Investment tips for the good of Hong Kong society

PUBLISHED : Monday, 16 July, 2012, 12:00am
UPDATED : Monday, 16 July, 2012, 12:00am


The Rio+20 conference witnessed the official launch of the Impact Investing Policy Collaborative, a network of researchers and practitioners working to shape public policies that create more effective capital markets for impact investing.

The co-conveners invited 35 of us from 15 countries to share the different paths we have taken to help direct private capital for the public good. Not surprisingly, the presentations from the US and Britain reinforced their leadership roles through the innovative use of public and private resources to build an ecosystem that supports impact investing, social enterprises and entrepreneurship.

A US-Brazil partnership fosters public-private sector collaboration to create sustainable and equitable urban communities, using Rio de Janeiro and Philadelphia as pilot cities. The project showcased the use of public policy to promote impact investing at the highest level.

Britain's Big Society Capital, capitalised with GBP600 million (HK$7.2 billion) over a five-year period, is acting as a cornerstone investor to develop ways to provide working capital to the social investment sector.

More unexpected was the presentation from Ghana, detailing its government's decision in 2004 to seed the creation of the Ghana Venture Capital Trust Fund. Since then, the trust has raised more than US$50 million in private funding, invested US$23 million in 46 small and medium-sized enterprises and created more than 1,000 formal sector jobs.

These bold examples of public-private partnerships contrast with our government's efforts to date.

At Rio, I shared how a Hong Kong 'we know best' government, the largest provider of grants for vulnerable communities, is largely excluding private intermediaries instead of using its vast resources to create an ecosystem to promote impact investing and social innovation.

The two funds our government created - the Community Investment and Inclusion Fund, and the Enhancing Self-Reliance Through District Partnership programme - have had mixed results at best, partly because they focused on directing grants to support specific projects instead of building an ecosystem. That's analogous to providing cars to villagers before building roads or teaching them how to drive.

If our government were more willing to learn from the experience of others, it would have noticed the tremendous strides achieved by Australia and Canada. In the past year alone, these two countries have made rapid advances in developing dedicated funds, financial innovations including social impact bonds, enterprise capacity building and research institutes.

Other governments in developing markets, including Brazil, Chile, Turkey, India, Senegal and South Africa, are also using various policy tools and working with the private sector to address social and environmental issues.

It's time for our chief executive and his new administration to try a bolder approach to solve Hong Kong's social and environmental problems.

The current practice of assigning the Home Affairs Bureau the sole responsibility of developing the social enterprise sector must end. Instead, Leung Chun-ying should create a new office of social finance and innovation under the Chief Secretary's Office to bring the latest social innovation ideas, including impact investing, to Hong Kong.

Such an office would stand a much better chance of obtaining the co-operation of the other departments to craft and deliver co-ordinated market solutions to address such issues as poverty, ageing and housing.

Ming Wong is co-founder of Social Investors Club in Hong Kong and an advisory council member of Impact Investing Policy Collaborative.