What Are Impact-linked Investments?
Impact-linked investments tie financial returns to the achievement of specific, measurable social or environmental outcomes. These innovative instruments reward companies for delivering positive impact while providing investors with both financial returns and measurable social benefits.
Ghana is emerging as a leader in impact investing in Africa, with growing interest in investments that address development challenges while generating competitive returns.
How You Earn Returns
Base Returns
Standard financial returns regardless of impact performance.
Impact Premium
Additional returns for achieving predefined impact targets.
Example Impact-linked Structure
Invest GHS 500,000 in a clean water company with 8% base return. If the company provides clean water to 10,000 additional people (impact target), returns increase to 12%. If they reach 15,000 people, returns increase to 15%.
Common Impact Metrics
Social Impact
- • Jobs created for underserved communities
- • Students educated or trained
- • Patients provided healthcare access
- • Affordable housing units built
Environmental Impact
- • Tons of CO2 emissions reduced
- • Hectares of forest protected
- • Liters of water saved or cleaned
- • Renewable energy capacity added
Key Features
Measurable Impact
Clear, verifiable impact metrics and reporting
Third-party Verification
Independent validation of impact achievements
Alignment of Interests
Investors and companies both benefit from impact
Flexible Structures
Can be applied to debt, equity, or hybrid instruments
Risks to Consider
Impact Measurement Risk
Difficulty accurately measuring and verifying impact outcomes.
Mission Drift
Companies may prioritize financial over impact goals.
Complexity Risk
Complex structures require sophisticated monitoring.
Quick Facts
Legal Framework
Impact-linked investments in Ghana are governed by:
- • Ghana Sustainable Banking Principles
- • Companies Act, 2019
- • SEC Impact Investment Guidelines
- • International Impact Standards