GreaterGood SA is breaking new ground in South Africa by working alongside the Cadiz Financial Strategy Group to create a socially responsible investment product that combines investment return imperatives with sustainable development – environmental, social and corporate. The relationship draws on GreaterGood SA’s track record of successful social impact assessment and evaluation as well as the considerable financial acumen of the Cadiz Group. Addressing imbalances South Africa is an upper-middle-income country in per capita terms. The number of South African dollar-millionaires increased by almost 14% between 2006 and 2007, according to the latest Capgemini Merrill Lynch World Wealth Report, and a rapidly growing black middle class is boosting the country’s house, car and retail sales. But despite this relative wealth, the distribution of income is among the most unequal in the world with an estimated 51% of South Africans living below the poverty income line . A great deal of capital has gone into development in South Africa since the fall of apartheid. A recent Human Sciences Research Council national survey on social giving in South Africa found that regular citizens give roughly R12 billion a year from their own pockets to help others and corporate philanthropy stands at an estimated R5 billion per year. “South Africa has a thriving civil society, large amounts of aid funding and a government committed to social upliftment and poverty alleviation,” says GreaterGood SA Managing Director Carol Tappenden. “Yet things do not seem to be getting substantially better for the very poor in the country. And our major challenges – HIV/AIDS, housing, education, food security – show few signs of being adequately addressed.” Infrastructure backlog There is an enormous savings pool in South Africa – around R3 trillion in largely life and pension funds – but only an estimated R10 billion is dedicated to socially responsible investing. At the same time, South Africa is struggling with basic infrastructure issues that need to be urgently addressed. “South Africa may have a huge infrastructure backlog,” says Heather Jackson, Head of Socially Responsible Investments at Cadiz African Harvest Asset Management. “But by happy coincidence it also has an advanced capital market, where infrastructure providers are able to raise capital. Many potential areas of investment in South Africa that are linked to transformation – such as infrastructure provision and black empowerment – are poised to offer competitive market returns by virtue of their investment and growth focus.” Demanding returns What is becoming clear is that innovative solutions are needed to address the huge imbalances that exist between South Africa’s rich and poor. GreaterGood SA’s SASIX initiative – www.sasix.co.za – is a social ‘stock exchange’ which lists carefully selected development projects for people to invest in. SASIX aims to move both corporate and individual donors from a compliance mentality of ‘tick-box’ or ‘feel-good’ giving to a more strategic and measured approach to tackling poverty in South Africa. It also insists on measurable returns, either social – in terms of lives changed – or financial and social. This philosophy helps raise the bar for public and corporate participation in social development in South Africa as well as build a culture of accountability for social performance amongst beneficiary organisations. “Within the South African context, SASIX has changed discourse and thinking,” says SASIX founder and GreaterGood SA Executive Trustee, Tamzin Ractliffe. “By working on both sides of the social investment giving-receiving divide, we have developed a unique understanding of the demands and pressures that investors and beneficiaries face. This has resulted in the creation of effective and robust solutions to address the requirements – and limitations – of the social capital market in South Africa.” The evolution of SASIX The global precedent shows South Africa lagging seriously behind international trends in the use of commercially viable responsible investments for pension fund portfolios. However, the unique context of developing countries has provided valuable experience in defining and developing systems for the traditionally developed world of investors whilst addressing the pressures and demands of the traditionally developing world of beneficiaries. This has led to the evolution of SASIX so that it can provide investments on a continuum from SASIX Social investments (or grants) to SASIX Financial investments which offer market-related financial returns in socially responsible initiatives. High impact responsible investments – inner city rejuvenation projects, the building of schools and hospitals or affordable credit for the poor, for example – now offer competitive financial returns as well as far-reaching social returns. Sustainable community development The funding priorities of SASIX Financial are housing, water and sanitation provision, public health and welfare services, public transport, public recreational facilities, education and training, environmental protection and other infrastructural development, especially where targeted at working class communities. SASIX Financial, together with the Cadiz Financial Strategy Group, kicked off with an initial R10m investment in the Kuyasa Fund which provides microfinance services to poor communities to help them improve their homes. After the cost of the guarantee, housing investment yields over 3% above similar commercial investments. “This is an investment in the future of our country,” continues Tappenden. ”The returns are financial, certainly, but these investments will also yield real, measurable change in people’s lives. Socially responsible investing also gives development organisations access to alternative financial instruments – beyond the traditional grant – which will reduce their fundraising costs and help them to become more sustainable.” “Everyone wins,” says Tappenden. “The investor gets a good return on their investment and communities benefit from long-term, sustainable development.” Links SASIX - http://www.sasix.co.za GreaterGood SA - http://www.greatergoodsa.co.za Cadiz Financial Strategy Group - http://www.cadiz.co.za The Kuyasa Fund - http://www.thekuyasafund.co.za