Measuring performance

The impact we aim to achieve

Job creation is our primary strategic focus because employment is the best and most sustainable path out of poverty. Getting a good job not only transforms that person’s life, it also transforms the lives of their family and dependents.

Two-thirds of those of working age in Africa and South Asia do not have a job in the formal sector. Population growth will only exacerbate the problem over the next decade as a billion more young people will enter the job market, mainly in Africa and South Asia.

Our investments can also have a transformative effect on sectors and countries’ economies.  For example, the businesses we invest in paid $2.6 billion in taxes to local exchequers, providing governments with the means to deliver essential public services.  We also invest in businesses that provide essential goods and services. For example, the power companies we back provided enough energy to meet the needs of 28 million people in 2015.

Understanding our impact

 Our dedicated Development Impact team works closely with our Investment teams to help us achieve maximum impact and to understand the actual impact we achieve.

Measuring job creation

We have developed a new methodology for calculating job creation with the help of an external firm that advises on impact and sustainability and we publish the direct and indirect jobs in our portfolio each year in our Annual Review.

Deep dive evaluations

We regularly commission independent evaluations to understand important themes in our work. They bolster our knowledge and guide our future investment strategies.

Our most recent published evaluations are:

"What impact do private providers have on health and health systems?"

This evaluation carried out by the Centre for Health Policy at the Institute of Global Health Innovation, Imperial College, creates a framework for understanding the impact of private healthcare providers. It's aimed at policymakers, private providers and development investors, with recommendations for how to maximise positive impact and minimise the risk of harming patients, fragile health systems and efforts to achieve universal health coverage. 

“What is the link between power and jobs in Uganda?”

This evaluation established that the large increase in Uganda’s power provision between 2011 and 2014 resulted in a fifth of the country’s GDP increase over that period.  Leading to more than 200,000 new jobs.  It also identified bottlenecks in transmission and distribution of power (rather than solely generation), which we are considering as part of our future investment strategy.

What are the links between power, economic growth and job creation?

This evaluation helped us understand the actual impact that improving access to power can have on business growth and employment.

“What was the impact of CDC’s fund investments 2004-2012?”

This independent evaluation from Harvard Business School looked at the impact of our Fund investments and showed that they had a strong developmental impact in many ways, but particularly by creating jobs and mobilising third-party investment into challenging environments.

Choosing the right investments 

We have created a screening tool that helps us choose the right investments that will have the greatest development impact. The tool prioritises investments in the most job-creating sectors and into the poorest countries and states. The methodology was designed with the help of our shareholder and academics and economists. It is embedded in our investment processes and we use it to assess every investment opportunity for its potential to create impact. Find out more here

 

Financial return

Throughout our history, we have consistently focused on generating a financial return as one of our two overriding objectives.  This focus is important for a number of reasons.

  • A rigorous commercial approach to investing designed to generate returns is an important gauge of our other objective, to contribute to long-term sustainable business growth and job creation.  Studies from other investors with dual purpose missions such as the IFC demonstrate that there is a positive correlation between investments that generate good financial returns and those that create employment and broader development benefits.
  • To be sustainable in the long term a business must be run profitably and responsibly. Profits enable companies to invest in training, research and development and expansion, as well as ensuring that they can withstand shocks.  Our team uses its skills and commercial judgement to direct capital to those businesses and opportunities that it believes are managed with the same objectives – to achieve profit in a responsible manner.
  • Financially sustainable businesses create jobs that can endure long after we have exited the investment.
  • Investing with commercial rigour and generating good returns demonstrates to other potential investors that successful investing is possible in difficult geographies. Encouraging commercial and institutional investors to direct capital to opportunities in Africa and South Asia is vital if their economies are to achieve their potential.
  • Investing profitably also enables us to be self-financing. When our investments and loans generate positive returns these are recycled back into future investments. This model means we have had no new capital from government since 1995, doesn’t cost the taxpayer a penny and can provide more capital over time and generate more impact from its own resources.

Find out more

Click here to download our Annual Review 2016: Supporting the potential of people.