UK’s development finance for Africa rises to £2.2b - THE NATION
• New digital tool to link Britain, African businesses
The United Kingdom (UK) at the weekend reaffirmed its commitments to channelling investments into Africa as Britain’s development finance in Africa exceeded target to hit £2.2 billion by 2021.
At the second UK’s Africa Investment Conference (AIC) at the weekend, UK affirmed that Africa remains the focus for investment over the next five-year strategy period.
The CDC Group, UK’s development finance institution, exceeded its 2020 commitment to invest £2 billion in Africa over the last two years with a closing mark of £2.2 billion by the end of 2021. The growth in Britain’s investments in African businesses came amidst the unprecedented upheaval caused by the COVID-19 pandemic.
The CDC is owned by the UK Government and it is regarded as a champion of the United Nation’s (UN) Sustainable Development Goals. All proceeds from investments are reinvested to improve the lives of millions of people in Asia and Africa.
To enhance UK-Africa partnerships, UK at the second AIC launched a new ‘Growth Gateway’ – a digital tool to link African and British businesses to UK Government trade, finance and investment services and opportunities. The service provides practical online support to businesses in Africa that want to export to and invest in the UK, and businesses in the UK that want to export to and invest in Africa, backed up by a team of trade and investment specialists.
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The second AIC highlighted Britain’s strategic plan to boost economic cooperation with African nations and enhance UK’s role as the continent’s investment partner of choice for greener, climate-friendly projects.
UK’s Secretary of State for International Trade, Anne-Marie Trevelyan, who hosted the one-day virtual event, said the cooperation aimed at further unlocking millions of pounds of new investment, especially in clean energy industries in both the UK and across Africa.
Trevelyan said sustainable trade and investment are crucial for reducing global inequality, improving economies, raising incomes and creating jobs, noting that UK’s ambition to be Africa’s investment partner of choice has never been stronger.
“The continent has huge economic potential, and our continued partnership will help businesses capitalise on investment opportunities, supporting high value jobs and boost enterprise in every part of the UK.
“This year’s Conference focuses on the importance of resilient, sustainable investment to support Africa as it pivots towards a more environmentally-friendly growth trajectory, and I look forward to working with leaders from the continent as they continue on this path to a greener future,” Trevelyan said.
UK’s Minister for Investment Gerry Grimstone said the second AIC was a key part of the UK’s strategic plan to make Africa a partner of choice by bringing UK and African business communities together to make the case for a closer investment partnership with a renewed focus on sustainability and clean growth.
“The UK is deepening our economic ties with countries across Africa. This conference is a fantastic opportunity to bring British and African businesses together to unlock millions of pounds of new investment, especially in clean energy industries in both the UK and across Africa.
“There is so much more that the UK and African countries can do together. Growth Gateway will make it easier than ever for African and British businesses to access the support they need to boost two-way trade and investment,” Minister for Africa Vicky Ford said.
Her Majesty’s Acting Trade Commissioner (HMTC) for Africa, Alastair Long, recalled that in 2020, at the UK-Africa Investment Summit, the Prime Minister set out the UK’s ambition to be Africa’s investment partner of choice and it has continued to bring life to this ambition.
“Last year, we launched an online investment deal room to provide a platform for African projects to be showcased to UK investors. The deal room has already published over £350 million of vetted and investable opportunities to date.
“Clean growth is at the heart of the UK’s trade agenda, and with Egypt hosting COP27, today’s Africa Investment Conference will be an opportunity to explore inclusive, sustainable and resilient investment opportunities that can serve to help Africa transition to a cleaner and greener growth trajectory,” Long said.
Chief Executive Officer, CDC, Nick O’Donohoe said the company, which is to be renamed British International Investment (BII) by April 2022, said the rapidly pivoted supports for its portfolio and mitigated the economic fallout of the pandemic in the countries in which it invested.
According to him, the role of development finance institutions such as CDC was vital in supporting vulnerable countries that did not have the financial reserves to protect their economies.
“Moving forward, British International Investment intends to invest between £1.5 and £2 billion per annum between 2022 and 2026 to support the UK government’s Clean Green Initiative and to create productive, sustainable and inclusive economies in Africa, parts of Asia and the Caribbean,” O’Donohoe said.
The CDC made its largest-ever deal in Africa in 2021 in a partnership with DP World worth up to $1.7 billion – to significantly boost the continent’s ability to trade globally by expanding its port capacity. Other key investments include Liquid Telecom, that is building a pan-African fibre-optic network, and in the Global Partnership for Ethiopia, a consortium led by Vodafone to build a new, world class mobile network in Ethiopia.
Investing in clean infrastructure will be central to CDC’s strategy over the next five year period. At least 30 per cent of total investment by value will go into climate finance.
Among the major clean infrastructure investments made in Africa by the company over the last strategy period was a $100 million or £75.5 million commitment to the Nachtigal Hydro Power in Cameroon, $50 million or £36.8 million for the Malindi Solar Project in Kenya, which became operational recently and $50 million or £36.8 million for ACWA Power in South Africa.
Director and Head of Infrastructure Equity, Africa and Pakistan, CDC, Chris Chijiutomi, said clean infrastructure investment for the company will go beyond renewables as clean water provision, forestry and agritech, for example, will become increasingly important moving forward.
According to Chijiutomi , CDC continues to power Africa’s growth as evidenced in its investee company Globeleq which in 2021 succeeded in securing 1.4GW of wind and solar projects in South Africa.
In addition to investing in utility scale projects, CDC will prioritise technology-backed venture capital opportunities in smaller businesses that have the potential to deliver innovative, local solutions to mitigate the impacts caused by the climate crisis.