Impact Investors Look To Fill Usaid Gap

Africa is facing significant headwinds from the sudden cancellation of US-funded aid programmes. But, for certain sectors, breaking free from a reliance on aid and pivoting towards investment could prove to be a blessing in disguise, says an Africa-focused impact investor.

"In the long term, maybe this is something that can be turned into an opportunity," says Nimrod Gerber, managing partner at Vital Capital, an impact investment firm that focuses on the water, food, health and sustainable infrastructure sectors. He tells African Businesses that businesses that receive "commercially oriented" support, as opposed to relying on grants from aid agencies, may ultimately prove to be more durable and create more impact.

The US Agency for International Development USAID has been gutted since Donald Trump returned to office, with 83 of its programmes cancelled. The United Kingdom, another important donor, has also announced drastic cuts to aid funding as it prioritises defence spending.

There is only so much that the private sector can do to fill this gap. In the case of humanitarian interventions, for example, there is little scope for private investors to replace aid.

But Gerber argues that private investment can play a role in mitigating the loss of USAID ecosystem-building programmes. He points to how African governments and financial institutions, alongside private sector developers, are taking the lead with 'Mission 300', the initiative to connect 300 million people to electricity networks by 2030. This, he says, is helping to fill the gap left by Power Africa, the USAID initiative that played a prominent role in addressingthe continent's electricity access gap from 2013 until its sudden demise in February.