Refining the Focus

Over the past few months, we have been refining our focus here at Fourth Watch. Although always open to other consulting opportunities related to the background and skills of the directors of Fourth Watch and our close associates, we are putting most of our effort behind a few projects that we feel have the opportunity to make a positive impact in Africa.

Focus Area:
Driving Impact Investing in the Natural Resource Sector in Sub-Saharan Africa (particularly South Africa and Zambia)
Three Stages:
1) Deal Sourcing
2) Project Design
3) Impact Evaluation

As always, a lot hangs on the definitions above, so here is a bit of elaboration.

Natural Resources - It is our opinion that it is very important to African development to move beyond the current model in many countries where the main driver of economic activity is primary resource extraction. In other words, mining or forestry (clear-cutting) activities where the raw material is extracted, prepared for shipment, and sent overseas for any subsequent secondary processing or value-added activities. In this model, the country gets some royalties for the resource and immediate and short term employment is created, but there is little lasting value added to the economy of the country. In most cases, the capital required is not available in the country, so the profits are also all exported to the international investors who provided the capital. It is our desire to move beyond this model and focus on projects that create a more sustainable development model. The natural resources sector allows for a great scope in such projects. We are currently looking at projects in agro-forestry, aquaculture, game farming, and eco-tourism. Although there aren't any on our radar at the moment, we are also actively looking for opportunities in agriculture.

Deal Sourcing - This is a service we can provide to international investors that are looking at making large investments into the above-stated focus areas and in the countries listed above. Through our strong network of local contacts throughout Sub-Saharan Africa, we are presented with a steady stream of investment opportunities. We welcome any suggestions on opportunities from readers, who can contact us at the email address listed on this site. Fourth Watch Global Analytics conducts its own preliminary due diligence on promising investments, and then presents them to funders. Many impact investing funds are currently experiencing a shortage of qualified investment leads, and we specialize in connecting the two.

Project Design - Most of this work occurs on the target investment side. When we have a project that has good potential, we often still need to redesign and repackage the investment in a way that it will be ready for funders to come in and do their own due diligence. For example, we can assist with designing such features as environmental remediation programmes, employee profit sharing systems, training and education programs, community building programs, and the design of innovative financial structuring that will retain or return majority ownership to local ownership or even employee ownership through a cooperative model.

Impact Evaluation - Fourth Watch and some close associates are designing social and environmental measures for our own investment deals, but are also interested in any opportunities to assist funders with designing customized measurement systems. We have the capacity to work on both design and implementation. We prefer to manage the ongoing monitoring and evaluation ourselves or through trusted associates contracted to provide such services. We are also open to discussing contracts to reliably manage monitoring and evaluation projects for impact investments that were sourced and placed by others. Although our specialty is on social and environmental measures, we also use associates to monitor financial performance.


So, with all that said, it is interesting to note that our best efforts at this point are going towards designing what we feel will be a very innovative impact investment. We are attempting with one of our projects to provide a template that can be followed by others, showing that it is possible to do resource extraction in a different way than that which I critically described earlier in this post. Is it possible to do a mining investment with a positive triple bottom line designed right from the start? Can it be done in a way that provides a net environmental benefit? Can profits and ownership be retained within the country? Can jobs be created that live well beyond the project? Can employees feel safe, valued, and personally connected to a mining company? We hope to answer yes to these questions, and in the coming weeks hope to share more details about the project on this site. Obviously here at Fourth Watch we do not shy away from a challenging project - let us know if you have such a challenge for us, and stay tuned for more information!