Impact Investing: one of the solutions for investment problem in Afghanistan

My name is Matiullah Rahmaty, and I am a social entrepreneur working with startups and new businesses since 2016 in Afghanistan. My entrepreneurial journey helped me in understanding more about the problems most of the small businesses in the Afghanistan market have in common. While we understand the challenges, we have started to provide with the solution and playing our role in bringing the positive change and act as a catalyst in the ecosystem. Therefore, me with my team first started implanting the Founder Institute incubation Program (The Founder Institute is the world’s largest pre-seed startup accelerator, with chapters across 180+ cities), then we launched Coworthy, the most affordable co-working space to help others spend less money on the space that they use for their office.

Also we launched impACT a global platform with two other co-founders to help social entrepreneurs get access to networks, knowledge and resources on 2017, through which a high number of entrepreneurs could build new and an international network.

The one thing that me and my team at BrightPoint (A business consulting firm I founded in Afghanistan)been always working on since 2017 is access to finance and seed funding for early-stage entrepreneurs in Afghanistan. Security, unstable economic and donor-dependent government made investment a huge challenge and a very high number of investor are not ready to invest in a country with such bad conditions when it comes to economic, security and political conditions but this has always been a dream for me to be part of the solution to this problem.

Initially, we worked on a crowdfunding platform; but, after talking to the Central Bank of Afghanistan (Da Afghanistan Bank)and understanding that we don’t have the legal framework for such a platform from one side and the lack of public understanding on the concept of the crowdfunding model made it even harder to start.

That’s why I had to explore other investment options and learnt about the impact investing model.

Impact investing comes with the idea of considering the investment, return and also the impact that the idea will have once it is implemented.

Or as defined in Wikipedia: “Impact investing refers to investments “made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.”[1] Impact investments provide capital to address social and/or environmental issues”.

Normally three approaches for impact investing is mostly used:

• Mission based approach: for those organizations with specific missions like clean energy, women empowerment…
• Sector-based is referred to specific sectors like agriculture, education…Seed *stage/early stage investing is mostly used for those startups who are at their very first/initial stages.
• Mostly impact investing is used to provide access to capital, essential services (high quality and low cost) and to provide access to markets.

Considering the following points, impact investing can be considered as the solution to the investment problem in Afghanistan:

• High growth of impact investing around the globe, according to the survey done by Global Impact Investing Network on 2018, this industry comes with an approximate valuation of 230 billion USD with an expected growth of 84% and impacting the lives of more than 1 billion people by 2020. Thus, it is highly expected to find a niche in Afghanistan market and that niche is nothing else but emerging startups with high potential to grow at a global level.
• Impact is the one important element to consider when it comes to impact investing and those investors care about the impact that the idea will have rather than the amount of return which of course it represents a higher risk than the usual investments. It gives us an important lesson and that’s the interest of people to consider the meaning not only the money when it comes to investment and making things happen.

Currently in Afghanistan, we need ideas with high potential to have a positive impact in the country and on people’s lives. The return on investment at this very specific situation won’t be considerable but for sure, those who believe in the cause they pursue, dreams they make happen and a future they try to build are more interested in the impact it will have on the community rather than anything else

Hence, we have to try to attract more of impact investing to Afghanistan. I am pleased to share that BrightPoint has taken the first step and we are about to launch the pilot phase of impact investing to test the possibility and potential of this concept on some potential startups while striving to play our role in making doing business easier in Afghanistan. We believe in a future where money is of no worth without meaning.