Paul Nuki Global Health Security Editor

Britain will invest up to £8bn in companies across the developing world over the next five years, in a bid to make a return for the UK taxpayer while driving global development.

The initiative is being led by British International Investment (BII), a government owned UK investment vehicle founded in 1948 to boost agricultural production across the empire.

At the time, Britain faced food shortages and rationing in the wake of the Second World War.

Jenny Chapman, the UK Minister for Development, now wants to accelerate the flow of capital to developing countries via BII as UK overseas direct aid budgets are shrinking.

It is envisaged that for every pound of public money BII invests a matched contribution will come from the private sector, bringing the total investment to about £15 billion.

Leslie Maasdorp, the South Africa born Chief Executive of BII, said: “Britain has a proud history of acting as a global leader in international development. BII is committed to demonstrating that a new, mutually-beneficial path exists that creates secure jobs and stable economic conditions in the countries in which we invest, while providing value for money for the UK taxpayer”.

Investing in developing economies is high risk but can also bring in substantial financial rewards beyond the help it provides locally in terms of innovation and jobs.

Over the last decade, BII generated a £1.6 billion return on investments, equating to a return of around five per cent a year. The new five year cycle envisages a minimum return on capital of at least two per cent but managers will be hoping for more.

The fund’s capital will also support UK based companies that are delivering positive economic and environmental outcomes in developing markets.

In an interview with the Telegraph, Mr Maasdorp said that development and national security were “reinforcing” concepts and “not opposites”. 

“The sources of uncontrolled migration flows, the sources of illicit finance, the sources of terrorism, extremism… they come from these challenging environments,” he said.

“If the global north is not engaged in investing in and stabilising these places, it impacts on the well being of the UK because the world is so interconnected.

“We cannot solve the global challenges we all face – poverty, instability, conflict and global public health – without bringing the least developed countries with us on the journey to shared prosperity.”

China has become the world’s biggest state investor in developing economies over the last 20 years, making huge investments in infrastructure across Asia and Africa.

Its strategy has been guided by the Belt and Road initiative, which aims to forge new trade corridors and dramatically boost China’s influence in global affairs.

All over Africa, Chinese construction companies with excess capacity and expertise developed during China’s own boom have been building ports, dams, roads, railways, schools, hospitals and solar power systems across the continent.

Mr Maasdorp said the approach to investment being pursued by BII and other western state-backed investors was different to the Chinese approach. 

It was not “state-led” and, while UK companies could be utilised where appropriate, BII’s strategy was not dependent on them. 

“Our model is embedded in the belief that the private sector is the engine of economic growth,” he said. “The state has an important and vital role to play in creating enabling conditions for investment… but ultimately it is the private sector and entrepreneurs that make an economy tick”. 

He added that long term “strategic relationships” with similar state-backed investment funds across the west gave BII and its partners the financial heft to compete effectively with China, he added.

BII has the freedom to invest in any enterprise that drives development and provides a public good, but it focuses on those countries most in need of investment.

Between 2026-2031, at least 40 per cent of BII’s total new commitments by value will be in climate finance – a sector that China has become dangerously dominant in globally.

BII is also a founding member of the 2X Challenge which has raised over $33.6 billion to empower women’s economic development.

But its assets are varied.

Current investments include the financing of a new deepwater container port in the Congo, an extension of the partnership that commenced with the modernisation and expansion of ports in Senegal, Egypt and Somaliland.

The new port development is expected to enable the creation of approximately 85,000 jobs and around $1.12 billion in additional trade and $429m in increased economic output annually.

BII was also a founder investor in Safaricom Ethiopia which was awarded Ethiopia’s first private mobile network licence.

Since its launch in 2022, the cost of mobile data services in the country has fallen by up to 70 per cent and, by June 2024, the company had signed up 4.4 million customers. 

Like an increasing number of international investors, Mr Maasdorp is bullish on the long term prospects for the continent of Africa – the world’s last great underdeveloped region.

It has the world’s fastest growing population, huge mineral wealth and enough farmland to become the “breadbasket of the world,” he says.

Its governance has improved dramatically over the last 25 years and, if African economies can “add value” by processing what they produce rather than simply exporting, it will boom just as the so-called Asian Tigers did in the 1990s.

“There are lots of pockets of positive momentum which could change the prospects of Africa all around,” said Mr Maasdorp.

 “With an average age of 18 or 19, the energy of youth is marked. And what the world of social media has done is give people a sense of what is possible – aspiration.

“Tech and AI companies are developing now in Africa, which I think holds great potential for many sectors to leapfrog ahead as they are building, in many cases, from scratch.”

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