Istanbul, Turkey, November 28 2019 – United Nations Development Programme (UNDP) Istanbul International Center for Private Sector in Development (IICPSD) launched “The Impact Investing Ecosystem in Turkey” study during the 10th Bosphorus Summit in Istanbul in partnership with the Investment Office of the Presidency of the Republic of Turkey. The report takes stock of major opportunities and challenges in flourishing a strong impact investing ecosystem in Turkey.
The investment gap for the SDG agenda by 2030 is at least US$2.5 trillion annually, according to UNCTAD. In order to meet the financing needs for development, private sector should be actively engaged to leverage business solutions for social and environmental impact.
Impact investing has been a key model to leverage private sector solutions for development challenges. The fast-growing impact investing market shows high potential to finance sustainable development with assets under management (AUM) reaching US$502 billion in 2018, estimated by GIIN. Indeed, the rising trend in impact investing has sparked a promising estimation of as high as a US$26 trillion investor appetite in the near future by the International Finance Corporation (IFC).
Despite a fast-growing impact investing market globally, there is still wide variance in the geographical allocation of impact assets. In 2018, Middle East and North Africa (MENA) and Eastern Europe, Russia and Central Asia (EECA) accounted for only 2% and 6% of total AUM, respectively. Located at the intersection of the east and west, Turkey emerges as a promising entry-point to catalyze impact investing activities to tap into the potential in these regions. Turkey’s conjecture offers a particularly strong case for impact investing as the country enjoys a developed financial market while it faces development challenges exacerbated by the recent developments in the region.
“The Impact Investing Ecosystem in Turkey” study was initiated by UNDP IICPSD as an outcome of discussions and consultations for SDG Impact Accelerator (SDGia), a new program by the Republic of Turkey Ministry of Foreign Affairs to accelerate “systems entrepreneurs” for market-creating innovations, initially for refugee populations, and in turn for low-income developing countries. The landscape study provides a stakeholder mapping and preliminary analysis of the nascent impact investing ecosystem in Turkey. Although a clear mandate for social and environmental impact is currently missing in investments in the Turkish market, there are adjacent activities which bring together for-profit investments with social impact. The study finds that Turkey is well-positioned to offer significant opportunities for impact investors as well as enterprises in the following areas particularly: Refugee livelihoods, women empowerment, renewable energy, health-tech and financial inclusion. The most important challenge for impact investing to flourish in Turkey is identified as developing a standardized framework for impact measurement and management. Aligning the interests of market players who are driven to couple business-as-usual with positive impact and transparently reporting such impact contributions are vital to ensure that social and environmental problems are accommodated by business solutions.
By laying the foundation for a strong impact investing ecosystem in Turkey, this report is a first-step in positioning impact investing as an enabler of SDG implementation in Turkey and MENA and EECA regions.
Two more publications have been launched during the 10th Bosphorus Summit. Developed and published by IICPSD, “Engaging the Private Sector for Inclusive Urbanization” examines some global practices of Municipally Owned Enterprises. IICPSD also facilitated “Impact Tech: Creating Market Opportunities in Tandem with the Global Goals” conducted by Asst. Prof. Dicle Yurdakul from Altınbaş University and funded by Microsoft.