G7 Development Finance Institutions create platform to boost investment in fragile states

• New DFI collaboration will be based in London and headed by Vivianne Infante, CDC’s Ethiopia Country Director

Development finance institutions funded by the G7 nations have announced the launch of a new platform designed to boost investment in fragile and conflict-affected states in Africa.

The Africa Resilience Investment Accelerator (ARIA) aims to unlock investment in fragile states through collective influence and by pooling expertise to overcome the challenges of providing capital in these countries.

Historically, DFIs have tried to originate investments in fragile states with mixed results. ARIA aims to engage proactively in such markets in a way that would improve investment-readiness – both a country’s readiness to benefit from DFI investment and DFIs’ abilities to invest in these economies.

The UK’s FCDO will support ARIA, which will be incubated in CDC’s office in London. Vivianne Infante, CDC’s current Ethiopia Country Director, will be seconded to run ARIA for the first two years.

She said: “DFIs have a mandate to provide investment to those that need it the most. Fragile states are desperately in need of capital to provide jobs and bring economic growth but investing in these markets is complex and challenging. ARIA’s work will be vital in addressing these challenges.”

ARIA will also identify several countries in which it will provide targeted coverage, develop expertise and arrange country missions. The intention is for ARIA’s country activities to foster greater collaboration amongst DFIs, with a longer-term ambition for more coordinated activities.

It is expected that ARIA’s work will uncover additional investment opportunities in targeted countries.

UK Minister for Africa Vicky Ford said: “Providing honest and reliable finance is one of the most effective ways to support countries to recover from conflict, create jobs and boost economic growth.”

The Africa Resilience Investment Accelerator will help development finance institutions to support the G7’s landmark commitment of providing $80 billion of investment in the African private sector by 2027.”

ARIA’s areas of focus will be:

1.      Market mapping: The development of a tool containing investment-related information, including key sectors, relevant local partners, financial intermediaries, potential investees and barriers to investment.

2.      Integrity: A group to exchange views and experience around challenges relating to integrity, especially in investment due diligence processes, and to agree on common standards, approaches to work collectively to leverage information sharing across DFIs.

3.      Conflict Sensitivity: The harmonisation of best practices around conflict sensitivity, including the development of common standards and tools that the DFI community can use to manage investment activities in areas that are at high risk of conflict.

ARIA will be a key partner to the Oxford Fragility Forum. The Forum will remain the thinktank and academic stronghold at the forefront of issues around investment in fragile countries. ARIA will act as an action-driven platform where ideas discussed at the Fragility Forum can be put into practice.

The members of ARIA are: CDC Group, US International Development Finance Corporation, Proparco, FinDev Canada, Cassa Depositi e Prestiti (CDP), in its role as Financial Institution for International Development Cooperation (Observer), JICA (Observer), Swedfund, International Finance Corporation, African Development Bank, European Investment Bank (Observer) and the European Bank for Reconstruction and Development (Observer).

About CDC Group

CDC Group is the UK’s impact investor with over 70 years of experience of successfully supporting the sustainable, long-term growth of businesses in Asia and Africa. Under its new strategy its geographical mandate will be expanded to include Indo-Pacific countries and the Caribbean. More detail about the next strategy period will be made available on 14 December 2021.

CDC will become British International Investment plc on 4 April 2022.

The company is a leading player in the fight against climate change and has committed more than £700m of climate finance over the last four years. It plans to invest over £3 billion in climate finance between 2022 and 2026. CDC is also a founding member of the 2X challenge which has raised $10bn to empower women’s economic development.

The company has investments in over one thousand businesses in emerging economies and total assets of £6.9 billion. In 2020, CDC committed over of £1.1 billion to businesses in Africa and Asia and aims to invest up to £1.3 billion in 2021 – with a focus on driving inclusive growth, job creation and supporting economic recovery from COVID-19.

CDC is funded by the UK government and is a champion of the UN’s Sustainable Development Goals. All proceeds from CDC’s investments are reinvested to improve the lives of millions of people in Asia and Africa. CDC’s expertise makes it an ideal partner for private investors looking to devote capital to making a measurable environmental and social impact in countries most in need of investment.