The UK Prime Minister Theresa May has announced a range of measures to boost much-needed investment in businesses and infrastructure across Africa, including an additional £4bn of private sector investment into the continent.
As part of this, CDC, the UK’s Development Finance Institution, will significantly increase its investment into Africa – aiming to invest up to £3.5bn in businesses on the continent over four years.
This will support hundreds of thousands of jobs, build stability and trigger growth in some of the poorest and most fragile countries.
A new investment of up to £500m of UK aid invested through the Private Infrastructure Development Group (PIDG) will build essential infrastructure such as power, roads and water, that will lay the foundations for new trading and business opportunities across Africa in places businesses previously would not have been able to operate.
Philippe Valahu, PIDG CEO, said: “We are delighted to announce this additional funding, which will enable us to do more, better. Our pioneering approach has seen significant success; with a successful track record we have supported 170 infrastructure projects, mobilised $22.9bn from the private sector and benefited an estimated 231 million people."
In addition to announcing a substantial scale up of investment through CDC and PIDG, the UK is setting a clear ambition to mobilise £4bn of private investment, particularly from the City of London.
In total, UK initiatives will generate up to £8bn (around $10bn) of investment for African countries between 2018 and 2021.
The Prime Minister has also set a new ambition for the UK to be the largest G7 foreign direct investor in Africa by 2020.
Africa’s population is set to double by 2050 and as many as 18 million extra jobs a year will be needed.
There is a chronic need for private and public investment to create better opportunities in Africa to prevent the next generation falling further into poverty, potentially fuelling instability and mass migration with direct consequences for Britain.
International Development Secretary Penny Mordaunt said: “Africa’s emerging markets offer huge untapped potential to the UK. There is a massive shortage of investment, infrastructure and jobs in these markets, and the City of London is uniquely placed to help fill this gap while earning benefits for the UK economy.”
The City of London manages over £8trn of assets but at the moment only around 1% of those assets are invested in Africa.
This partnership will mobilise further capital from pension funds, insurance companies and other investors, enabling the City to take on an even greater role as Africa’s partner of choice for financial services as the UK leaves the EU.
This will create the opportunity to boost investment returns for the UK’s pension pot, while triggering essential long-term investment for African businesses, transforming the world’s poorest nations into the UK’s trading partners of the future.
“We’re building mutually beneficial partnerships which are helping to stimulate long-term transformational growth and create good jobs for people in the world’s poorest countries, while also allowing UK investors to access the wealth of opportunity offered by African countries,” said Mordaunt.