The Evolving Role of Impact Funding in South Africa
B-BBEE funding, including Enterprise and Supplier Development (ESD) and Socio-Economic Development (SED) spend, has become increasingly linked with impact investing goals, understanding how these elements intersect has become essential for investors, corporates, and development practitioners.
At Impact Investment Solutions, our advisory work helps South African businesses strategically deploy their ESD and SED funding into high-impact sectors such as solar energy, water infrastructure, and healthcare innovation.
Each month, we analyse market data, industry insights, and stakeholder feedback to identify key impact investment trends. Below, we unpack the most significant developments for October 2025.
Search Trends: What Google Data Reveals About Impact Investing
As a data-driven advisory firm, we rely on web analytics and search trends to understand what topics are top of mind for decision-makers.
Over the past month, two standout search phrases have emerged:
- “How is AI used in water management” / “Use of AI in water management”
- “Khanyisa Impact Investment Fund”
AI and the Water Infrastructure Crisis
The growing search interest in AI-driven water management solutions reflects South Africa’s escalating water infrastructure challenges. There’s a clear appetite for technological innovation that can enhance water monitoring, leak detection, and resource optimisation.
Innovators are exploring how artificial intelligence can be integrated into municipal and industrial systems to improve efficiency, sustainability, and cost control, a promising area for impact investment and ESD funding.
Spotlight on the Khanyisa Impact Fund
The Khanyisa Impact Investment Fund, managed by Stanlib, continues to draw investor attention.
The fund is designed for institutional investors who seek sustainable and predictable returns while delivering measurable socio-economic outcomes.
Khanyisa focuses on credit opportunities across infrastructure, financial inclusion, and agriculture — sectors that directly contribute to South Africa’s development finance objectives.
You can read more about the fund and its portfolio strategy here.
Early-Stage Impact Funding: Lessons from MycoSure and Ninety One
We’ve recently been engaged in supporting the Ninety One Green Economy Accelerator project. It’s a collaborative initiative between GreenCape, the National Business Initiative (NBI), and Ninety One Asset Management.
One of the participants, MycoSure, is a pioneering company developing next-generation, climate-friendly food ingredients.
However, as MycoSure CEO and co-founder Charles Reed notes in his article “The innovation paradox holding back South Africa’s bioeconomy,” South Africa continues to struggle with limited early-stage impact funding.
Despite the potential for scalable innovation, access to seed and pre-series capital remains constrained — a challenge that impact investors and development finance institutions (DFIs) must help address to unlock inclusive growth in the bioeconomy sector.
ESD Policy Debates: The Rise of the “3-for-3” Proposal
In Enterprise and Supplier Development (ESD) circles, the “3-for-3” B-BBEE proposal has generated significant discussion this month.
The proposal, introduced by Alan Knott-Craig (Jr), suggests that companies should be able to contribute 3% of South African turnover in exchange for an automatic Level 3 B-BBEE rating.
While this proposal has not yet been formalised, it has reportedly gained the support of the Minister of Trade, Industry and Competition, as it could rapidly capitalize the Transformation Fund — placing billions of rand in corporate spend under the management of the DTIC and appointed fund managers.
Critical Industry Perspectives
Two strong analytical responses are worth reading:
- Stuart Theobald (Krutham): “A 3% shortcut to BEE compliance – smart compliance or a costly loophole”
- Bruce Hunt (Transcend): “Funding vs Fronting: Is the 3% BEE levy the answer to empowerment?”
Our analysis:
Both Theobald and Hunt raise valid concerns. For companies with high revenue but low profitability, a 3% turnover contribution could be prohibitive. Additionally, the transparency of B-BBEE ownership structures remains a concern.
We believe this proposal signals a fundamental shift in how government views B-BBEE — from a developmental initiative to a potential quasi-taxation mechanism for funding transformation.
While 3% may be too steep, a compromise rate closer to 1.5% could achieve better market support while maintaining developmental impact.
Case Study: Strategic ESD Deployment Saving 80% in Costs
In a recent client engagement, our team demonstrated how strategic structuring of Enterprise and Supplier Development investments can unlock significant efficiencies.
Through targeted support, we helped a client save up to 80% of their ESD investment while enabling a downstream beneficiary to raise grant funding, DTIC incentives, and debt finance.
To learn more about this case study, please email marc@decusatio.co.za for detailed insights into how structured ESD deployment can deliver both financial and social returns.
Asset Managers Speak Out on Impact Investing
South African asset managers have become increasingly vocal about the role of impact investing in retirement funds and institutional portfolios. Recent coverage worth exploring includes:
- Can impact investing transform SA’s retirement funds? (Moneyweb)
- Momentum Investments releases its 2024 Annual Stewardship Report (FA News)
- How Sanlam Umbrella Fund is “growing the pie” with Impact Investments (Citywire South Africa)
- Must-have structures for philanthropy to have a lasting impact (Citywire South Africa)
These discussions reinforce a trend: impact investing is no longer a niche pursuit — it’s a mainstream financial strategy linking profit with purpose.
European Union Commits EUR11.5bn to South Africa
In a significant boost for clean energy and development finance, the European Union (EU) has pledged EUR 11.5 billion (approx. R225 billion) in investment for South Africa.
The funding will target clean energy, infrastructure, and pharmaceutical projects, with a key initiative being the Coega Green Ammonia Project, designed to position South Africa as a green hydrogen and ammonia export hub.
Read the details on Engineering News.
Partner with Impact Investment Solutions
If you’re looking to deploy ESD funding or impact capital into healthcare, water, solar, or SME development projects, our experienced team can help you design and implement high-impact funding strategies.
We combine technical expertise in development finance, impact measurement, and policy alignment to ensure that your investments deliver measurable outcomes.
To set up a meeting or explore partnership opportunities, please contact us.
