Social finance eyes better sustainable investment return

Mainstreaming social finance could present a win-all situation for planet, profit, and people.

Social finance as a means of philanthropy is gradually becoming a global mainstream, but it can only work if it is self-sustainable in terms of investment reaping actual financial reward as part of its social value. This was the consensus reached by participants to the China Charity Fair Social Finance and PPP Summit Forum held in Beijing on Saturday.

In light of international practice, social finance will become a class of assets for wealth management and financial investment, said Ms. Xu Xiuling, joint secretary of the China Initiative for Social Finance (CISF), formed by CreditEase, where she is a senior vice president.

Charity is very cool, because it teaches us how to spend money in a more meaningful way. Finance is also cool, because it greatly raises our happiness. This is why we should blend them together.

Xu Xiuling, joint secretary, China Initiative for Social Finance

Social finance is also known as finance for public welfare. It is a new type of investment paying attention to economic reward while providing social benefits. Impact investing, socially responsible investing, venture philanthropy and micro financing are among the better-known aspects.

“Charity is very cool, because it teaches us how to spend money in a more meaningful way. Finance is also cool, because it greatly raises our happiness. This is why we should blend them together,” said Xu.

Public-private partnership (PPP) is believed to be the best mode to help achieve this goal. In a PPP program, the private party provides a public service and assumes substantial financial, technical and operational risk in the project. In some types of PPP, the cost of using the service is borne exclusively by the users and not by the taxpayer, therefore lessening the government’s burden of fund provision.

There are already successful international practices for China to follow, among which are Eytan Stibbe’s investments in Africa. Stibbe’s company, Vital Capital Fund, built water purification plants and dairy farms in countries like Nigeria and Uganda, projects local governments could not easily afford. Speaking at the meeting, he said such projects also involved partners like Coca Cola and the World Bank; corporate investors reap a return from such projects while improving local people’s livelihood.

Stibbe advised modernisation work in less developed places in China to attract such social finance investors to supplement the poverty-reduction campaign led by the Chinese government to make win-win results for all, besides being an innovation in itself.

This story was published with permission from China.org.cn

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