British International Investment (BII), the UK's development finance institution and impact investor, on Thursday launched its new five-year strategy aimed at bringing £9 billion of new capital to Africa to support economic growth.
A central pillar of the strategy is to focus on accelerating the flow of private capital into African countries. Of the £9 billion, the BII will contribute approximately £5 billion, with the remainder expected to come from private institutions in Africa and globally. Leveraging nearly eight decades of investment experience in Africa, BII will use its capital, partnerships and risk appetite to attract private investors to markets and regions where capital remains scarce.
BII also announced that it will increase its commitment to frontier markets, which have been identified by the United Nations as least developed countries and at least 25 percent of new investments by value will go to these countries. Frontier markets are home to over a billion people and have the greatest need for investment, yet they are underserved by private capital due to structural barriers to investment.
Additionally, the BII will focus on selected frontier markets in Africa, including Sierra Leone and Zambia, with a combination of investment, policy engagement, technical assistance and partnerships to strengthen the investment climate and capital markets.
Across Africa, BII will focus its capital on high-impact areas where it can deliver the greatest benefit to people, businesses and the planet. These include financial services, power, transport, trade, digital infrastructure and sustainable industries.
Development Minister, Jenny Chapman, said: “Over the past few months, I have been highlighting the need for a new UK approach to development, moving away from traditional aid grants towards long-term partnerships that bring together investment, expertise and international finance reform. This also means investing responsibly: bringing together everything the UK can offer, from our work to research, practical advice and diplomacy through international organizations and our investment instruments. Used together, this will help businesses grow, Can help create jobs and support the reforms and policies that our partners choose for themselves.
BII is at the heart of this vision, and its new strategy builds on the direction we have set as a government. I am confident that BII will lead from the front in translating our joint ambitions into real results over the next five years.”
Chris Chiziutomi, BII's MD and Head of Africa, said: “Africa has been at the heart of BII's work since our founding. That long track record has given us deep experience investing through economic cycles and a clear understanding of how to grow businesses in some of the continent's most challenging markets.
This strategy is based directly on that experience. By focusing our attention on frontier markets, investing in high-impact sectors and mobilizing domestic and international private capital, we are focusing our efforts where our capital and expertise can make the biggest difference to African economies.
At least 40 percent of the BII's new investments are expected to be in climate finance, up from the target of 30 percent in the previous strategy period. With approximately 600 million people still lacking access to electricity, BII will help countries in Africa transition to renewable energy, strengthen electricity networks and deliver clean energy to millions of homes. This will be done in partnership with others to help meet Mission 300's goal of connecting 300 million people to electricity in Africa by 2030.
In a further development of its approach, BII will also seek to make “market-level impact” investments that go beyond commitment to a single company and help grow a broader sector or market.
BII will also increase its commitment to gender-lens investments in support of women, with the intention that 30 percent of new investments qualify under the 2X Challenge.