Socially responsible investing is mutually beneficial

LAST week there was an initiative by project Umubano and the capital markets to garner investment to better the lives of their beneficiaries. There used to be a time when charity and business were two separate entities but the recent drive towards socially responsible investment has blurred the line between the two.

LAST week there was an initiative by project Umubano and the capital markets to garner investment to better the lives of their beneficiaries.

There used to be a time when charity and business were two separate entities but the recent drive towards socially responsible investment has blurred the line between the two.

Likewise, in the world of charity and development programmes there was been a necessity to make themselves sustainable and even profitable. This is where need to have socially responsible investment arose, investors in the west demanded more than just profit but demanded that they also make a difference.

Today most investors, particularly smaller investors demand their money be used ethically and for the social good. This means they demand investment in environmentally sound projects, as well as socially beneficial projects, but they also want a profit at the end of it.

In this time when fewer companies are making profit and there is less money to go around, it is harder to attract investors, it is now when you have to appeal to the social good that investment can do. In the world of boom and bust, investors need something more tangible than dividends.

Investors are looking for excuses to divest their cash from companies, for example BP is still a viable investment even with the huge liabilities they have to pay for the oil spill in the Gulf of Mexico, but the negative publicity has put off investors.

Local NGO’s and local development schemes have to find a way to tap into the cold harsh world of capital investments. Many of the concepts from that world are already incorporated into projects, such as quarterly reports, due diligence, cost-cutting, profit-making, and the recruitment of professionals from the investment sector.

We should tap into the urge for shareholder activism by making investors invest emotionally in Rwanda. It is not good enough to attract funds, investors have to care about the projects they invest in, more importantly they must care about the people they are investing in.

That way they will be involved in the project and provide skills through volunteering to help the locals. That way we can tap into positive investment where investors can get monetary dividends as well as social transformation.

As long as there are mechanisms to safeguard the investment such as transparency and scrutiny, then investors can focus more on the social good.

The best thing about socially responsible investment is that it is not aid, there is no dependency because a project in Bangladesh might be more profitable than one in Rwanda and pull investment away.

It is competitive so it keeps us on our toes, it is based on profit and not pity so it allows us to save our pride. Micro-finance institutions need to tap into capital markets because they produce higher returns than most banks.

Cooperatives are also key to this, they straddle the line between profit and community development. Ethical investment is the key to attracting investment in Rwanda and best of all, it is mutually beneficial.   

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