The Clerk
International Development Committee
House of Commons
London SW1A 0AA
Subject: Written Evidence Submission to the Inquiry – Managing the Future of UK Aid and Development Assistance
1. About Us
TLG Capital is an African investment firm founded by former Goldman Sachs and Lehman Brothers professionals. We invest private capital on behalf of more than 100 global investors, including pension funds, sovereign funds, endowments, and family offices. Over the past decade, TLG has completed more than 50 investments across 20+ countries in Sub-Saharan Africa.
We were invited to provide evidence based on our direct experience and observations over more than ten years of investing in Sub-Saharan Africa and engaging with the development and investment ecosystem.
2. The Spirit of Our Comments
Investing in Sub-Saharan Africa is inherently difficult. Capital markets are thin, secondary markets are limited, liquidity is scarce, and investors are exposed to volatile local currencies and underdeveloped enforcement mechanisms.
Our submission is made in a spirit of transparency and humility. We do not claim universal answers; rather, we aim to share practical observations on what we have seen work — and not work — in the region. Our comments relate exclusively to Sub-Saharan Africa, where we operate and where our experience is grounded.
3. What Works in Africa
Development programmes are most effective when they pursue specific, well-defined sector objectives and partner with local firms and institutions that understand the market and share in both commercial and development outcomes.
UK-funded programmes such as Manufacturing Africa demonstrate the significant potential of British development assistance when it collaborates closely with proven private enterprises to create jobs, scale industries, and deliver value for the UK taxpayer.
4. What Struggles in Africa
Where investment initiatives in Sub-Saharan Africa do not involve African institutions or crowd in global commercial capital, performance typically weakens, both in terms of returns and development outcomes.
Challenges arise when strategies are defined centrally and executed rigidly, without sufficient flexibility to incorporate new information from the ground. Effective investing in Africa requires nimbleness and the ability to pivot.
Sub-Saharan Africa should in many ways be approached like an early-stage entrepreneurial ecosystem: each step must be re-evaluated honestly, and well-reasoned course-corrections should be encouraged.
Based on our experience, private equity investing into SMEs in Sub-Saharan Africa is generally neither scalable nor commercially viable. Within two years of operating, we shifted from equity to structured credit financing of the same companies.
We are concerned that although debt strategies have become more prominent, attention to downside protection is often insufficient. Structurally relying on local collateral enforcement—for example, lending against land or buildings—has rarely proven scalable or capable of consistently generating commercial returns.
We also observe instances where development institutions’ guarantees support funds that are themselves funded by DFIs, resulting in two layers of development capital supporting the same ultimate portfolio companies. Public analysis on whether this is optimal is limited.
Where investments integrate significant local institutional capital and global private capital — as seen in BII’s partnerships with Ecobank and other African banks — outcomes have been stronger.
5. Budgets Need Not Be Fully Spent
As with private fund managers, when safe opportunities do not exist, capital is preserved. BII may consider a similar approach or deeper partnership with FCDO programmes such as Manufacturing Africa to build bankable pipelines.
The core balance sheet of BII can pursue commercially viable, lower-risk strategies, deploying capital only when opportunities are appropriate, while higher-risk or humanitarian initiatives can be funded from realised profits.
Realised returns, rather than capital deployed, are the more meaningful measure of development success. Current reporting does not sufficiently distinguish between realised and unrealised performance or between African outcomes and global outcomes.
6. More Transparency Mobilises Private Capital
Currently, there is no publicly disclosed data on Africa-specific annualised returns, realised versus unrealised P&L, default rates, or commercial capital mobilisation.
We recommend disaggregation by region (e.g., East Asia, North Africa, Sub-Saharan Africa) and by asset class (equity versus debt). Development finance is inherently challenging, and more published reflection on lessons learned would strengthen future strategies.
7. Unified Planning
Coordination across UK development institutions appears limited. We frequently hear from FCDO-affiliated initiatives that collaboration is not prioritised, reducing the overall effectiveness of Britain’s development efforts.
