Today we’re publishing our 2018 Annual Review, Making a Difference, along with our Annual Accounts. Over the last year, we have continued to invest in innovative ways to help create jobs, improve access to goods and services, and support business growth in Africa and South Asia. We made 43 new investment commitments totalling £1.06bn, the second highest amount in our 70-year history.
Our capital now supports a total of 698 businesses in Africa and 344 in South Asia. Our portfolio in these regions directly employed 852,000 people. Those businesses paid $3.2 billion in taxes to their local governments.
The 43 new investments we made last year were designed to unlock potential for individuals, companies and markets – and to make a difference that will improve people’s lives in some of the world’s most challenging environments. They included a new independent renewables company in India that will develop hundreds of megawatts of clean power; a leading African telecommunications company that will expand broadband connectivity from Cairo to Cape Town; a new investment fund dedicated to supporting food security by backing SMEs in the food production and processing sector across Africa; and we were among the very first financial institutions to offer desperately needed capital to Zimbabwean companies in a post-Mugabe world.
We also increased our willingness to be innovative in deploying capital and make investments with a broader risk appetite. Through our Catalyst Strategies, for example, we have identified areas of significant market failure and thought creatively about how to help address them. We launched MedAccess, a company dedicated to underwriting the risk of supplying critical drugs and medical devices to uncertain markets. We also laid the foundations for a new company that will develop and invest in power networks across Africa where over 600 million people currently have no access to electricity.
The 2018 figures show a total profit of £6.0 million (compared with a loss of £72.8 million in 2017), which represents a return of 0.1 per cent on net assets this year. The average annual return on net assets since 2012 is 6 per cent. Total assets rose to £5.8 billion (2017: £5.1 billion) and we increased our portfolio to £4.3 billion (2017: £3.9 billion).
Welcoming the publication of our 2018 annual results, Chief Executive, Nick O’Donohoe said:
“I’m proud of the difference that CDC has made this year. By investing over £1 billion of much-needed capital we’ve helped create jobs, improved access to goods and services, and supported the economic stability that enables countries to leave poverty behind. Importantly, we’ve done this while making a financial return. In 2018, we were determined to play a leadership role in where we invest, how we invest, and the difference our investments make to people’s lives and well-being. Our Annual Review, Making a Difference, sets out how we did this.
“Many of the economies we invest in continue to face volatility and uncertainty and falling investment levels, particularly in sub-Saharan Africa. As a long-term developmental investor our role to maintain support in these challenging economic conditions, to take risks others would not take, and focus on achieving real development outcomes.”
Our Annual Review sets out how we aim to make a difference in three ways. To people and communities by supporting more jobs as a route out of poverty, working with companies to ensure decent work, reaching poor and inaccessible communities and building towards a low carbon future. To companies and local economies by innovating to shape new markets, ensuring good environmental standards and championing people and inclusion. And to developing capital markets by mobilising commercial investment to build sustainable economies and strengthening access to finance.
Other key findings
Jobs: The businesses in our portfolio in Africa and South Asia employed 852,000 people. Of these jobs, 32,000 were newly created. In the last five years, when our reporting on jobs began, the average annual job creation rate in our investee businesses is 5.8 per cent. This compares to a growth rate of 3.1 per cent in our regions over the same period.
Wages and livelihoods: $4.5 billion was paid in wages to employees of our investee businesses.
Access to power: Our investments in power infrastructure generated 49 terawatt hours of electricity, enough to power Portugal for an entire year.
Access to financial services: The number of customers served by the financial institutions in our portfolio reached 72.2 million.
Impact on food and agriculture: The agribusiness investments in our portfolio sourced from 1.25 million farmers.
Impact on health: The healthcare operators in our portfolio treated over 9.5 million patients.
Impact on education: Our education investments supported over 358,000 students.
Mobilisation of capital: Between $570m and $576m of additional private capital was mobilised alongside our own investments.
Where we invest: Of the total £1.06 billion we committed in 2018, 71% (£752m) was in Africa with 21% (£217m) in South Asia. The remainder were pan-regional commitments that will be allocated to either Africa or South Asia in the future.
What we invest in: 27% of CDC’s investment commitments were in financial services (£283m); 19% in infrastructure (£199m); 7% in manufacturing (£78m); 6% in construction and real estate; (£59m); 5% in food and agriculture (£57m); 3% in education (£15m) and <1% (£1m) in health.
The type of investments we made: £191m (18% of the total) of our investment commitments were direct equity; £423m (40%) were debt; £311m (29%) were intermediated equity/fund investments; and £135m (13%) were guarantees.
Find out more
Read our Annual Review 2018: Making a Difference here
Read our Annual Accounts 2018 here