As we enter the second quarter of 2025, I think it’s a good moment to take stock of the rapidly evolving impact investing landscape and highlight emerging trends for investors and impact enterprises—particularly around current global market challenges. While impact investment trajectories remain steady for now, there is high likelihood that US tariffs will have far-reaching downside effects.
Strong Demand Amidst Global Shifts
We observed a strong demand trajectory in impact investing globally, with data showing over US$1.57 trillion in assets under management and 21% CAGR growth from 2019 to 2024, driven by heightened urgency on global sustainability agendas, portfolio optimization by large institutional investors, and government support for blended finance approaches to bolster SME development, job creation, and inequality reduction—particularly in low and middle-income economies.
We’re also seeing capital allocations reaching regions that need them the most, with a survey of 305 impact investing organizations showing that investors are planning to increase allocations to Sub-Saharan Africa by 53%, to Southeast Asia by 49%, to East Asia by 42%, and to South Asia by 39% within the next five years.
This momentum is further supported by data from IIX Intelligence, which has collected over 160,000 data points from sustainable SMEs, reflecting growing interest and actionable insights into impact-driven enterprises across these regions. Data from the IMF also projects above-average economic growth of 5.1% in Asia and 4.2% in Sub-Saharan Africa in both 2025 and 2026.
Geographic Capital Allocations to Emerging Regions in the Next Five Years
These regions are also projected to see above-average economic growth in 2025 and 2026, with an estimated 5.1% growth in Asia and 4.2% growth in Sub-Saharan Africa.
This trend signals optimism for regions with untapped potential and underserved populations—where SMEs are critical engines for driving local economies.
Economic and Geopolitical Headwinds
The positive momentum we are seeing is not without headwinds. Global markets have faltered over recent US tariffs and other geopolitical uncertainties which present obstacles to investing in the near term.
Global Economic Growth Projections vs. Historical Average
With around US$44 billion in global aid disbursed by USAID in the 2023 fiscal year, the agency’s closure has contributed to a significant funding gap for impact enterprises and organizations supporting underserved communities—and created more cautious impact investor sentiments. An example is Inclusive Development Partners losing 90% of their total budget, jeopardizing essential programs for children.
Easing Impact Investing Journeys Despite Uncertainty
Through IIX’s work in facilitating capital allocations into projects which impacted over 155.3M lives, 59% of them being women, we identified two fundamental areas that could improve investor and investees’ impact journeys.
A top issue that impact investors face is reliable impact measurement and verification. Out of 305 impact investing organizations surveyed in 2024, the top three challenges cited were fragmented impact frameworks that use different metrics (92%), difficulty in comparing impact results to peers (87%), and challenges verifying impact data received from investees (84%).
To address these challenges, impact verification needs to be conducted in real-time and go hyperlocal, incorporating tens of thousands of standardized data points across hundreds of impact projects down to the last mile, backed by reputable verification partners, to provide standardized benchmarks for comparing impact across investment recipients. Utilizing reliable and updated business intelligence databases on women enterprises and climate will help ensure the accuracy of impact verification.
Another issue is the perception that impact-focused investments might offer lower financial returns compared to traditional investments or carry higher risks due to operating in underserved or emerging markets—creating risk-return profiles that might not seem as attractive at first glance.
This is where governments can come in to boost incentives for impact investing or allocate catalytic capital to de-risk projects. Private-sector players, particularly corporations with strong gender equality and ESG agendas, can also add to the potential resource pool to invest in impact enterprises. Together, these partnerships can play pivotal roles in mainstreaming the valuation of impact as performance and strengthening enterprises that contribute to actual financial and economic outcomes.
Source:
– GIIN, October 2024.
– IMF, January 2025.
The Path Ahead
IIX’s goal remains to connect the world’s most underserved communities to global capital, as we’ve done for the past 16 years—not through charity, but through finance that’s rooted in inclusion, accountability, and impact. Our Women’s Livelihood Bond™ (WLB) series has mobilized over US$228 million for women-focused, climate-resilient enterprises. Our Impact Partners™ platform has connected investors to enterprises, unlocking over US$500 million for purpose-driven SMEs across the Global South.
As we enter Q2, we’re pleased to announce the upcoming issuance of the seventh bond in our WLB™ Series, the WLB7, aimed at empowering women and girls across emerging markets in the Global South
In the ecosystem space, the Orange Movement™ that we spearheaded, comprised of over 285,000 advocates of gender-lens investing across sectors, will soon also be announcing the formation of our inaugural Advisory Council to bring together leaders and changemakers committed to transforming the global financial system for women, girls, and the underserved.
As we build on learnings from 2024 and set bold goals for the rest of 2025, we invite you to collaborate with us in unlocking new pathways for inclusive growth and sustainable impact.
Prof. Durreen Shahnaz,
Founder and CEO