8. Proposal
We encourage UK development policy to emphasise partnership, transparency, and innovation:
Such an approach aligns with the values of the British taxpayer and with the UK’s tradition of financial discipline and enterprise.
I. Britain in Africa and the Need for Honest Reckoning
BII and its predecessor, CDC Group, were founded on the conviction that enterprise could replace long-term dependency. These institutions are staffed by committed and capable people undertaking a complex task. However, after decades of investment in Africa, outcomes have often fallen short of expectations.
African markets differ significantly from those in Asia: they are shallower, less liquid, and require models pioneered by local institutions and specialist private-sector players. High-profile examples such as Feronia (DRC) and ARM Cement (Kenya) illustrate these structural challenges. Transparent reporting of realised returns, write-offs, and lessons learned would strengthen accountability and institutional knowledge across the sector.
Given the scale of capital BII deploys relative to other DFIs, there may be pressure to spend budgets annually or to demonstrate leadership within the DFI community. This can unintentionally push portfolios toward higher risk without corresponding returns. The portfolio-wide 5.1% return, with Africa likely below that level in realised terms, only marginally exceeds the risk-free rate of UK Gilts.
Our intention is not to criticise individuals, but to offer an alternative approach:
II. Local Currency Funds in Ghana and Zambia: The Need for Local Involvement
BII has established local-currency credit platforms in Ghana and Zambia. While the ambition is commendable, local pension funds and insurers participate only minimally — despite Ghana’s pension industry being approximately 86 billion cedis (~USD 6 billion).
By contrast, TLG Capital launched Nigeria’s first institutional local-currency credit fund in 2024 with a Nigerian asset manager and 17 Nigerian pension funds. The programme — 100 billion naira — was privately financed, unsubsidised, and commercially profitable. Rather than anchoring the vehicle with large foreign investment, local capital was invested from day one. TLG’s contribution was technical expertise in credit structuring.
This demonstrates that local institutions, when trusted and supported, can develop sustainable solutions tailored to their markets.
III. Manufacturing Africa and Terra Aqua: A Demonstration of Effective Partnership
Where UK development programmes partner meaningfully with the private sector, results can be transformative.
TLG provided capital to Terra Aqua, a Nigerian aluminium recycler, while Manufacturing Africa delivered operational guidance, supply-chain optimisation, and worker-safety upgrades.
Results to date:
This illustrates the value of public-private partnership: technical expertise, capital, and development impact combined.
IV. Crowding in Private Capital
Sustainable market development is driven by entrepreneurs and commercial actors. In Africa, private equity and debt funds remain primarily financed by DFIs, which can create unsustainable models that do not catalyse meaningful commercial participation.
GEMS database evidence indicates lending to African financial institutions delivers strong risk-adjusted returns. A strategy prioritising collaboration with African banks and selective fund investments with local and global investors forming the majority may be more effective.
Africa’s financing gap remains vast. Economic fragility contributes directly to humanitarian pressures affecting Europe. Job creation is both a moral imperative and a strategic UK interest. Transparent long-term analysis of successful initiatives is urgently needed.
V. TLG Capital as a Case Study
TLG has operated across Africa for more than a decade, completing 50+ transactions with 30+ exits across USD 300m of investments. Our investors include leading European DFIs, sovereign funds, and global institutions.
We partner with African banks that provide credit guarantees, leveraging local due diligence and ensuring capital flows back into local economies. Nearly two-thirds of our capital comes from outside the DFI community, demonstrating that Africa is investable when risks are appropriately structured.
TLG is British-founded, FCA-regulated, and combines commercial discipline with development impact. We support sector-wide publication of granular African fund track records to guide future policy.
VI. A Call for Renewal and British Leadership
Britain can align prosperity with private-market discipline. At a time of global strategic realignment, the UK can lead through prudence, transparency, and partnership.
A “British-first” development policy does not imply withdrawal. It ensures taxpayer capital delivers value abroad and supports Britain’s strategic and economic interests at home.
To lead, the UK must:
Sustainable development requires patience, partnership, and evidence-driven strategy. The United Kingdom is uniquely positioned to champion this approach.
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