Increased investment will help create jobs, economic growth and opportunity across Africa.
Speaking at a UK-South Africa Business Forum event in Cape Town at the beginning of Theresa May’s visit to Africa, CDC’s Chief Executive, Nick O’Donohoe, announced that CDC would aim to commit up to £3.5 billion investment to African businesses over the next four years (2018-21).
CDC is the UK’s development finance institution and invests in Africa and South Asia with the aim of supporting economic development and prosperity.
CDC has a £2 billion portfolio of 715 companies in Africa and plans to increase its investment rate in order to help meet the shortage of capital needed to create jobs and build infrastructure on the continent. CDC’s announcement is also designed to encourage other investors and companies to access the opportunities offered by African countries.
Nick O’Donohoe said:
“I’m here as part of the PM’s delegation to demonstrate to local businesses that CDC is increasing the level of investment we want to make. There remains a huge shortage of the investment, infrastructure and jobs needed to help many African countries reach their potential, so I’m pleased to be able to announce that we’re aiming to invest up to £3.5 billion over the next four years.
“CDC has been investing successfully in Africa for 70 years and our investments make a real difference, whether by funding companies providing low-cost internet access in Nairobi, or backing new and renewable sources of energy in Lagos. And as we invest more than ever in the continent I want to see CDC broaden its impact, making investments that specifically target the economic empowerment of women, climate change, job quality, and local skills and leadership. We’ll also focus our new investments on removing barriers to growth in new markets and on transforming whole industries.”
CDC aims to increase capital flows to underdeveloped markets so countries can finance their own way out of poverty. CDC focuses on sectors that are most important for economic growth and achieving impact through, for example, job-creation, including infrastructure, construction and real estate, education, food and agriculture, financial services, health, and manufacturing. With a focus on less-developed and more fragile markets, CDC typically takes on more risk than other investors which means we typically have lower financial returns. Even so, in the last five years CDC’s successful investing track record has seen it grow its portfolio in South Asia and Africa by £1.4 billion, making returns of almost £1.2 billion.
Recent investments by CDC in Africa include a £50m commitment to a solar power project in South-East Kenya; a £30m investment in Africa CapitalWorks, an investment company that will provide permanent equity capital to growing mid-market companies across sub-Saharan Africa; and a £12m commitment to a high-impact fund for agricultural finance in Nigeria.