From Necessity to Opportunity: The Case for Impact Investing in the Arab World

Abstract

Impact investing refers to the practice of investing with a dual objective: generating positive social and/or environmental impact while also achieving a financial return.1 Impact investments are often characterized by (i) the pursuit of an identified social and/or environmental impact, often with the view of benefiting an under-served or excluded segment of the population, (ii) the measure of the impact post-investment to be able to track progress, (iii) a longer term approach to the investment cycle (impact investing is also sometimes described as “patient capital”), and (iv) an innovative approach to structuring investments (impact investing is often considered part of a broader “innovative finance” field). Although there is still much debate around terms and definitions, the concept has gained considerable traction in recent years and moved to the centre stage of the discussion on how to tackle some of our most pressing challenges with limited, sometimes decreasing, resources.2