The UK’s Department for International Development (DfID) released its first economic development strategy on 31 January 2017, in which the department highlights the role its private sector arm will have in catalysing private capital towards job creation in the world’s poorest countries.
The UK’s state-owned development financial institution, CDC Group, will work “at the heart” of DfID’s mission to improve conditions for investment in the world’s highest-risk areas, according to Priti Patel, head of DfID and the UK’s secretary of state for international development.
In the report, subtitled Prosperity, Poverty and Meeting Global Challenges, Patel said her department aims to tackle a “desperate shortage” in private and public investment that risks leaving regions such as sub-Saharan Africa with an employment gap of around 18 million jobs per year by 2050. The report also sets out Patel’s strategy for preserving UK interests, specifically its role in preventing mass migration to the UK by allowing economic instability in underdeveloped countries to worsen.
“This strategy is about helping people find work and earn better incomes – growing economies to fund better schools, hospitals and other vital services,” Patel said.
CDC invested a total of around £1.8 billion in economic development in 2015 to 2016, and could have its spending cap raised to an initial £6 billion in 2017 after a bill passes through UK parliament. A raised spend cap could grant CDC greater flexibility to invest in South Asia and sub-Saharan Africa across sectors that include infrastructure, manufacturing and energy.
Signalling CDC’s own investment strategy would be released in the coming months, the department told Development Finance at a private press briefing that DfID’s galvanised relationship with CDC could see the introduction of a range of new risk mitigation funds and financial instruments designed to encourage more institutional investors to invest in high-risk areas.