At the UK-Africa Investment Conference in January, Vera Songwe, executive secretary of the UN’s Economic Commission for Africa, stated that UK investment to Africa represents only 3% of total FDI, and challenged the UK government and businesses to double this to 6% within the next five years. That same day, the CDC Group announced that it had exceeded its commitment in 2020 to invest £2bn ($2.7bn) over the next two years in Africa.
CDC, the independently operated development finance institution of the British government, is rebranding as British International Investment, changing its name after 73 years. The decision to rebrand was made after two years when other CDCs, including the American Centres for Disease Controls and its African counterpart, Africa CDC, have grabbed headlines in their fight against the Covid-19 pandemic.
Despite the new name, chief executive Nick O’Donohoe says the institution’s commitment to Africa, which receives the bulk of its investments – last year close to 60% – remains unchanged. Renewed emphasis on climate
Over time, the nature of those investments have been gradually shifting. In the new five-year strategy, released last year, one noticeable shift is a renewed emphasis on climate financing.
“We have been an investor in climate certainly over the last five years, particularly renewables, but I think the mandate is getting much bigger.
It’s also getting more broad-based – we’re increasing our geographic footprint to encompass Southeast Asia and the Caribbean, both of which have been out of scope for us in the last 10 years,” says O’Donohoe.
In recent years, there has been a fierce debate over whether DFIs and their international partners should be putting money towards gas, hitherto classified as a fossil fuel.
Since Cop26 in Glasgow in November – and following many vocal protests by African governments – there is currently a discussion taking place at the EU and multilateral level to re-classify gas as a transition fuel, which would be a game-changer for the continent, home to some of the biggest investments in gas in the world. O’Donohoe is one such advocate.
“We still think that gas has a role to play in a transition [towards net zero],” he says. “We won’t invest in coal, we won’t invest in oil-fired energy, we won’t invest in anything that’s excluded under Paris [the 2015 international climate agreement signed in Paris which seeks to limit global temperature rises].
“But gas, in specific situations in specific countries, if it’s clearly part […]