Investing with Purpose: The Future of Impact in MENA
Impact investing is defying its doubters and delivering healthy returns while achieving the intended outcomes, but what is impact investing and how is it playing out across MENA?
Impact investments are an alternative method for tackling social and environmental challenges. They use the profit motive to deliver projects and programmes that make a significant difference in people’s lives - whether social or environmental.
The scale of impact investment has grown significantly over the last decade. PitchBook data reveals five-fold growth globally, while a 2024 study from the Global Impact Investing Network (GIIN) reports ‘impact assets’ under management growing at an impressive 21% CAGR between 2019 and 2024 – up to nearly $1.6 trillion.
Echoing the global growth of impact investment, the MENA region is also seeing significant momentum, with venture capital deal value soaring from $990 million in 2019 to a 2022 peak of $3.6 billion. Impact-driven initiatives in education, healthcare, agriculture, and energy are the sectors leading this charge.
Significantly, even as broader VC investments declined in 2024 due to global market corrections, the MENA region still maintained $1.9 billion in VC investments for the year (down 29% year-on-year), a decline less severe than other emerging markets such as Southeast Asia and Africa, which fell 45% and 44% respectively. Such resilience emphasizes the growing importance, and continued potential, of the region’s impact-focused startups.
Encouragingly for impact investment’s advocates, GIIN found 90% of its surveyed global investors believe their impact strategies meet or exceed their targets. The remaining 10% is, however, enough to continue to generate doubts about the attractiveness of impact investments.
One possible explanation for the challenge of building a solid reputation for the sector is the lack of a common impact framework, as examined in PitchBook’s 2024 report on “The State of Private Market ESG and Impact Investing in 2024.” The fact that some investments could be claimed to have had an impact, but without empirical evidence to corroborate it - can yield scepticism undermining the majority of genuinely successful outcomes. Such risks created by mixed perceptions towards impact investing are equally valid in the MENA region.
This central reputational challenge underscores the crucial role of effective communication in understanding and meeting stakeholder expectations, setting overarching goals, measuring performance, and identifying oneself as an investor, founder, or startup. It is a collective effort requiring all parties’ active engagement.
Another challenge is the required scale of funding. The UN has estimated $2.5 trillion and $4 trillion is needed annually to make significant progress toward the Sustainable Development Goals (SDGs) by 2030, while the IMF forecasts that $3 trillion would require 16.1% of GDP for low-income developing countries (LIDCs) to develop sectors such as education, health, water and sanitation, electricity, and infrastructure.
Fortunately, the growing financial commitments towards sustainable development, highlighted in PwC’s Sustainability in the Middle East 2024 survey, provide optimism.
As we look to the future, the emerging markets of the Middle East and Africa highlight a growing demand for innovative solutions. The markets range from tech-based healthcare platforms to sustainable agriculture initiatives, presenting a unique opportunity to bridge critical gaps while driving societal progress and financial returns.
In this complex investment landscape, founders must stay true to their core mission. The distinction between impact and non-impact should be secondary to the purpose and vision driving their ventures. Investors, customers, and communities all have different expectations, but founders should remain focused on the long-term value and purpose that a startup seeks to achieve. Ultimately, what matters is the value created, not the labels adopted.
The old mindset separating impact from financial-first investments - needs updating. The future across MENA lies in a unified vision where financial success and societal impact are intertwined. Climate change, inequality, and access to education, healthcare, and financial inclusion demand solutions both financially viable and socially transformative. This unified vision should make stakeholders feel united and committed to driving positive change.
When entrepreneurs focus on solving real problems, they create their own market – which is likely to be profitable - and lay down a resilient foundation to help them navigate past obstacles to building and scaling in an evolving landscape.
This isn't just about creating a business – but shaping a future where economic success and social value become one and the same. By defining clear goals and measuring progress through key metrics, startups can ensure they are on the right path, not just financially but in making a lasting impact – and, in turn, burnishing the sector’s reputation.
The experience of C3's alumni speaks volumes. Startups accelerated through our platform have raised $618 million in just six years and a remarkable 95% still thrive today, so we are reassured trends are moving in the right direction. This survival rate isn’t just a heart-warming statistic; it’s proof that impact-focused ventures are relevant and adaptable - staying ahead in markets that demand both innovation and resilience. This should inspire and motivate entrepreneurs to stay true to their mission, knowing their resilience can ultimately lead to success.
Let’s challenge founders to develop solutions that truly matter and encourage investors to allocate capital to ideas driving change. In this new era, impact isn’t a label—it is the essence of success.
About the Author:
Kevin Holliday is the Managing Director and Nadim El Hamalawy is the Programme Lead at C3 – Companies Creating Change, a company dedicated to fostering innovation and impact. Kevin brings over 20 years of global strategy, finance, and investment experience, having held senior positions at AW Rostamani Group, OSN, Global Integrated Security, Networkers International Plc, and Euromoney Institutional Investor Plc. His expertise lies in strategic development, execution, impact investing, and social entrepreneurship within high-growth, fast-paced environments. Kevin is a qualified chartered management accountant and holds an MBA from Warwick Business School. Nadim holds an MSc in Entrepreneurship and Innovation and dual BSc degrees in Politics and Economics and Sociology from Lund University. His professional journey includes co-founding innovative ventures, leading impactful projects, and developing strategic partnerships and programmes.
