Submission from Time Partners to the International Development Committee (IDC) of the UK Parliament

 

2 February 2023

 

Mark Florman

 

  1. I have been working with development finance institutions for around 20 years and can confirm that the work of the BII, formerly CDC, is regarded as world class amongst the development finance community.  There are around 10 similar sized institutions, generally sponsored by their governments (and perhaps a further 15 much smaller organisations that follow the work of the larger ones).

 

  1. Within the DFI community, BII has traditionally been seen as one of a very small number of leading, creative and effective development institutions alongside Proparco, DEG and FMO.

 

  1. Private sector capital has become somewhat dependent on the leadership of the BII. Across the continent of Africa in particular, private sector investors have come to expect the BII to be there conducting due diligence and paving the way for their investment. This way of mobilising capital has been quite effective and over the years, a multiple (35x) of private sector capital, as well as other DFI capital, typically follows an investment made by BII.

 

  1. The infrastructure financing gap in Africa continues to be substantial, presenting as a permanent shortage of inward investment and private sector involvement. When it does take place, it often follows an investment made by a leading DFI.

 

  1. Therefore, the effective impact of investments made by BII is in fact a multiple of what is directly reported. In developing economies, the External Rate of Return (a metric that shows the impact of investment on jobs, society at large, tax generation, the development of skills, the impact on climate etc.) is amplified compared to an advanced economy. The External Rate of Return1 paper can be found here.

 

  1. Investment and the availability of capital (multiplied by the private sector’s involvement) has an existential social and environmental impact where it is made. A job created in a poor community, if it is sustainable and reasonably paid, has an enormous multiplier effect – up to seven lives are affected and a number of further jobs can effectively be created, both in this generation and, through education, in future generations.

 

  1. BII’s successful investment work has effectively supported a number of the Sustainable Development Goals2, from before the creation of these and the preceding Millennium Development Goals, focussing on the need to invest in human capital. I list these goals below:

 

    1. Good health and wellbeing
    2. Quality education
    3. Gender equality
    4. Clean water and sanitation
    5. Affordable and clean energy
  1. Industry, innovation and infrastructure

 

  1. Bob Geldof and I created the private equity fund, 8 Miles, many years ago to show that Africa was only 8 miles from Europe and that this continent offered tremendous opportunities for investment from the UK. 

 

  1. At the moment, Russia and China are playing very significant roles in a number of these economies, having stepped up the pace of their engagement and investment over the past ten years. These two countries operate with the intention of influencing governments, civil society and democracy. The UK should embrace the good work of the BII to help pre-empt developing nations turning to others.

 

  1. The onward benefit to the United Kingdom from the work of BII can also be measured by helping to invest in growing economies, creating jobs and opportunities, new technologies and new ideas. In so doing, the UK is able to support more vulnerable societies, with a longer-term benefit to both the society and the UK.

 

 

 

 

References

1. Florman, Mark, Klingler-Vidra, Robyn and Facada, Martim Jacinto (2016) A critical evaluation of social impact assessment methodologies and a call to measure economic and social impact holistically through the external rate of return platform. Working Paper (1602). LSE Enterprise, London. http://eprints.lse.ac.uk/id/eprint/65393

2. UN Sustainable Development Goals https://sdgs.un.org/goals