Chris Barnett, Edward Jackson, Peter O'Flynn, Hamdiya Ismaila, Coleman Agyeyomah
, November 2018

Background: Mobilising investment for sustainable development is a priority for many
African governments and their international allies. There are many claims about the social
impact of investments in small and growing businesses, and yet these mostly focus on good
news stories or a narrow set of metrics (jobs created, tax revenue, etc.). There are relatively few
studies that consider the diversity of social impacts, particularly in an African context.
Objectives: The aim of this research was to work collaboratively with investors in Ghana to
better understand social change and contribute to their own work on improved performance
and reporting.

Method: Using a theory-based examination of social impacts, the research purposively selected
a subset of 13 investments from the Venture Capital Trust Fund (VCTF) in Ghana. Theories of
change were used to explore the available documentation, triangulated with insights from
fund managers, entrepreneurs, senior managers and, where possible, employees. The findings
were validated with VCTF staff.

Results: While the research demonstrated the usefulness of a theory-based approach, it found
it helpful to develop a smaller set of typologies to capture different impact pathways – a more
efficient way to assess and report on social returns. In particular, the research highlights how
commonly used metrics like job creation undervalue the social impact of some types of
investment. Other lessons also included the value of rural businesses (not typically favoured
by venture capitalists) and the potential to further extend impacts to lower income groups, but
that this required real intent and leadership on the part of investors and entrepreneurs.

Conclusion: We conclude that further research is merited on two fronts. Firstly, research into
the scale of the small and medium enterprises and the associated investment required to
support the operating costs to really manage, improve, monitor and evaluate social impact.
And secondly, further field testing of different evaluation techniques to help stakeholders
better understand and improve the social benefits of venture capital.

Volume: 6
Issue: 2
Related resources: View this publication
Partner(s): Itad, Institute of Development Studies