startups (median 6.4 years versus 7.4 years).

For investors, focusing on only a fraction of all entrepreneurs means they leave significant opportunities for returns on the table. For startups, this gender financing gap means promising innovations do not receive the resources they need to scale.


That is why Village Capital partnered with IFC, We-Fi, the World Bank, and researchers Amisha Miller and Saurabh Lall to identify and test several concrete ideas for how to help close the gender financing gap. With the support of a research coalition that also includes Visa Foundation, Moody’s, ANDE’s Advancing Women’s
Empowerment Fund, Sasakawa Peace Foundation, and ANDE’s SGB Evidence Fund, we have identified several promising interventions.


Now we are sharing our results, and encouraging investors and accelerators to take action."