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ESG Investment Trends to Watch in Southern Africa

With the Covid-19 pandemic pushing investors more and more toward sustainable investments, many regions across the world are seeing a demand for eco-friendly investments.

In 2020, investments into American ESG products rose by 140%, according to Moody’s Investment Services. Globally, the amount of money that flowed into ESG companies rose from $285 billion to $542 billion. This trend continued into 2021, with a record $649 billion flowing into ESG-focused companies.

The South Africa region is often overlooked when it comes to ESG investments. That part of the world experiences some of the most dramatic temperatures, and many of the area’s economies depend on jobs involving minerals, energy, and mining — industries certainly not known for positively impacting climate change in the region. 

In this article, we’ll take a look at some countries with major Environmental, Social, and Governance (ESG) investment trends you should watch. 

The Push Toward ESG in Botswana

Southern Africa and Subsaharan Africa as a whole have experienced a push toward more sustainable solutions in various industries over the past few years. Botswana, in particular, has seen an influx of direct foreign investment recently. 

In a Techbullion interview with financial planner Christopher Roy Garland, he states how the Botswana Government has been increasing its funding and focus toward sustainable sectors and away from diamond mining. He also explains how his government wishes to diversify its energy sector using the foreign funds their country has received. 

Many see Botswana as a leading nation when it comes to sustainability in Africa, and say the country is close to some major developments in the energy sector.

South Africa’s Rise to Sustainable Investing

Botswana’s neighbor to the south, South Africa, has also experienced a considerable influx of sustainable investments. In fact, it’s been South Africa pushing institutional investors to invest in ESG solutions since 2011 — the second country to do so next to the United Kingdom.

According to this article from Business Insider Africa, The African Private Equity and Venture Capital Association had 80% of its investments in companies that were implementing ESG solutions into their businesses. 

In addition to this, South Africa-based TymeBank has been the leading bank in South Africa for low-cost transactions. Many small businesses and traditionally under-served customers around South Africa are able to use TymeBank because of this. They also bring on roughly 140,000 new customers every month. 

ReconAfrica in Namibia

Another country to receive a lot of foreign ESG investment is Namibia. According to a recent ReconAfrica report, the company has invested into projects such as community wells and has invested $112 Namibian or ~$8 million USD into “ESG initiatives” in the country. 

ReconAfrica is actively employing Namibians to work on their projects as another method of investing into the economy there. According to the report, over 500 people from Namibia have worked on projects as technical specialists, project managers, and more. 

It should be noted that ReconAfrica plans to drill for oil in Namibia, as it says the industry will be needed in the region for “several decades to come.” 

Key Takeaways

Environmental, social, and governance investments are becoming more common in regions across the world, including Southern Africa. Notably, it’s been the Covid-19 pandemic that has pushed a lot of investors toward ESG solutions. 

Botswana is one of the leading nations in Southern Africa when it comes to sustainability, as the country is actively working on lessening its dependence on its diamond industry. The South Africa government has campaigned for investors to choose ESG solutions, and the African Private Equity and Venture Capital Association puts the bulk of their money in ESG. 

It is also important to acknowledge the issues the region faces, with the continent of Africa experiencing record temperatures as climate change grows and many economies struggling to branch out from mining and energy. It remains to be seen what the future holds for the ESG investment trend in this challenged part of the world.

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