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- What is worrying is the fate of the UK’s development finance agency CDC, which is part of DfID and one of the biggest investors in Africa.
- . Up to 52% of CDC UK’s investment portfolio is based in Africa.
UK Prime minister Boris Johnson’s recent announcement that Department for International Development (DfID) would be merged with the Foreign and Commonwealth Office to create a new Foreign, Commonwealth and Development Office came as a surprise to many. Aid and development agencies were also caught off guard.
There has been a hue and cry about the decision. The criticism came from former prime ministers, foreign secretaries and international development secretaries from the two main parties, as well as myriad voices from the development community.
What is worrying is the fate of the UK’s development finance agency CDC, which is part of DfID and one of the biggest investors in Africa. if the agency is forced to change course as a result of DFID merger with Foreign and Common wealth
Office, it could hit several sectors of Africa including the private equity sector.
CDC over the years had developed into one of the biggest investors in Africa while major international banks and private equity (PE) houses have been reducing their exposure to Africa. Up to 52% of CDC UK’s investment portfolio is based in Africa. CDC deals provided capital for smaller funds to seek out opportunities. It has stakes in at least 600 different companies across 34 countries, in Africa. Last year it committed $1.4 billion in Africa and has earmarked $2 billion more for the next two years. Political observers predict that CDC will become a much bigger part of UK aid which will mean more money going to for-profit healthcare, fossil fuel projects and unaccountable private equity funds in the global south. PM Johnson explained to the House of Commons that “The UK possesses the third biggest aid budget and diplomatic network in the world: we owe it to our people to make the best use of these ssets.”
The decision may lead CDC to adapt its future strategy if not fundamentally change it. Among other things, there might be more pressure on CDC to involve British companies in its deal-making. So far, the organization has been open to working with partners from anywhere in the world. Additionally, CDC’s focus on making investments in Africa and South Asia– may also come under pressure. Prime Minister Johnson in his Commons speech mentioned the large amount of UK aid spent in Tanzania and Zambia compared to trouble spots closer to home such as Ukraine or the Western Balkans.
