According to the Global Impact Investing Network (GIIN), the fastest-growing and largest category of impact investing assets under management by investment source is from pension funds and insurance companies. Pension funds that are putting money in impact investing are from the developed world and very little is happening in terms of the investments of the African pension funds.

In many places, pension funds are riding on DFIs and other fund managers to make investments especially in developing countries including Africa. In 2011 while I was working with the Danish International Investment Funds (IFU), together with project development team, we innovated the model that was aimed at attracting the Danish pension funds for impact investments.

These efforts resulted to the first of such collaboration which was the Danish Microfinance Partners that was a $D90 million fund that invests in micro financing institutions in Africa, Asia and Latin America.

The fund was co-managed by both IFU and Maj invest, a traditional investment management company on behalf of the Danish State and the pensioners. Today, there are more than 10 such collaborations in different impact sectors and managing over $1 billion.

Pension funds are characterised by their appetite to provide long-term and patient capital. Traditionally, the funds have been focusing on investments in real estate, publics equities and government securities and for the progressive funds, they have considered investment in private equity but at a very limited scope.

Due to the nature of the funds and the regulations that govern the funds, there are normally limitation on the assets classes that the funds can invest.

For insurance in many Africa jurisdiction, the key assets classes include equities. property, cash and debt. In some markets the regulators, go further by defining the percentage of the assets under management that could be invested and this limit the innovativeness of the funds in how they can allocate their resources.

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