IMPACT INVESTING RENEWABLE ENERGY
Foreword Impact investing was the main theme at the Botswana Resource Sector Conference held in Gaborone on 10-11 June 2019. Business leaders and experts across the resource and financial industries emphasized the dire need to invest for purpose and also be primary custodians of the environment for future generations. Investors are not only in the pursuit of financial rewards but are now focused on the footprints they will leave for sustainable impact in the communities that they operate and the environment. In Botswana, Environmental, Social and Governance (ESG) framework is not a new phenomenon. Corporate Social Responsibility agendas have long been adopted, however they operated in silo to investment decision making. ESG is a new buzzword in town offering better ways of integrating non-financial factors to decision making at the early stages of the investment cycle.
Lindiwe Mafavuneh Founder & CEO LCM Capital Lindiwe Mafavuneh is the Founder and CEO of LCM Capital, an alternative investment company in Botswana with primary focus on Risk, Investment and Governance.
Companies on the Botswana Stock Exchange Limited are required voluntarily to incorporate ESG factors to their investment strategies and reporting purposes. I expect a surge in impact investing primarily in renewable energy and infrastructure projects as more institutional investors chase impact investments to meet regulatory requirements and the quest to be good environmental custodians for future generations.
LCM Capital: Nurturing Assets Ahead of Time http://www.lcmcapital.co.bw
INVESTING WITH PURPOSE :ESG MAKING WAVES ON LOCAL SHORE
HARNESSING THE SUN Cost By Source $0.4 $0.2 $0.0 Solar
Wind
BioMass
2010 2017
Solar PV costs have dropped by 72% between 2007 and 2010 ($0.36/KwH to $0.10/KwH) giving it an economic cost advantage compared to other renewable sources of energy.
High electricity import bill is driving the Ministry of Mineral Resources, Green Technology and Energy Security to consider Renewable Energy as necessary to wean from imports and to create sustainable energy supply that is needed for the growing economy and the attraction of foreign direct investment to the country. Nature holds the solution to revolutionize the energy sector in Botswana bringing energy efďŹ ciency solutions to high energy intensive sectors, end perennial power outages, power off grid villages and create opportunities from the green energy and technology. The World Energy Organization estimates that Botswana receives a high rate of solar irradiation between 280-330 days of sun per year with daily average sunshine ranging from 9.9 hours during the summer to 8.2 hours in winter. This is a very convincing fact however renewable energy has long been considered a high capital venture making the government shy away from it.
LCM Capital: Nurturing Assets Ahead of Time http://www.lcmcapital.co.bw
Botswana is well endowed with base metals such as copper, nickel, iron ore, manganese, silver and vanadium that are in high demand in the manufacturing of electric vehicles ,green technology and energy storage.
Base Metals Role in Green Technology
National Energy Mix
Investing capital for impact is high priority for many fund managers who see sustainable investing as a competitive advantage that generate high risk adjusted returns. There is a high appetite for green investment looking at climate change issues and the need to be compliant with United Nations Sustainable Development Goals by 2030. Raising capital for renewable energy through the issuance of green bonds by institutional investors or private investors is still at an infancy stage in Africa, Nigeria is the only Country thus far that has issued a green bond.
Outlook
% by 2030
30.0% 70.0%
Coal
70
Renewable Energy
30
REIPPP Model Botswana can draw lessons from her neighboring countries South Africa and Zambia with mature Renewable Energy Independent Power Producer Procurement Programme (REIPPP).
Investing for Impact
Renewable energy journey in Botswana has been very slow since the early 1990s with cost as the significant impediment for investing. There is a paradigm shift that cannot be overlooked with the main utility Botswana Power Corporation showing interest for projects in the energy sector that will wean them from relying in one source of energy to meet local demand. Junior mining exploration companies that are off the grid are also looking for hybrid energy solutions to drive down operation costs as diesel prices continue to skyrocket. There is also a gradual penetration of solar heating systems and solar water pumps products for households and farmers looking to make energy savings. There is a huge investment opportunity for a 100MW solar park in Botswana through IPP to close the energy gap. The future looks green for renewable energy in Botswana.
LCM Capital: Nurturing Assets Ahead of Time E-mail: lindiwe@lcmcapital.co.bw