The UK’s development finance institution is planning new investments in Africa to support a struggling economy. Priority will be given to technology, climate and health.
CDC Group reveals its intention to invest more than a billion dollars in Africa in 2021. The British development institution is thus maintaining its sustained pace of investments. It intends to provide essential “countercyclical finance” to African businesses and communities, while foreign investment continues to decline.
CDC unveiled its plans on Jan. 20 at the UK-Africa Investment Conference. The organization promotes itself as “an impact investor and a committed development finance institution, supporting the sustainable and long-term growth of businesses in South Asia and Africa”.
This commitment will allow CDC to invest in many promising African companies and SMEs. Its aim is to stimulate inclusive growth and job creation across the continent, where more than half of the institution’s portfolio is now committed. The funds will be invested in financial institutions, infrastructure and climate, services, manufacturing, agriculture, real estate and technology.
In 2020, CDC has already committed more than $1 billion in Africa, with a focus on post-Covid economic recovery. The CDC has injected systemic liquidity into financial markets, provided capital to companies that provide essential goods and services, made new commitments to African funds, and protected existing companies to help them maintain employment. The institution recalls that FDI (Foreign Direct Investments) to Africa decreased by 30% in 2020.
Infrastructure support!
The organization plans new investments in key markets such as Egypt, Ethiopia, Kenya, Nigeria as well as in “the continent’s most difficult to reach frontier markets where significant development gains can be made”.
As the world’s largest bilateral development investor in Africa, CDC has invested more than £2.7 billion in African companies over the past three years. In 2019, CDC’s investments supported more than 320,000 direct jobs in Africa, contributing nearly $1.5 billion in taxes to local economies.
“The two areas we will particularly focus on this year are accelerating our investments in climate and technology,” said CDC Chairman Nick O’Donohoe. “On top of that, we are a big investor in infrastructure and will continue to be.”
After the experience of managing the Covid-19 pandemic, “more attention will be paid to investing in health and governments will obviously have to do a part of that,” said Nick O’Donohoe. Who believes that “the private sector will have a more important role to play”. The main deals announced in 2020 include:
- A $100 million investment in Helios Investors IV to develop market-leading companies across the continent.
- The creation of a $750 million biopharmaceutical platform to expand access to generic specialty drugs in Africa.
- The launch of the BlueOrchard Covid-19 Emerging and Frontier Markets MPME Support Fund, backed by the CDC, and which aims to support more than 200 million jobs in frontier and emerging markets
- An additional investment of $40 million in Liquid Telecom to drive the growth of digital ecosystems
- A $50 million guarantee by MedAccess, a CDC affiliate, to UNICEF to improve access and accessibility of Covid-19 medical supplies for low- and middle-income countries.
“2020 has been a difficult year for African economies and businesses, which have been severely affected by Covid-19,” commented Nick O’Donoho. As an impact investor and development funder, CDC is committed to providing long-term investments, especially in difficult times. “As FDI continues to decline, we maintain our unwavering commitment to African businesses which play a leading role in accelerating Africa’s economic and human development.”
