The world urgently needs to move towards models where economic growth is decoupled from natural resource use and climate mitigation pathways. In South Africa, this means investment in businesses that can generate verifiable green outcomes, whilst creating jobs, including in energy, water, waste, infrastructure and land management.
Through a partnership officially signed on 31 January 2020 between National Treasury’s Jobs Fund and GreenCape, the Green Outcomes Fund (GOF) provides outcomes-based matched (concessional) funding to local investment funds (our Catalytic Finance Partners) to support investments into local SMMEs that make a demonstrable contribution to South Africa’s green economy, as well as job and enterprise creation in priority impact areas. This is also made possible by catalytic support from the FirstRand Foundation.
The aim of the GOF is to incentivise new approaches and financing models by impact investors in targeting high potential and fast-growing SMMEs operating in South Africa’s green economy. The funding must enable lending and investment on terms and to SMMEs which would not be feasible without the GOF’s support. The GOF will ultimately blend concessionary funding (in the form of grants) with private capital, thus enabling participating CFPs to develop and adapt their SMME investment criteria and support services in ways that were not previously possible – realising greater impact in terms of the types of SMMEs funded and green outcomes created
This structure is based on the following principles:
The project is funded through a grant and matched investment funding from the CFPs. The matched funding from CFPs flows to the green SMMEs in the form of investment through debt or equity. The grant flows to the GOF and is disbursed to the CFPs after verification of green jobs by the GOF’s Investment Committee (IC) and the grant funder. The grant will be used to support CFPs in increasing access to finance for SMMEs upon creation of green jobs and external monitoring and evaluation, knowledge management and trust administration include the costs incurred by the GOF.