We have a long history as an investor. We've evolved since 1948 and we're now better-positioned than ever to carry out our mission. Here are some frequently asked questions relating to how and why we operates in the way we do, as well as some information about current performance.
CDC is a Development Finance Institution (DFI), owned by the UK Government’s Department for International Development (DFID). Our mission is to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people's lives in some of the world's poorest places. CDC is not designed to solve all development challenges; it is one part of the Department for International Development's strategy to harness the power of the private sector in reducing poverty.
a) One of the greatest challenges facing developing countries is the lack of jobs, particularly good quality jobs in the formal sector. CDC supports the growth of commercially sustainable businesses across all of Africa and South Asia – especially in the harder places. We aim to invest with a focus on job creation: in countries where the private sector is weak and jobs are scarce, and in sectors where growth leads to jobs. CDC invests to support the growth of all sizes of business from the micro-level right up to the largest because we believe that a balanced private sector is necessary for economic development and robust job creation.
b) CDC encourages private investment in developing countries by demonstrating a profitable and responsible track record. CDC does this because many commercial investors still shy away from the emerging markets in Africa, parts of South Asia and other poor countries which are seen as risky, unknown and problematic.
Since 2011 all our new investments have concentrated exclusively on Africa and South Asia where more than 70 per cent of the world's poorest people live. We invest using debt and equity in both direct and intermediated forms.
Since 2011, we have invested using direct equity, intermediated equity and by providing debt.
At the end of 2015 our portfolio of companies was worth £3.9bn.
- Our investment supports 1,293 businesses - including 684 in Africa and 349 in South Asia.
- We estimate these investee companies created more than a million jobs in 2015.
- In 2015, the businesses we supports in Africa and South Asia contributed $2.6 billion in local taxes.
For more information on CDC’s development, financial and economic impact, please see the our Annual Review 2015.
CDC has been investing in developing countries since 1948 and during this time the global economy has seen many countries move out of poverty. Over the years CDC has adapted its investment policy accordingly.It is important that CDC honours its commitments, however, and doesn’t recall capital as soon as the investment policy is updated. So when CDC provides patient capital to help a business grow we see out the term of the investment. This means that CDC’s portfolio of investments often includes companies outside the regions stipulated by the policy for new investments. CDC will sell these investments in due course and reinvest the capital according to the latest investment policy.
Private equity is often called risk capital or growth capital. By buying a stake in the business, an investor is committed to the success of the business because if it fails then they will lose their capital. This is a fundamental difference between debt (loans) and equity.
- Hands-on capital: many growing businesses need more than money to reach their goals. Equity investors take a proactive approach: building management teams, developing strategy, reviewing systems and controls, ensuring accountability for results. This is especially important with regard to improving environmental, social and governance (ESG) standards.
- Attracting other capital: private equity funds bring DFI and commercial capital into businesses and provide long term investment.
- Smart capital: fund managers recruit experienced specialists to help improve, develop and grow the businesses. This rapidly improves local industry standards and improves competitiveness.
Working with fund managers and other partners has a number of benefits:
- Most of our fund managers are based in developing countries so CDC can take advantage of their local knowledge and expertise both in sourcing and supporting investee companies. Investing with local managers also strengthens local investment infrastructure;
- It encourages third parties to invest capital in developing countries by demonstrating that responsible investing can generate good returns. Lack of capital is a major impediment to economic development in these countries, so catalysing commercial investment is vital; and
- CDC also benefits from a much broader investment footprint, with our fund managers deploying CDC capital and good business practices into over 1,300 businesses in over 74 countries.
For full details please go to our Annual Review 2015. Key highlights include:
- Our portfolio of investments in Africa and South Asia created 1.03 million direct and indirect jobs.
- Over the last five years, we've made an average annual return on our net assets of 7.8 per cent
- Our assets have grown to £3, 901.2 million
CDC will not pay and will not condone the payment or receipt of bribes, facilitation or other forms of corrupt payments. Not only are such payments in violation of CDC’s investment code, but CDC regards them to be wholly incompatible with its mission to build businesses, create jobs and make a lasting different to people’s lives in developing countries. CDC seeks to promote this simple principle wherever it operates. Click here to read CDC’s anti-corruption statement.