Making a case for a legal and regulatory framework for impact investing in Nigeria

Abstract

Development in Nigeria has been set back, or at best, stagnated, and the lack of access to sustainable finance has been noted as a contributing factor to this slow progress. Nigeria’s national goals and regional commitments towards sustainable development may become mere dreams without a concerted effort by the public sector, the private sector, and civil society actors. There is therefore a need for a connecting thread to foster social impact without compromising on financial gain as a consequence of economic activity. Impact investing has been identified as a revolutionary tool for providing sustainable finance required by business entities to create solutions that elevate the quality of life in Nigeria across the economic, social, and environmental matrix. Impact investing, as an innovative development finance tool, seeks to generate positive social and environmental returns alongside financial returns. Despite the opportunities presented by the concept of impact investing in driving development, its use has not gained popularity in Nigeria. One of the core reasons for this low awareness and use of impact investing in Nigeria is the absence of a comprehensive legal and regulatory framework for impact investing. This research, therefore, evaluates the legal and regulatory framework for impact investing in Nigeria to determine the extent to which it aids the use of impact investing and creates an enabling legal environment for impact investing to thrive in Nigeria. This study begins by delving into the concept of impact investing to explore its meaning, features, actors, and theories and briefly compare it with other forms of sustainable investment. The study further provides an overview of the landscape of impact investing in Nigeria and then analyses the legal and regulatory framework for impact investing in Nigeria. The research adopts a comparative method of analysis to examine modern best practices for the legislation and regulation of impact investing and draw valuable lessons for Nigeria. This research concludes with pragmatic recommendations for strengthening the Nigerian legal and regulatory framework for impact investing to further stimulate awareness and use of impact investing towards meeting development needs in Nigeria.