Collection: Frontier Finance
CDC to become British International Investment with increased focus on infrastructure and climate
The UK foreign secretary Liz Truss has announced a revamp of CDC Group, the country’s development finance institution, which will change name and extend its remit.
CDC will be renamed British International Investment plc (BII) in March 2022, Truss (pictured) said on Thursday in a speech at the London Stock Exchange. The change will coincide with the start of the institution’s new strategy, which plans to extend its geographical remit and focus more investments on infrastructure – in particular green infrastructure and climate finance.
CDC committed more than £700m in climate finance over the past four years. Between 2022 and 2026, BII plans to increase this to approximately £3bn – about 30% of all new spending.
Nick O’Donohoe, CEO of CDC, said: “We will deliver on the UK’s promise to support emerging economies to combat the climate emergency and track the impact of each investment to ensure every penny is used productively.”
We will track the impact of each investment to ensure every penny is used productively - Nick O'Donohoe
The company is planning to invest between £1.5bn and £2bn in total finance per year over the 2022-2026 period. BII will partner with capital markets and sovereign wealth funds to catalyse public and private investment, and will be part of the UK government’s wider plans to mobilise £8bn to fund international projects by 2025.
‘Worrying sign’
Critics have however voiced concerns that the new focus on infrastructure may be detrimental to other aspects of CDC’s activities such as education, better nutrition and decent health services.
“The word ‘development’ has been taken out of the title. That’s a worrying sign,” chair of the UK parliament’s International Development Committee Sarah Champion (pictured) said in a statement on Thursday.
“The number one priority of a development finance institution must be tackling poverty in lower income countries... I want to see a clear commitment from BII to fight poverty. The poorest and most vulnerable must not be left behind.”
Champion also criticised the lack of commitment to stop investments in fossil fuels.
The poorest and most vulnerable must not be left behind
The UK government said BII was part of its “network of liberty strategy” that seeks to bring more developing countries “into the orbit of free-market economies” – a response to China’s rising influence in the global south as the Asian superpower is investing billions in low- and middle-income countries through its Belt and Road initiative.
Truss said “reliable and honest sources of finance” were needed. “When freedom-loving democracies invest in infrastructure and supply technical expertise, it makes countries freer, wealthier and more secure,” she added.
To date, CDC has operated in Africa and Asia. The revamped institution will also invest in the Caribbean and the Indo-Pacific region, specifically in the Philippines, Indonesia and the Mekong region, with a particular emphasis on renewable energy infrastructure.
BII will also invest in digital technology, both large digital infrastructure and early-stage startups. The company also plans to invest 25% of new commitments in gender finance.
CDC currently has investments in more than 1,000 businesses in emerging markets with total net assets of £6.8bn.
New chair: Diana Layfield
Diana Layfield will replace Sir Graham Wrigley, who will leave his position in January after eight years as chair of CDC. Layfield is currently a president at Google, overseeing Europe, Middle East and Africa partnerships, and a non-executive director at AstraZeneca. She was formerly the Africa CEO of Standard Chartered.
She will be CDC’s first female chair in its 73 year history.
Layfield, who also worked as a medical relief pilot in war zones in Africa, said: “I believe profoundly in the importance of [development finance institutions] and the critical role they play in the investing and development landscape – both for the countries investing and for the countries and projects which benefit from that investment.
“The ability of expertly deployed, patient capital which is correctly structured to have a transformational impact is something I have witnessed directly in my career.”
Sir Graham Wrigley oversaw major growth at CDC, which went from an institution numbering around 80 people, investing £300m per year, to employing 500 people and investing £1.5bn per annum.
Top picture: Enepher Wanjala poses irrigating a farm using solar-powered water pump in Kenya. Credit: Jeffery M Walcott / IWMI via Climate Visuals. Official portraits of Truss and Champion: UK Parliament.
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