ESG Club
Ben Constable-Maxwell is head of impact investing at M&G Investments
THE LIFELINE OF CONNECTIVITY
In the digital age almost half the world’s population – 3.7 billion people – are offline. The UN has warned that without decisive action, “the digital divide will become the new face of inequality.”¹ But we believe investing with an impact lens can help provide a pathway to social inclusion through services for millions of people, address the Sustainable Devel- opment Goals (SDGs) and embrace “double materiality” along the way.
In the heart of Africa lies the Democratic Republic of Congo (DRC), a country two- thirds the size of Western Europe and home to vast swathes of the Congo Basin – the world’s second-largest rainforest and a critical lung for the planet, as well as Africa’s most biodiverse protected area – the Virunga National Park whose famous inhabitants gorillas.
include the mountain
One avenue is to invest in companies which enable access to mobile communication services in underserved regions where penetration is low.
However, the size of the DRC means that its people are separated by two time zones and huge distances, which makes digital connectivity all the more vital for a popu- lation of close to 90 million people where infrastructure is lagging. According to data from the World Bank, as of 2020 14%² of the DRC’s population use the internet while 46%³ have mobile sub- scriptions versus 98% and 80% in high- income countries, respectively. So, how can investors target SDG 94 (Innovation, Industry & Infrastructure) and generate impact by fostering social inclusion for a growing young population who want to play a part in the country’s economic future?
Empowering participation We believe one avenue is to invest in com- panies which enable access to mobile communication services in underserved regions where penetration is low. M&G’s Positive Impact team invests in Helios Towers, which owns and operates tele- communications towers in high-growth African markets, including the DRC, Tan- zania and Congo Brazzaville. “Helios Towers has a high-quality busi- ness model and socially beneficial objec- tives, linked to growing mobile access in Africa,” says Ben Constable-Maxwell,
42 | portfolio institutional | November 2022 | Issue 118
head of impact investing at M&G Invest- ments. “These regions have Africa’s fast- est-growing populations but also areas where mobile and other infrastructure is limited; that combination of a growing population who want to participate in the benefits of the digital economy versus a lack of opportunity is an anomaly the company is explicitly looking to address.” With an abundance of natural resources – from cobalt to copper, and cassiterite to timber – the DRC’s traditional economic model has been largely extractive, soci- etally unequal and environmentally prob- lematic. In a region beset by these chal- lenges, we believe there is an opportunity to drive a more participatory development model based on access to information rather than resource extraction, one that seeks to help to close the digital divide by increasing access to critical services. According to a joint report on Africa’s internet economy by Google and the IFC⁵, a 10% increase in mobile internet pene- tration in Africa increases GDP per capita by 2.5% versus 2% globally. Consequently, improved digital connectivity also provides fertile ground for innovative solutions. “The African internet opportunity is driven by the talent of young digital entre- preneurs,” the report notes. “Start-ups are solving some of Africa’s most challenging issues, such as access to healthcare for remote populations, employment oppor- tunities for women, and the ability to securely send and receive money. Advanced technologies – tailored to data- driven, scalable, and pan-African approaches – are providing new ways for Africans to conduct business and earn income.”
Bringing in a ‘double materiality’ perspective We believe double materiality enables investors to take an ‘outside in’ perspec- tive, focusing on how the company is managing those external factors that may affect its prospects, as well as an ‘inside out’ viewpoint which addresses the real-
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