The UK will boost investment into promising businesses in Africa and South Asia to create jobs, stimulate growth and end dependency on aid, International Development Secretary Justine Greening has announced.
A new investment of capital into CDC, the UK’s development finance institution, will ensure promising businesses in emerging and frontier economies receive the finance they need to grow and create jobs.
This will ensure countries can grow and trade their way out of poverty while building future markets that British businesses can compete in.
Announced at the UN’s Financing For Development conference in Ethiopia, the investment will stimulate growth in some of the world’s poorest countries.
Justine Greening said:
For the first time in 20 years we are investing in CDC to help some of the poorest countries start to grow and trade their way out of poverty.
Too many developing countries find their job creation and economic growth is held back because their businesses cannot find the capital they need to grow and expand. Our investment will allow CDC to target more support to job-creating sectors, such as agribusiness, manufacturing, infrastructure, financial institutions, health, education and construction.
CDC will bring the best of British expertise in finance, development and investment to transform the job opportunities and life prospects for people in some of the world’s poorest countries.
Recently refocused towards the poorest countries, an expanded CDC will be at the heart of our drive to end dependency on aid through job creation.
Chief Secretary to the Treasury Greg Hands said:
Britain is a nation that stands tall in the world. CDC’s impressive results demonstrate why it is well placed to help meet the substantial demand for capital from promising businesses in Africa and South Asia trying to reach their full potential. This is not only the right thing to do, it is also firmly in Britain’s own economic interest as it will help build future markets for British and other businesses to compete in.
The first new injection of capital in CDC for 20 years, the UK government’s £735 million investment over 3 years will allow CDC to target more support to developing countries.
There remains a considerable shortfall of investment capital across the developing world, particularly in countries and sectors where there are higher levels of risk. Estimates for total investment needs in developing countries range from £2.1 trillion to £2.8 trillion every year.
Last year CDC-backed businesses contributed to the creation of nearly 1.3 million direct and indirect new jobs. This includes new jobs in the businesses in which they invest, new jobs in the supply chain and new jobs created through better access to power and finance The new capital investment will allow CDC to scale up its work considerably.
The changes the government made to CDC in the last parliament have ensured CDC’s support is now targeted to countries and investments where it is needed most and where it can have the greatest impact. CDC will target job-creating sectors in areas where the shortage of capital is particularly acute and the investment climate is challenging.
CDC committed approximately £1 billion in 2013-14 and anticipates demand for its capital to be over £640 million in 2015. The capital invested by DFID will be returned over time and will be reinvested by CDC in other businesses.
Notes to editors
- Justine Greening’s full Written Ministerial Statement is available online.
CDC Group plc is the UK’s development finance institution wholly owned by the UK Government. It supports the building of businesses throughout Africa and South Asia to create jobs and contribute to economic growth.
- Since 2012, a refreshed CDC has been pursuing a new strategy, agreed with DFID, to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people’s lives in some of the world’s poorest places.