CDC Group is to commit a further £2bn into African businesses over the next two years, as it looks to double the size of its portfolio on the continent.
The UK’s publicly owned impact investor which is also the world’s largest bilateral development investor in Africa unveiled a string of new partnerships totalling nearly $400m at the UK-Africa Investment Summit (AIS) in London. The bulk of funds will be to provide African banks with greater liquidity to support SMEs, entrepreneurs and microbusinesses in their regions.
These include a $100m trade finance loan with ABSA, the South African bank, to support SMEs in southern Africa, an MoU to commit $100m to CIB of Egypt to allow the bank to further support SMEs and microfinance enterprises and a $75m trade finance agreement with TDB to support bank lending to SMEs in 32 African countries.
It also included a $10m debt agreement with Mettle Solar Africa to accelerate the roll-out of solar energy in South Africa and Namibia, a $27.5m investment in Mediterrania III Fund to support mid-cap businesses in North and West Africa, a $20m investment in Adiwale I Fund to support SMEs in West Africa with growth capital and a $20m investment in Verod Cap Growth III Fund to support SMEs active in high growth sectors in West Africa.
Others are a $20m investment in Metier Sustainable Capital II Fund, a renewables fund focusing on sub-Saharan Africa and $15m investment in the TLcom TIDE Africa Fund, a sub-Saharan African VC fund that supports businesses that leverage technology and innovation.
Nick O’Donohoe, Chief Executive of CDC, said “Investors have a real opportunity to embrace the UN’s Sustainable Development Goals – in partnership with African countries and businesses – to fight climate change, create jobs and skills and bring about positive social and environmental change.”
“The commitments we have announced today will accelerate the roll-out of solar power and other renewable technologies and support the growth of countless SMEs – the bedrock of any healthy economy – across the continent.”
CDC is responsible for over 10 per cent of all capital invested through Africa-focused private equity funds.
Despite Africa being home to eight of the world’s 15 fastest growing economies, the continent receives less than 4 per cent of global foreign direct investment.
Strive Masiyiwa, the founder of pan-African telecoms, media and technology company Econet and one of Africa’s best-known entrepreneurs and philanthropists, said “The role of development finance institutions like CDC is vital in providing much needed long-term patient capital for African entrepreneurs and businesses. There is a significant opportunity for UK investors to work with African businesses to create a brighter, sustainable and more prosperous future for the continent.”
Mr O’Donohoe added: “The UK is already the investment partner of choice for many African nations. The investment community here now has a fantastic opportunity to strengthen that position by aiming to make a positive impact to bring about sustainable, long-term economic and social development. That aim does not diminish the financial opportunities that exist for all types of investors. In fact, it enhances them”.
CDC already has investments in over 700 African companies. In 2018, its investee companies collectively employed about 370,000 people and supported millions more through supply chains.
Among its recent deals in Africa was a $180m equity investment in Liquid Telecom to accelerate the rollout of its pan-African high-speed fibre optic network, including into underserved markets such as Sudan and the Democratic Republic of the Congo, and a $92m capital injection to the Nubian Suns project in Egypt, part of the largest solar power installation in the world.