Leslie Maasdorp, the newly appointed CEO of one of the oldest development finance institutions in the world, is seeking capital from private investment firms and pension funds to channel towards development projects, especially in green energy.
Maasdorp was appointed CEO of British International Investment (BII) in October, after serving nine years as CFO of the Brics New Development Bank (NDB). By the time he left the NDB, it had a balance sheet of $32bn (R595.37bn), a staff of about 300 and $15bn (R279.08bn) in bonds.
He told the Business Times in Cape Town this week that in many countries, including South Africa, large pension fund savings were invested in traditional asset classes. But very few of these large institutional investors were having a development impact.
“We want to create an environment where we can direct large pools of commercial capital into development, infrastructure, the building of productive infrastructure, so that economies can grow. So this second priority is mobilisation of capital, where we want to work much more closely with those types of institutions.
“To make it concrete here in South Africa we are going to work with the pension funds, with asset managers like Coronation, Allan Gray, so they can look at some of the investments and make an investment alongside us, or we can raise funds from them and then invest in various businesses.”
We at BII right now have climate emergency as the No 1 strategic priority
— Leslie Maasdorp, CEO of British International Investment
Investment platform Summit Africa has launched a $20m (R372.10m) equity fund with British International Investment. The fund will raise an additional R400m to R500m to address the needs of the low-income population in South Africa, among other things.
Coronation Fund Managers' CEO Anton Pillay said the ability to attract foreign direct investment into South Africa was crucial to boosting economic growth and employment.
“We are very encouraged by the support of prominent development finance institutions such as British International Investment and believe it has the potential to unlock significant opportunities and fuel inclusive growth.”
Maasdorp said the mobilisation of private capital should go towards the development of clean energy infrastructure in the Global South. The demand for more jobs for the burgeoning youth population in Africa and climate scepticism from leaders in the Global North made this doubly urgent.
He has met with one of BII’s platform companies, AgDevCo, which is involved in African agriculture. Entrepreneurs running the company in Mozambique and Malawi have noted erratic weather patterns in recent years.
“There are so many data points and indications that we ought to take climate change very seriously and we should look at development through that integrated lens. We at BII right now have climate emergency as the No 1 strategic priority. We already have a target where ... all of our investments must meet a climate finance threshold of 30%.
“In practice, we have already achieved 40%, but we are going to deepen the focus on the climate going forward. One of the positive aspects of our mandate is that the UK government has a very deep commitment to this challenge as well and has shown significant leadership in this regard.”
This week the business segment of South Africa’s G20 activities, B20, was launched in Cape Town.
At the launch, vice-president of economics and private sector development at the International Finance Corporation, Susan Lund, said Africa’s young population was a major advantage for the continent’s developmental goals, but underdevelopment meant the continent’s economies would struggle to provide enough jobs.
She said Africa would have more than 750-million working-aged people by 2050, but at current rates, only 150-million jobs could be created for young Africans entering the workforce by 2050.
Maasdorp’s remarks came as the UK government announced it would cut foreign aid and development funding from 0.5% to 0.3% of gross national income to boost defence funding in case Russian President Vladimir Putin attacks Western Europe.
Speaking to reporters in Cape Town this week, the UK's chancellor of the exchequer, Rachel Reeves, said the most important way to raise living standards on the African continent was to mobilise private sector investment towards development.
“There’s also massive opportunity ... to leverage in more private sector investment to support development priorities. If you look at the bilateral relationship between the UK and South Africa, trade between our countries is worth something like £30bn a year. The UK is the biggest international investor in South Africa.”
She said while the UK would be reducing spending on foreign aid and international development to bolster defence spending under the spectre of military threats from Russia, her government remained committed to aid and foreign development through structures such as BII.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.