CDC makes new investments solely to businesses in Africa and South Asia, regions that include some of the world’s hardest investment environments.
The global poverty landscape is changing. South Asia and Sub-Saharan Africa are already home to 74% of the world’s poorest people, CDC is the only development finance institution to focus new investment exclusively on these regions, which by 2015 will likely contain 80% of the world’s extreme poor.
Africa and South Asia need jobs desperately. In 2012, South Asia had 25 million unemployed and Sub-Saharan Africa 26 million – together this is a quarter of the world’s unemployed. These are young, fast growing, rapidly urbanising populations. For example, between 2010 and 2050, Nigeria will grow from 158 million people to 390 million; and Pakistan from 173 million to 275 million (ILO).
Many 'jobs' are of low-quality. Over three-quarters of workers in both regions are in vulnerable employment, including own-account and unwaged jobs like subsistence farming and street-vending. Today, 40% of workers in sub-Saharan Africa and 25% of workers in South Asia are classified as ‘working poor’ (earning $1.25 a day). Only the private sector can provide skilled and higher waged jobs at the scale needed, as a study in Ghana showed for the period 1991-2005.
Africa and South Asia are capital-starved. The private equity capital pools in these regions are tiny in comparison to developed Western markets or the BRICS. For every US$1 of private equity capital raised for investment in China, 17 cents was raised for India and just 8 cents for Africa.1 Access to finance is a significant constraint for most companies across Africa, including in countries such as Malawi and Ethiopia and for a third of all businesses in Bangladesh. In South Asia, only a third of adults have an account at a formal financial institution; in Sub-Saharan Africa, just a quarter of adults have an account. The position for women is even worse (World Bank). Through its support for the private equity industry and capital for financial services businesses including microfinance, CDC is strengthening the investment community in Africa and South Asia, making the sector better able to meet the needs of local entrepreneurs and larger businesses.
1 CDC analysis of 2011 data from United States Private Equity Data Pitchbook; EMPEA; BVCA.
Note that CDC's legacy investment portfolio includes investments in businesses in many parts of the developing world, including Central Asia, Central America, Latin America and South East Asia in addition to Africa and South Asia. Click for more information about non-eligible regions.