Investing in businesses

Boosting the private sector

Our investments:

• provide much needed capital for growing businesses;
• attract other investors by demonstrating success;
• build value in companies by improving environmental, social and governance (ESG) standards; and
• drive economic growth which is the only long-term route out of poverty.

The crisis in the global economy means that promising businesses in poor countries face an even bigger challenge in accessing long-term investment. CDC provides capital for 59 fund managers to invest in new and growing businesses.

CDC’s 700+ portfolio companies provide approximately a million jobs and support the lives of an estimated 6 million people in poorer countries. We also know that well over US$2.2 billion in taxes was paid out by CDC’s portfolio companies. This means that governments in developing countries have a sustainable source of finance to pay for public services instead of having to rely on donors for funding.

Development depends on investment in businesses of all sizes and in all sectors. A broad-based economy is a pre-requisite of sustainable economic growth. CDC’s fund managers invest in many industries including agribusiness, which plays a vital role particularly in Africa, but they also invest in manufacturing and industry, financial services including microfinance, telecommunications and information technology, property and retail, consumer goods and services as well as mining and engineering businesses.

Encouraging other investors

CDC plays a crucial role in encouraging additional capital from the private sector and other investors. In the last decade more money has been committed to poor countries and it is our role at CDC to ensure that this trend continues.

The amount of third party capital invested alongside CDC in private equity funds in poor countries has grown significantly in the last four years, from US$2.8bn in 2005 to a total of US$21.2bn at the end of 2008.

Most of CDC’s fund managers are based in developing countries with offices in 34 countries and many are first time managers. CDC’s initial backing and cornerstone financial support for new fund managers like Aureos and Actis has helped them to succeed and raise billions of dollars from commercial investors, as well as strengthening capital markets in the developing countries in which they operate.

For more information on CDC’s support for private sector investment go to Chapter 5 of our development report,