Investment for development: The UK’s strategy towards Development Finance Institutions – Written submission by Global Justice Now

January 2023


About Global Justice Now

Global Justice Now, formerly the World Development Movement, is a democratic social movement that has researched and campaigned on issues relating to UK aid for over 50 years. We strive to fundamentally change the global economic system and create a world where people are valued before profit. We stand in solidarity with those at the sharp end of the global economy: communities across the global south who suffer impoverishment, exploitation and oppression as a result of rules and systems created here in the global north.


Our submission details serious concerns about British International Investments (BII), its role within UK aid spending, its contribution to poverty reduction, and the investments that it makes. Based on this evidence, that we have collected through detailed research on BII over numerous years, we conclude that BII is not a suitable vehicle for achieving poverty reduction. By extension, we believe BII is not a suitable channel for spending UK ODA, that commitments to BII are already too high and negatively impacting other areas of UK aid, and that all future commitments to BII should be suspended.

We also have severe concerns over the suitability of BII as a vehicle for climate finance, and over BII’s approach to investing in private healthcare and education. By favouring a private sector approach to these investments, BII is investing projects that ultimately undermine progress towards climate justice and the universal rights to healthcare and education. 

Recommendations to government

  1. British International Investment, poverty reduction and UK aid
    1. British International Investment has seen rapid growth in the size of its portfolio since the passing of the Commonwealth Development Corporation Act 2017, from $4.76 billion in 2016 to $8.14 billion in 2021.
    2. In 2021, BII received £446 million in support from the Foreign, Commonwealth and Development Office, and made £1.87 billion of new commitments, their “highest ever annual commitment figure and over a 50% increase compared with 2020”.[1]
    3. In the last two years, however, the overall UK budget has been heavily reduced, falling by over £3 billion (21.1%) in 2021 (although other estimates suggest by as much as £4.6 billion) due to the government’s decision to reduce UK aid spending from 0.7% to 0.5% of GNI.[2] Furthermore, in 2022, FCDO embarked upon what has been described as “a third round of aid cuts in three years”, resulting in cuts to the bilateral aid budget of 30%.[3]
    4. In the context of these cuts, commitments to BII are taking up an ever-increasing proportion of overall UK aid spending. This may not itself be an issue, if BII was an institution targeted at effectively and directly reducing global poverty. However, BII does not make investments to directly target groups experiencing extreme poverty. Instead, it focuses on investing in markets, sectors and the broader business environment of particular countries with the aim of creating jobs.
    5. This is an indirect and ineffective means of reducing global poverty. Firstly, this approach results in BII investing in companies and services that “typically employ workers with some experience in labour markets and serve customers with some disposable income”.[4]
    6. Our research has found that this can often results in investments, such as private health services, expensive hotel chains, restaurants, and high-end health clubs, which do little to reduce poverty.[5]
    7. This is an illogical and contradictory means of reducing global poverty, as it is UK aid’s mandate to do. This therefore brings into question where BII is an effective vehicle for ODA.
    8. Growing BII’s proportion of UK aid also comes at the expense of other important bilateral and multilateral aid programmes which have faced swingeing cuts in recent years. As just some examples, cuts to UK aid to Afghanistan and and Yemen have falled by 78% and 60% respectively, while the UK made no commitment to the Global Fund replenishment in 2022.[6] Crucial international programmes that support humanitarian relief and global health are being heavily cut at the expense of BII.
    9. Furthermore, at a time when public opinion and value for money are key concerns for UK aid, ineffective investments such as those cited above have the potential to undermine public trust in aid spending.


