Impact investing is hitting its stride in many parts of Africa. Airport lounges across the continent bustle with the arrival of impact investors who are deploying capital in new ways to catalyze both social and financial returns. It’s an exciting moment.         

Yet the impact investing sector is harder to find in the parts of Africa where the problems are the greatest: fragile and conflict-affected states. While investors have created impact by funding new business models for solar, sanitation, and mobile health solutions in Kenya, entrepreneurs in nearby countries cannot access capital to grow proven businesses ­that directly support health access, food security, and job creation. In the dusty bar at Logali House in South Sudan and lounging by the Niger River at the Hotel Badala in Mali, the topics of expatriate conversation are the same as they’ve always been in fragile places: politics, aid, security, and the romantic entanglements of the press corp. If you are lucky, you might meet a few pioneers—Kinyeti Capital, Spark, Injaro Investments, XSML Capital, and the reliable International Finance Corporation. But for the most part, impact investors have not shown up. At least not yet.

This is understandable. It’s hard to invest in fragile and conflict-affected nations. This is true across the world, whether it’s in the Democratic Republic of Congo or Afghanistan. Weak institutional capacity, poor governance, political instability, and violence create substantial real and perceived risks. Investors struggle to find “bankable” deals among the scrappy entrepreneurs with informal management systems and handwritten financials, and the lack of direct flights and reliable Internet don’t make life easy for investment teams.

But an uncomfortable fact remains: By the end of 2018, half of the world’s people living on less than $1.25 a day will be in fragile states. These are the places where capital is most scarce and impact is most needed.

As the impact investing movement grows, we want to challenge the sector to grow beyond the expatriate haunts and innovation hubs. Responsible investment has a vital role to play in sustainable peace in fragile states. Political, military, and humanitarian interventions are all necessary, but they are not sufficient. While the provision of aid and security help ease immediate ailments in a fragile state, investment can catalyze and secure long-term peace through inclusive prosperity. 

A bustling marketplace in Herat, Afghanistan. Stanford Social Innovation Review.

A bustling marketplace in Herat, Afghanistan. Impact investment beyond the frontier can help foster inclusive prosperity. (Photo by Jake Cusack)

Our firm, CrossBoundary Advisory, aims to unlock capital in underserved markets. We work with investors to engage with some of the most difficult places in the world: Afghanistan, Haiti, South Sudan, Iraq, and Mali. Based on our experiences, we offer two observations for impact investors interested in extending their reach beyond the beaten path.

1. Broaden the definition of impact.

Traditional definitions of impact strategies—with their focus on bottom-of-the-pyramid (BOP) consumers and highly innovative solutions—are too restrictive for fragile markets. For instance, in 2014 we assisted a private hospital in Juba, South Sudan, in seeking $1 million for capital expenditure on a critical care unit and medical waste management facility. The hospital was profitable, yet capital for expansion was scarce. Banks had frozen lending amidst political instability, and foreign currency was tough to come by. We explored the possibility of accessing impact capital; we thought the case was strong. The hospital was the best and often the only option for critical care within the country, serving 1,000 patients every month.

Yet the opportunity did not attract impact capital for two reasons. First, the hospital primarily served the nascent middle and upper class, not the extremely poor. Second, its business model was a vanilla, fee-for-service, stand-alone hospital; it wasn’t doing anything particularly innovative. 

We believe investors need to broaden how they think about impact. First, in fragile markets, investors should consider anything that leads to broad-based growth. Businesses that serve upper classes or commercial enterprises play a role in building critical physical and soft infrastructure. Indigenous construction firms, diaspora-led service-providers, and small-scale traders are necessary for a vibrant economy that can then support BOP-focused businesses. For example, the private hospital we assisted that serves wealthier patients in South Sudan also rents its facilities to community doctors for training and humanitarian medical assistance. These enterprises are the building blocks of stable and prosperous economies.

Second, investors should measure innovation relative to what exists in the market. As a common criterion of impact investment strategies, the term “innovation” becomes a hurdle when it takes on meaning beyond its fundamental definition. Instead of embodying a process whereby value comes from iteration and willingness to fail, investors often use “new” or “tech” as shorthand for effectual. Innovation can be impactful, but only if considered in context. In fragile markets, there is an urgent need for expansion of tried-and-true models that can meet basic human needs. The hospital in South Sudan might not be investing in mobile medicine, but it is investing in simple technologies taken for granted in other markets, such as CT scans and defibrillators. In fragile markets, proven models represent an untapped reservoir of impact potential. What’s new isn’t necessarily what’s needed. Let’s scale boring ideas that work.

By adopting a broader definition of impact, investors can more effectively engage and drive positive change in fragile markets.

2. Investors, not entrepreneurs, should be impact literate.

In fragile states, investment processes that require polished “impact stories” and measurement procedures mean investees must develop literacy in the foreign language of impact terminology. This requirement for “impact literacy” is often counter-productive and favors the slick over the substantive.

We assisted an entrepreneur in South Sudan seeking capital to expand his poultry operation, which would improve local nutrition and empower local farmers. Enchanted by a diverse landscape of capital options, the entrepreneur shopped his investment proposal to a nonprofit challenge fund, a development finance institution, nonprofit technical assistance providers, and foreign-service attachés. He did all this before he even reached out to a commercial bank. Each of these providers had rigid objectives, criteria, and timelines for the entrepreneur to grapple with. It was overwhelming for a lean entrepreneur—his expertise was poultry not PowerPoint.

In this context, investors should consider the outcome they want to achieve, but keep their criteria broad and their implementation simple. Application, due diligence, and disbursement processes should add value rather than create barriers. Burdensome requirements reward savvy not substance. Local entrepreneurs often struggle with procedure and aren’t great at selling “their story.” If expectations for investees’ impact literacy are too high, then the money often flows to Western-originated social enterprises, and local enterprises producing real, tangible outcomes are inadvertently excluded.

In fragile markets, investors should seek impact—not impact literacy—from investees. The “process burden” should fall on the party best equipped to shoulder it—the investor themselves.


The growing community of impact investors is making exciting progress in tackling global challenges. Yet as we progress in the crowded hubs of Nairobi and Lagos, we are leaving behind other markets just one connecting flight away. Impact and profit are there in fragile and conflict-affected states for those brave and resourceful enough to look.

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