CDC Group plc has welcomed the Department for International Development’s (DFID) announcement today that it will invest new capital in CDC as part of its plan to reduce poverty in the developing world by supporting economic growth and creating jobs.
CDC is the UK’s Development Finance Institution tasked with investing in businesses in Africa and South Asia to create jobs and make a lasting difference to people’s lives in some of the world’s poorest places.
The new investment of £735 million will allow CDC to invest on a greater scale in job-creating sectors such as agribusiness, infrastructure, financial institutions and construction. Last year, CDC-backed businesses helped create nearly 1.3 million direct and indirect new jobs in Africa and South Asia.
“A job is the best route out of poverty, and we know from experience that people in developing countries have the vision and drive to build the businesses to provide these jobs. What’s lacking is long-term, supportive investors with experience and this is where CDC can make a difference. Over the last 70 years we have backed many thousands of successful businesses and helped to change millions of lives for the better. I am excited that this extra capital will allow us to do more and live up to our proud history.”
A strong private sector is essential to provide the income, jobs, goods and services that help people escape poverty. However, businesses in developing countries can struggle to find the investment and expert advice they need to grow, particularly in regions and sectors where private investors are put off by higher levels of risk. The United Nations estimates that only half the annual US$2.5 trillion needed to achieve the Sustainable Development Goals is currently available.
As well as targeting development impact, CDC investments also generate a financial return, which is recycled into future investments, making each pound invested go even further. Since 1948 the UK Government has invested a net £144 million into CDC, which has now been turned into net assets of £3.4 billion.
CDC is currently invested in over 1,300 companies in 74 countries. Current CDC investments include an agribusiness that operates across more than 30 African countries, such as South Sudan and Guinea-Bissau, to connect hundreds of thousands of smallholder farmers with consumers; a Bangladeshi garment firm that has raised standards in the industry and provided jobs to thousands of women; and Cameroon’s electricity supplier which has ambitious expansion plans to deliver an increase in power in a country where nearly 50 per cent of households don’t have access to electricity.