Group targets $1b yearly investment in Africa

FDI. Photo: NAIRAMETRICS

By Benjamin Alade

 The United Kingdom’s impact investor and development finance institution (DFI), CDC Group, has

announced a commitment to invest over $1 billion again in African businesses in 2021.
 
This will enable CDC to invest in more promising African enterprises, including small and medium enterprises (SMEs), and continue to drive inclusive growth and job creation across the continent, where over half of the institution’s portfolio is now invested.
 
The funds will be invested in financial institutions, infrastructure and climate, services, manufacturing, agriculture, real estate, and technology.
  
In 2020, CDC committed over $1 billion into Africa with a focus on recovery from COVID-19. The group injected systemic liquidity into financial markets, providing capital for companies that deliver critical goods and services, made new commitments to African funds, and provided a buffer to existing investors to sustain jobs.
 
Foreign direct investment (FDI) into Africa is predicted to have declined by 30 per cent in the year. So, CDC’s maintained investment pace provides counter-cyclical funding at a critical time for the continent. The fund’s investment activity is equivalent to an ever-greater proportion of FDI into Africa.
 
Last week, CDC unveiled plans at the UK-Africa Investment Conference to expand its Africa portfolio with new investments in key markets including Egypt, Ethiopia, Kenya, Nigeria, and other 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 businesses over the past three years. In 2019, CDC’s investments supported over 320,000 direct jobs in Africa, contributing close to $1.5 billion in taxes to local economies.
   
Some of the deals announced in 2020 include a $100 million investment in Helios Investors IV to scale market-leading companies across the continent, the creation of a $750 million biopharmaceutical platform to broaden access to generic pharmaceuticals in Africa, the launch of the BlueOrchard Covid-19 Emerging and Frontier Markets MSME Support Fund, which is anchored on its goal of supporting more than 200 million jobs in frontier and emerging markets.

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It also invested $40 million additional investment in Liquid Telecom to boost the growth of digital ecosystems, a $50 million guarantee by MedAccess – a CDC subsidiary – to UNICEF to improve the access and affordability of COVID-19 medical supplies for low and middle-income countries.
 
In his remarks, Chief Executive Officer of CDC, Nick O’Donohoe, said: “2020 was a challenging year for African economies and businesses, which have been heavily affected by COVID-19. As an impact investor and DFI, CDC is committed to providing long-term investment, particularly in challenging times. As FDI continues to drop, we maintain our steadfast commitment to African businesses as they play a leading role in accelerating Africa’s economic and human development.
  
“Alongside our partners at the Foreign, Commonwealth and Development Office and Department for International Trade we have focused our efforts on preserving the development gains that have been hard-won over the last twenty years and ensuring Africa’s recovery from COVID-19 is inclusive and sustainable.”