  1. Intermediated investments
  1. Concerns have also been raised over BII’s approach to using financial intermediaries to make investments, as this means that financial institutions, with potentially looser regulations and no poverty reduction mandate, are being handed control over UK aid spending.[7]
  2. These concerns were identified previously around the time of BII’s 2011 change of strategy, and over time the proportion of BII’s portfolio reflecting intermediated equity held via intermediary funds has fallen to 33% (and only 22% of commitments in 2021).[8]
  3. However, the total amount of intermediated equity held by BII has increased, £1.9 billion in 2011, to £2.7 billion in 2021.[9]
  4. One illustrative example of the lack of control and regulation over these intermediated investments is in BII’s commitment to Nu Cosmetic Clinic in India. BII made a $20 million commitment in the APF-I fund in 2008, but it was not until 2016 that APF-I invested in Nu Cosmetic Clinic on BII’s behalf. Nu Cosmetic Clinic advertises “Vaser Liposuction” for between Rs. 85,000 and Rs. 350,000 (£950 to £3,800). Male nose surgery is Rs. 75,000 to Rs. 100,000 (£800 to £1,100). In short, is an investment that appears to primarily serve middle-income customers and to have questionable development impact.
  5. In response to questions about this investment from a journalist in 2021, a BII spokesperson said, “We would never choose to invest in a cosmetic surgery business. We neither intended nor desired to have a stake in Nu Cosmetic and we look forward to the day when it is off our books”.[10] This hardly suggests effective stewardship, on BII’s part, of UK ODA, and it is understandable how such investments could undermine trust in UK aid.
  6. Further evidence on the problems with BII’s investments made via intermediary private funds is provided in the Global Justice Now reports, Doing more harm than good and Healthcare for all?.[11]
  7. There is also a growing proportion of BII’s investments that are, in essence, hidden intermediated investments. As much as 34% of BII’s portfolio is now in financial services. BII reports these as direct investments in financial institutions. However, the funds are then used for various forms of on-lending and trade finance.
  8. This is potentially a problem because the level of regulation and restrictions (for example, on investing in fossil fuels) applied to these investments, and how financial institutions use them, is unclear.
  9. In recent years, BII has made significant investments in ABSA Bank ($375 million, South Africa) and Trade Development Bank ($275 million, Burundi). Both banks have significant fossil fuel exposure. For example, oil and gas loans represented over a quarter (28%) of T&D Bank’s loan distribution in 2018, while Afrexim Bank, with which BII has a $100m risk sharing guarantee programme, has 23% portfolio exposure to oil and gas.[12]
  10. BII’s fossil fuel policy states that financial institutions with fossil fuel exposure will continue to be considered eligible for investment "subject to us seeking credible evidence that the recipients of the investments are working towards aligning future activities and portfolios with the Paris Agreement", and that trade finance activities for refined energy products would also be permitted. This lags behind other peer institution's commitments, such as the International Finance Corporation (IFC). The IFC has committed, through its Green Equity Approach, to support clients to reduce coal exposure to zero by 2030.[13]


  1. Investments in private sector healthcare and education
  1. The development impact of BII’s approach of investing in private entities, particularly with regards to healthcare and education, has also been called into question by the development sector on numerous occasions.
  2. In 2021, Global Justice Now published Healthcare for all?, an investigation into the impact of BII’s £273 million of healthcare investments.[14] This report found that private healthcare investments were almost exclusively reaching middle-income patients, were failing to improve healthcare access, were exacerbating inequalities, and undermining public services.[15]
  3. One example is Vikram Hospital, which was criticised by local regulators in India for failing to reserve beds for government sponsored Covid-19 patients (and instead prioritising middle class, fee paying customers). Another hospital supported by BII, Evercare Dhaka, was one of several hospitals in Bangladesh accused of “exploiting the ongoing coronavirus health crisis” by overcharging for Covid-19 testing and treatments.[16]
  4. Many other BII healthcare investees are big corporate healthcare chains that predominantly treated middle-income groups. In some cases, this is even stated on BII’s website, with development outcomes for lower income groups appearing to come through potential job creation only.[17]


  1. This is an illogical and incoherent means of supporting global public health and access to healthcare services. BII should not be supporting private healthcare providers that do not treat low-income patients.
  2. Similar concerns have been raised in relation to BII’s investments in private education. These include some low fee private schools, but also in companies such as GEMS Education that run mostly “elite” private schools that exclude the poorest.[18]
  3. BII’s support for Bridge International Academies, a company owned by Newglobe Schools that runs low fee private schools in Kenya, Uganda and Liberia, has been particular cause for concern. Civil society has repeatedly raised concerns over Bridge’s operations, regarding pay and working conditions for teachers, its poor approach to gender equality, its failure to provide decent quality classrooms or teaching, and its exclusion and lack of support for disabled pupils.[19]
  4. The evidence around the failings of Bridge International Academies was so severe that it has already convinced the IFC to stop investing in all fee-charging private schools.[20]
  5. In relation to private healthcare and education, BII should follow the IFC’s lead and should stop supporting private sector providers of healthcare and education.

Recommendation: BII should stop investing in private healthcare and education providers altogether.

Recommendation: BII should introduce an effective accountability mechanism to ensure that communities and workers impacted by BII’s investments have a right of recourse to justice.


