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Mdluli Safari Lodge sets new standard for impact investing in South Africa

03 February 2021 Impact Capital Africa

In these challenging times, good-news stories are hard to come by.

Impact Capital Africa (ICA) is therefore pleased to share the unique South African success story of Mdluli Safari Lodge in the Kruger National Park, which has earned the highest-achievable ICA +Impact Sustainable Development Goal Investment Grade core rating of AA+.

Mdluli Safari Lodge is a sustainable tourism partnership between a community of land restitution beneficiaries and private investors. The project has an inspiring history that puts its achievements into greater perspective: in 1968, the people of the Mdluli Community were forcibly removed from their land near the Numbi gate of the Kruger National Park by the apartheid government, following a policy to expand the Park’s borders. After a long battle for land restitution, the Community were granted freehold title of their land in 1998. The area is now known as the Mdluli Safari Reserve.

The Community subsequently reached an agreement with private investors to develop the Mdluli Safari Lodge within the Reserve, using the local investment incentive in section 12J of the Income Tax Act. Guests at the four-star Lodge enjoy a luxury stay in spacious, custom-designed tents made of locally sourced materials that seamlessly blend into the surrounding African bush. This ecotourism project is a great example of the power of the 12J incentive, and has fulfilled the incentive’s objectives of employment, economic growth and social transformation in rural areas.

Today, 84% of the Lodge’s current staff are from the surrounding community and 61% of them are women. Our assessment shows that this tourism initiative has set a new South African standard for investment projects that optimise financial, social and environmental returns, also known as impact or ESG investing. This is noteworthy at a time when investors are looking to ESG (environmental, social and governance) ratings to guide their decision making, to make sure their investments not only have a positive impact on the world around them but also offer sustainable returns in the long run.

Brett Wallington, CEO of Impact Capital Africa says: “The impressiveness of Mdluli’s far-reaching social and environmental impact cannot be overstated. Worldwide, most impact investment projects aim to demonstrate how they impact a handful of SDGs but struggle to do so. In Mdluli’s case, however, we see inspiring positive payoffs across a core and wide range of SDGs, quantified through application of our +Impact SDG Investment Grading Tool.”

The +Impact SDG Investment Grading Tool is a robust, objective methodology that measures an investment’s performance against the universally recognised standards set by the United Nations Sustainable Development Goals (SDGs). The SDGs, which were adopted by the UN General Assembly in 2015, are an interlinked set of 17 global goals to achieve a better and more sustainable future for all. Each goal has universally recognised targets against which progress can be objectively measured. The Tool has been used in South Africa across a wide array of sectors, including agriculture, rural development and tourism to help both businesses and investors understand the social and environmental impact of their activities.

Mdluli Safari Lodge achieved an 87% (AA+) grade on its selective, core SDG assessment, based on four SDGs:

• SDG 8: Decent Work and Economic Growth. At least 120 people from the Mdluli Community directly benefit from employment at the Lodge; this adds value to local economies.
• SDG 10: Reduced Inequalities. The Mdluli Community have a 50% stake in the Lodge, with the remaining half of shares being held by private investors; profit share thus accrues in substantial measure to staff from the Community, significantly reducing inequality.
• SDG 11: Sustainable Communities. From the outset, the Lodge was designed with a vision to improve the economic and cultural well-being of the Mdluli Community, including investment in clinics, schools, roads, accommodation and cultural institutions.
• SDG 15: Life on Land. The Lodge is situated in the Community-owned Mdluli Safari Reserve within the Kruger National Park, which is managed with a view to preserving and enhancing biodiversity. These measures include an anti-poaching programme, staffed by Community members who, as part of the investment project, have been trained as anti-poaching rangers and conservationists.

Across the whole range of 17 SDGs, the Mdluli Safari Lodge achieved a 74% (AA) grade. This puts the Lodge in an elite bracket of impactful projects with a highly significant ability to promote conservation through responsible ecotourism, protect the environmental and cultural heritage of South Africa’s rural areas, and bring about deep and lasting socioeconomic change for poor communities.

Nelly Mdhluli, a member of the Mdluli Community says: “We are so proud of what we have achieved at the Lodge. Not only has the project created much needed, stable jobs for our community, but we are also preserving the cultural heritage of this area and looking after the environment for our children and grandchildren.”

Ms. Mdhluli believes that the project will offer further benefits for the Community going forward, as the Lodge continues to attract capital from 12J investors and draw more visitors to the Reserve. Dedicated funds have been set up to build and upgrade schools, clinics and community centres which service the community at large.

Malcolm Segal, a director of Mdluli Safari Lodge, says there is an increasing appetite amongst South African investors for projects that have positive environmental and social impacts as their foremost goal. “Socially and environmentally conscious investors want to be involved in ventures that are about more than just about profit. The amazing benefits this project has brought to the Community and to the beautiful natural environment in which the Lodge is situated really gives investors the sense that they’re doing something far more meaningful than just making money,” Segal says.

Impact Capital Africa’s full report into Mdluli Safari Lodge can be accessed here.

 

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