The money management industry needs to employ some “strategic empathy” when it comes to persuading pension funds to make allocations to impact investments in Africa, said panelists at the Pensions & Investments WorldPensionSummit Africa Special conference.
Speaking Tuesday at the conference, held in Abuja, Nigeria, Catherine Duggan, professor of management and political economy, and vice dean for strategy and research at African Leadership University, Rwanda, said: “I think that some of us often lose the forest for the trees as we're trying to figure out exactly what we need. Pensions are an amazing thing because they are the link between the past, the present and the future. … We also just need to think about the impact of what we're doing,” Ms. Duggan said.
Ms. Duggan referred to “strategic empathy,” thinking about what keeps people up at night as a way of working out how to speak to them and convince them about the impact of their investments. “Making the really technical elements of what we're hearing about pensions into a story about how people can contribute … to the development of the continent is a very powerful thing.”
She quoted former South African President Nelson Mandela, who said: “If you talk to a man in a language he understands, that goes to his head. If you talk to him in his language, that goes to his heart.”
“I would use that as a metaphor to suggest we often like to talk to people's heads — trying to sell … by appealing simply to their rationality. What we can do … is give people a reason not to use their money today, but to put it away for tomorrow,” Ms. Duggan said. That is a “big ask,” but it “has to be accompanied by a story that is compelling. And that story … can fix not only the way people save for the future, but drive trust in the government and institutions across the country,” she said.
Panelists also addressed the need for increased education and expertise in Africa, to encourage increased investment in impact strategies. “Part of what we have started doing … is taking the role of educating our investors,” said S. Gabriel Shumba, founder, chairman and CEO at alternative manager Group Shumba. Mr. Shumba said the firm receives questions from investors who don't understand the geography and risk profiles of African countries.
Abimbola Adebakin, chief operating officer at the Tony Elumelu Foundation, Lagos, Nigeria, said: “Fund managers need to bring their expertise to the local context. Foreign managers need to come and contextualize that fund. … What I see many times is funds want to come with their own ideas to impose here,” Ms. Adebakin said.