  1. Climate finance and fossil fuel investments
  1. Climate finance provided by Annex 2 parties (to the United Nations Framework Convention on Climate Change) to lower income countries should always be, as far as is possible, new and additional to ODA and should be grant-based.
  2. BII is therefore not an appropriate vehicle for climate finance, as it is funded by ODA and is not grant-based. Any increase in climate finance spent through BII results in a reduction of the grant proportion of UK climate finance.[21]
  3. Another reason that BII is not a suitable vehicle for climate finance is that it is still exacerbating the need for climate finance, that is the climate crisis, by investing in fossil fuels.
  4. BII has committed an estimated £100 million to the development of the Temane CTT gas power project in Mozambique, currently under development by Globeleq (in which BII has a 70% stake). This is despite Mozambique having significant renewable energy resources and potential, particularly in hydropower and solar.
  5. Mozambique is one of the poorest countries in the world and regularly suffers economic damage as a result of tropical storms and cyclones that are being exacerbated by global warming. In 2019, Cyclones Kenneth and Idai devastated agriculture, homes and businesses across Mozambique, resulting in an estimated $3 billion in economic damage.[22]
  6. Mozambique was previously ranked 14th in the Climate Risk Index for the years 1999-2018, and has suffered the impacts of major extreme weather events including Cyclone Idai and Cyclone Kenneth.[23] The UK government recognises these challenges and has previously contributed UK aid to programmes seeking to build climate resilient infrastructure and respond to extreme weather events in Mozambique.[24] To be supporting the expansion of gas infrastructure on one hand while investing millions in disaster response and climate resilience on the other highlights the inconsistency of UK policy in this area.
  7. The government also argues that investments in gas power should continue to be allowed because gas power can be a greener alternative to coal and oil. However, campaigners have demonstrated that gas power will lock in high carbon emissions for generations to come, breaking the carbon budget and guaranteeing higher levels of global warming.[25] Climate justice advocates Anabela Lemos (based on Mozambique) and Nnimmo Bassey have also called on financial institutions to stop funding gas projects in African countries.[26]


  1. Transparency and accountability
  1. From the perspective of the development sector, BII is not a transparent institution. Even when it comes to basic information on investment amounts, investees and impact, very little information is available on BII’s website (and almost none for investments made via financial intermediaries.
  2. Information on BII’s online database of investments regularly appears to be out of date, unexplained or inaccurate. New investments take a long time to be listed on the website. Some investments are listed as having been ‘Exited’ but with no rationale given as to why
  3. There have been improvements in terms of impact measurement since BII started using its new Impact Dashboard, but hardly any of this information appears to be published online alongside investment details.
  4. After the change in UK policy regarding public finance for fossil fuels, BII initially published a full energy portfolio, listing direct and indirect investments in fossil fuels and renewable energy, as of end of 2019.[27] An updated list, as of the end of 2020, was published some time after.[28] This information was incredibly useful for examining the impact of BII’s energy investments. However, over a year since the end of 2021, no updated list has been published.
  5. BII also demonstrates very little appetite for genuine consultation with the third sector. At times BII has given presentations to development experts and civil society groups, co-ordinated by organisations such as BOND, but often gives the impression that this is after decisions on key strategies and policies have already taken place.



[1] ‘BII (formerly CDC Group) Programme of Support in Africa and South Asia (2015-2023)’. Available at:

[2] ‘UK aid spending: statistics and recent developments’. Available at:,core%20contributions%20to%20multilateral%20organisations; William Worley, ‘UK aid’s tumultuous 2022’, Devex. Available at:

[3] ‘UK aid’s tumultuous 2022’.

[4] BII, ‘Why use the $5.50 poverty line as a benchmark for inclusion?’,

[5] Global Justice Now, ‘The future of aid after DfID: Shocking development projects supported by the UK’ (2020). Available at:


[7] Global Justice Now, ‘Doing more harm than good: why CDC must reform for people and planet’ (2020). Available at:


[9] GJN, ‘Doing more harm than good’, p.13.

[10] Billy Kenber, ‘Foreign aid cash for liposuction and hair transplant clinic in India’, Times. Available at:

[11] GJN, Doing more harm than good, pp.13-20; Global Justice Now, Healthcare for all? How UK aid undermines universal public healthcare (2021), p.17. Available at:

[12] TBD Group. 2020.

English.pdf; Afreximbank. 2019. Annual Report.

[13] IFC. 2020.IFC's Approach to Greening Equity Investment in Financial Institutions.

[14] GJN, Healthcare for all?.

[15] GJN, Healthcare for all?, pp.12-21.

[16] Ibid., p.15.


[18] GJN, Doing More Harm Than Good, p.21.

[19] GJN, In Whose Interest? The UK’s role in privatising education around the world (2019). Available at:


[21] Oxfam, Climate Finance Shadow Report 2020: Assessing Progress Towards The $100 Billion Commitment (2020). Available at:


[23] Climate Risk Index for 1999–2018, p.41.

[24] Programmes include: Building Resilience and Adaptation to Climate Extremes and Disasters, Emergency Response to Cyclones Idai and Kenneth in Mozambique, and the Climate Resilient Infrastructure Development Facility. See more details on DevTracker:

[25] Oil Change International, Burning the Gas ‘Bridge Fuel’ Myth: Why Gas Is Not Clean, Cheap, or Necessary (2019). Available at:

[26] Nnimmo Bassey and Anabela Lemos, ‘Africa’s Fossil-Fuel Trap’. Available at: