Rising to the challenge - Annual Review 2020 CDC Group plc
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Rising to
the challenge
Annual Review 2020
CDC Group plc
The UK’s development
finance institution
CDC is the UK’s development
finance institution, with over 70
years’ experience of successfully
supporting the sustainable, long-
term growth of businesses in
CDC Group plc Annual Review 2020
Africa and South Asia. We are a
champion of the UN’s Sustainable
Development Goals – the global
blueprint for achieving a better and
more sustainable future for us all.
CDC is funded by the UK
Government and has a dual objective
– to support business growth that
lifts people out of poverty, and to
make a financial return. We reinvest
all proceeds from our investments
Rising in improving the lives of millions of
people in Africa and South Asia.
to the
Our goal is to help solve the biggest
global development challenges by
investing patient, flexible capital to
challenge
support private-sector growth and
innovation.
Here’s how we are rising to
the challenge.
CDC Group plc Annual Review 2020
We have
done so
much
already...
We have direct and indirect
investments in almost
1,200 …but we
businesses in emerging economies
with total net assets of
have so
£6.8 billion
In 2020 we committed much more
£1.22 billion still to do.
Overview Our impact This year’s new investments This year’s impact in numbers
Home
In this report
This year’s new
investments
A selection of our investments
Here is
and their expected impact
p.25–p.30
how we are Regional
perspectives
rising to the
Our growing regional teams
share their views from Africa
and South Asia
p.22–p.24
challenge... This year’s impact
CDC Group plc Annual Review 2020
Whether transforming lives or
having a positive impact on
the planet, our investments
are making a difference
p.12–p.21
Our COVID-19
response Overview 01–06
We concentrated our response
Chairman’s introduction 01
on three areas: ‘preserve’,
‘strengthen’ and ‘rebuild’ CEO’s introduction 02
p.08–p.11 What it means to invest for development impact 04
Overview of CDC’s impact 05
What it means to Overview of CDC’s financial performance 06
invest for Our impact 07–24
development impact Our COVID-19 response 08
For over 70 years we’ve
Impact on people 12
successfully supported the
sustainable, long-term growth Impact on the planet 17
of businesses
Regional perspectives 22
p.04 This year’s new investments 25–30
This year’s impact in numbers 31–35
Home Our impact This year’s new investments This year’s impact in numbers
Overview
Chairman’s introduction
“
As I reflect on my time as Chairman, I’m
enormously grateful for the dedication, the
passion and the commitment of the
We had two overarching goals
variety of stakeholders I’ve had the
pleasure to work with – from UK
our new climate strategy, or addressing parliamentarians to civil society, from
for 2020 – to provide the best gender inequality. We have also worked London to Lagos. The challenge, quality
with our shareholder to review progress and diversity of these interactions has
against our commitments in the 2017-2021 helped guide us to better solutions. We
response to the economic strategy and started to frame the next continue to welcome this dialogue and
2022-2026 strategy. We look forward to scrutiny during the development of
2021 sees us enter the last year
reporting on our achievements against the our new strategy this year. We’ve also
of our five-year strategy period, and
consequences of COVID-19 in of course, we’re doing that at
a time of great uncertainty in the
current strategy and announcing the new
strategy later in 2021.
worked hard to support the Independent
Commission for Aid Impact (ICAI) over the
last three years, benefiting from its
our markets; and to deliver
countries where we invest. As I enter Of course, not everything went to plan. constructive feedback. We were pleased
my eighth and final year as Chairman I have consistently forecast that as a result that ICAI’s recent review concluded it is
of CDC, I believe that 2020 has been a of our developmental strategy to focus content with the progress we have made.
CDC Group plc Annual Review 2020
on our current five-year year of challenges quite unlike any exclusively on the most challenging
markets of Africa and South Asia, financial I would like to thank my fellow Board
other we have experienced at CDC.
returns would reduce over time. In 2020, members for their unwavering
strategy, ensuring the
Those challenges have ranged from COVID and the strengthening of sterling commitment and continued support over
addressing the impact of COVID-19 in have had a significant negative impact on the past year. I am very grateful to Wim
the countries where we invest, to the the financial performance of our portfolio. Borgdorff and Keki Mistry, who stepped
organisation emerges from this difficulties experienced by our employees Nevertheless, it is disappointing to record a down as non-executive directors after
during the ongoing pandemic. At a Board second year of losses. In the same way we completing their terms, and I am
meeting in April, when the scale of the are striving to maximise our development delighted to welcome Krishnakumar
crisis ready to support the crisis was becoming clear, we collectively
agreed we had two overarching goals for
2020 – to provide the best response we
impact, the Board and the management
team are focused on financial returns.
Natarajan and Kathryn Matthews, who I
know will be worthy successors, and also
Carolyn Sims as Chief Financial Officer,
Given the volatility of our markets, it is
countries where we invest in could to the economic consequences of
COVID-19 in our markets; and at the same
important to look across multiple years for
trends, and we remain on track to achieve
to the Board. I have been very fortunate
to work with 15 very talented Board
members over the years, and I thank
time, deliver on our current five-year the commitments on long-term financial
the years ahead. strategy, ensuring the organisation
emerges from this crisis ready to support
returns we made to our shareholder in 2012,
through to the end of this strategy period.
them all.
Finally, I’d like to thank Nick O’Donohoe,
the countries where we invest in the
We are proud of our achievements in 2020, who has led our outstanding management
years ahead.
but are very aware that it would not be team with calm ambition and remarkable
You will read about our COVID response in possible without the help of others. stamina this year. I also salute each and
this Annual Review. With an annual In particular, the support of our every staff member at CDC for the personal
commitment of £1.2 billion, at a time when shareholder has been fundamental. tenacity, resilience and dedication they have
capital retreated from Africa and South We are very proud to be part of the UK shown throughout the last year, to help
Asia, we’ve provided much-needed, Government’s development offer to the CDC achieve its mission of helping solve the
impact-driven, targeted capital and liquidity world, and we have continued to benefit world’s biggest development problems in
to our partners on the ground. To achieve from a strong relationship with our some of the world’s poorest countries. It has
this, we needed both a rapid and new shareholder, as it merged to become the truly been a privilege to serve CDC these
approach in the most challenging of times. Foreign, Commonwealth and Development last eight years, and I commit to do my very
However, you will also see that we have Office (FCDO) in the latter part of 2020. best to support the organisation’s inspiring
remained focused on delivering the Of course, we are also very grateful to our mission until my last day in post.
strategic commitments we have made to partners in Africa and South Asia. Sir Graham Wrigley
our shareholder – whether delivering on Chairman
Sir Graham Wrigley
Chairman
01
Home Our impact This year’s new investments This year’s impact in numbers
Overview
CEO’s introduction
“
edge AI company in India, is another
example of a business both supporting its
workforce of almost 3,000 – many of whom
The countries where we invest
are from under-resourced communities
and over half of whom are women
Within this, we also asked ourselves three – and achieving business growth
do not have the NHS or the same questions – what could we do quickly, during COVID.
what could we do at a scale to make a The tools we have put in place over the
difference, and what could we do that was last few years have worked particularly
fiscal support schemes that In previous Annual Reviews, my
relatively simple – to ensure our focus was
where we could be most effective. That
approach has driven our efforts to help
hard this year. The investments we make
as part of our Catalyst Strategies, which
focus has been on how we’ve been allow us to take an even more flexible
have been provided by our own moving forward, and how we’re
playing our part to help achieve
businesses right across the economy. For
example, we’ve found trade finance to be a
approach to risk in pursuit of impact, have
been a key part of our COVID response.
simple and effective tool to provide the
Government in the UK. As the
global development goals. In this For example, MedAccess – a subsidiary of
support businesses need to overcome CDC that provides innovative social
extraordinary past year, much of our short-term liquidity constraints, and finance to enable life-changing medical
focus has been on maintaining what protect jobs, during a crisis. You can find
CDC Group plc Annual Review 2020
scale and impact of the
supplies to reach people in Africa and Asia
has already been achieved, and I more on our response on pages 08–11. – responded rapidly to the pandemic. This
expect that to remain the case for
Over the year, our own staff have faced resulted in a $50 million guarantee to
some time. The economic impact of
pandemic became clear early enormous challenges. Like everyone, their support UNICEF to secure vital COVID-19
COVID-19 has pushed around two per working lives, and their home lives, have medical supplies.
cent of the global population – 140 been severely disrupted. Being unable to At the same time, CDC Plus, our technical
last year, we knew we needed to
million additional people – into travel has meant it is more difficult to assistance facility, stepped into action,
extreme poverty. Overall, the FCDO support our investees and to find new launching two facilities: one to support
predicts the pandemic has reversed companies to invest in, and our teams our investee businesses to adapt or scale
act with the same urgency to progress on fighting world poverty
by seven years. The impact of the
have had to be creative in meeting
practical issues like how to conduct
up to form part of the response to the
pandemic, and the other to develop
pandemic will be felt across the remote diligence on new investments.
provide support and to rise to
guidance for companies on how to
world, and particularly in the Their tenacity in rising to these respond to the crisis. The projects it’s
challenges, both to support our investee
countries where we invest, for supported have ranged from distribution
companies and to continue to invest in
the challenge.
many years. companies delivering basic goods to rural
the markets that need our capital, has areas, to a company launching a new app
The countries where we invest do been impressive, resulting in £1.2 billion to assess COVID symptoms.
not have the NHS or the same fiscal of new commitments last year. Their care
support schemes that have been provided for each other, our partners and our This year has not only been about
by our own Government in the UK. As the mandate has made me prouder than responding to COVID, and we should not
scale and impact of the pandemic became ever to lead CDC. fall into the trap of ascribing all injustices
clear early last year, we knew we needed to the pandemic. For example, lack of
I am proud, too, of our investment sustainable investment in the countries
to act with the same urgency to provide
partners. There have been examples of where we operate is not new, and before
support and to rise to the challenge. We
innovation and determination across our the pandemic 800 million people globally
concentrated our response in three areas
portfolio, with businesses often pivoting to lacked access to electricity. Nonetheless,
– to preserve the viability of our current
new priorities in the midst of the crisis. For the valuable lessons it has taught us about
investees to help them safeguard impact
example, mPharma, a Ghanaian healthcare the challenges we need to address
and weather the crisis; to strengthen our
company that uses data and technology to emphasise several areas of our work.
response to the economic and health
help make the medicine supply chain
challenges of the crisis; and to support
more efficient and reduce the costs
economies rebuild, acting as a long-
of medicines, found ways to distribute
term partner.
one million testing kits to medical labs in
five African countries. iMerit, a cutting-
Nick O’Donohoe,
Chief Executive Officer
02
Home Our impact This year’s new investments This year’s impact in numbers
Overview
CEO’s introduction
First, the impacts of crises are rarely Second, it’s focused attention further
gender-neutral and COVID is no different. on the importance of responding to
This makes the work we have led on the threat of climate change – from
championing gender-smart investing as lockdowns leading to a fall in emissions,
crucial as it’s ever been. Over the year, to the focus on building more resilient
we’ve led the way for other investors, businesses in the wake of the pandemic.
continuing to be a key member of For our part, last year saw us launch our
the 2X Challenge, an initiative by 18 Climate Change Strategy, which focuses
development finance institutions (DFIs) on three areas – ensuring our portfolio
and multilateral development banks reaches net zero by 2050, supporting a
(MDBs) to support the economic ‘just transition’ to a low-carbon economy,
empowerment of women. Almost $200 and strengthening the resilience of
million of our investments in 2020 communities, businesses and people to
qualified under the 2X criteria, and since the effects of climate change. Over the
the initiative began in 2018, we’ve invested year, we’ve been leading the way,
$430 million that meets that standard. alongside other DFIs, in making progress
against those three areas. For example,
With our partners, we also invested in the
we know that in most countries where we
CDC Group plc Annual Review 2020
first ‘2X Flagship Fund’ this year – funds
invest, the local markets and businesses
that have committed to investing with a
needed to adapt to climate impacts are
gender lens using the 2X criteria.
only just emerging. We need greater
collaboration to grow these, which
is why we’ve committed, with other
organisations, to work together on a range
of initiatives on adaptation and resilience.
Third, the use of technology has had Programme’, we’re investing in early-stage Finally, as I reflect on an extraordinary
a huge impact on the way we have lived companies that use technology and year, I want to take the opportunity
our lives through the pandemic. It has innovative business models to achieve to thank all those who helped ensure that
While the last year emphasised what we already knew to impact – like CropIn, an agribusiness CDC continues to deliver on its mission of
be the case, that finding sustainable software specialist that uses technology improving livelihoods in the countries
has been one of our and inclusive solutions to reach the UN’s to monitor crop health remotely, and where we invest. That includes all our
most challenging, it Sustainable Development Goals will
require technology. That ranges from
improves farmers’ access to finance and
climate resilience tools.
colleagues at FCDO, our Board and
independent Investment Committee
has also shown us improving access to the affordable,
good-quality internet that is central to
While the last year has been one of our
members, our investee companies and
fund managers, and especially the hard
most challenging, it has also shown us
what is possible. development, to providing solutions that
what is possible. On a broader level, I am
working, committed and very talented
have the potential to make a difference to team at CDC.
spurred on by the collaboration we have
both people and planet.
seen between different types of Nick O’Donohoe
Our role is to invest in both. First, we’ve organisation in the race to develop a Chief Executive
continued to support businesses that are vaccine, and by the urgency that has been
growing the digital infrastructure needed missing from the global response to
to improve internet access – like Liquid threats such as climate change. These
Telecom, the largest independent fibre show us what is possible in tackling global
and cloud provider in Africa, who we challenges – and I believe that CDC, as a
invested in for the second time during long-term investor in the private sector to
2020. Second, under our ‘Venture Scale-up tackle some of these challenges, will
continue to play an important part in this
over the coming year.
03
Home Our impact This year’s new investments This year’s impact in numbers
Overview
What it means to invest
for development impact
We are an
investor 1. To support the business 2. To make a financial
with two
growth and economic return, which we reinvest
stability that will enable to improve the lives of
countries to leave millions of people in
objectives:
poverty behind. Africa and South Asia.
CDC Group plc Annual Review 2020
As a development finance institution
investing for development impact, we
measure success in two ways. First,
we’re looking at whether the Closing the digital divide in Nepal Boosting job creation in India
businesses we invest in have a
positive economic, environmental or In Nepal, WorldLink has grown to become Ecom Express is renowned in India for
the country’s largest private internet its safe and reliable nationwide express
social impact. Second, we’re looking
service provider, laying over 8,000km of delivery services for the e-commerce
at how commercially sustainable and
fibre network and connecting hundreds of industry. Reaching over 1.2 billion people
successful a business is.
thousands of households and small daily, Ecom Express’ network empowers
These two measures of success, impact businesses to the internet. Armed with our and connects sellers and consumers,
and financial return, go hand in hand. To capital, WorldLink has been able enabling the growth of e-commerce and
create long-term impact, a business must to fulfil its ambitious expansion plans. giving people in harder-to-reach areas
be financially sustainable, because if a Since our investment in 2019, the company access to goods and services they
business isn’t viable and fails, this can has increased the number of households it otherwise may not have.
have negative impact consequences for its reaches by 46 per cent to 477,000. The
Over the last three years, Ecom Express
workers, suppliers, and customers, company’s services now reach remote
has tripled its volumes and revenues. The
particularly those that are most places such as Karnali, the most
business’s growth is helping to meet the
vulnerable. That means when we invest, mountainous and underdeveloped
high demand for jobs in India: the country
the potential development impact and the province in Nepal. WorldLink has also
needs to create 8.1 million jobs a year
commercial viability of the business, as been recognised by the Nepali Government
to maintain its employment rate. Our
well our ability to make a positive as the country’s highest taxpayer and
investment is helping the company
contribution, all need to be aligned. largest employer in the IT sector.
to grow its workforce significantly
The second of these measures – financial by creating 23,000 new jobs. The company
return – also matters because we can is also committed to strengthening its
reinvest this to help other businesses gender diversity by prioritising hiring
grow and generate further impact. women for jobs across the nation.
You can read more about the link between
impact and commercial success in
Relevant investment: WorldLink, Nepal Relevant investment: Ecom Express, India
this article
Investment type: Catalyst Strategies Investment type: Growth Portfolio
04
Home Our impact This year’s new investments This year’s impact in numbers
Overview
Overview of CDC’s impact Maximising the impact of Find out more about our
each investment impact data on pages 31–35.
Since September 2019, we’ve produced an
‘Impact Dashboard’ before making every
investment. This assesses the impact we
expect to achieve against our ‘Impact
Our goal is to support Framework’; and links the impact of the
Directly employing
951,930
investment to the SDGs. A recent review of
CDC by the Independent Commission for
the business growth
Aid Impact concluded that: “CDC’s
investment decisions now address
development impact throughout the workers
and economic stability
investment cycle and consideration of
impact is driving active management
Investing in power
of investments.” Find out more about
infrastructure to generate
that will enable 55
the impact of our investments
terawatt hours of electricity
countries to leave Teaching
poverty behind. 802,290
CDC Group plc Annual Review 2020
students
Treating
14.5 million
patients
Sourcing from You can find out more about the advice
4.08 million
and guidance we provided to support
businesses, investors and financial
institutions during the COVID pandemic,
farmers on page 11.
Overall in 2020, our Meeting global principles on impact
investments made a In 2020, we published six lessons from our management
2020 also saw us publish our approach
positive difference to portfolio, including the impact of solar
home systems in Nigeria, of sustainable to aligning with the Operating Principles
people’s lives by: farming on smallholder farmers in for Impact Management. The Principles
Ethiopia, of access to finance for were launched to harmonise the different
healthcare facilities in Kenya, and of approaches to measuring development
connectivity in the Democratic Republic impact, with the aim of giving a clearer
Sharing our learning of the Congo. We’ve published evidence picture of progress globally.
We’re committed to sharing our reviews on the impact of investing An independent assessment by Tideline
experience and expertise with others. Our in power, in food and agriculture, in Advisors, a certified women-owned
Insight reports are a series of practical manufacturing, and in construction and advisory firm in impact investing, judged
and digestible lessons on the issues of real estate. CDC to have ‘advanced’ alignment with
private-sector investment and
We’ve also published practical guides for the majority of the Principles.
development, based on our experiences,
knowledge and research. They are aimed other investors on issues ranging from
at investors, businesses, development gender-based violence and harassment to
professionals and those with an interest the role of environmental, social and
in private-sector development. governance (ESG) in venture capital.
05
Home Our impact This year’s new investments This year’s impact in numbers
Overview
Overview of CDC’s financial performance
We recycle financial returns
CDC is a long-term investor, so it is due to our narrower geographic mandate, You can read our financial statements in
important to look across multiple years which means that since 2012 we have full, and find out more about our
for trends, recognising that, in any made new investments in Africa and approach to risk in our
into new investments.
isolated year, market conditions or events South Asia only, while exiting our legacy Annual Accounts
may cause exceptional performance. portfolio in other places, like China and
While we remain ahead of our financial Latin America. Second, it is because our
return hurdle (average of 3.5 per cent developmental strategy challenges us to
since January 2012), our underlying seek out higher risk.
returns are continuing to reduce in line
We remain determined to support the
with the public statements we have made
economic stability that will improve the
over several years.
lives of millions of people in Africa and
Since adopting a new, highly South Asia. We will continue to take a
developmental strategy in 2012, we rigorous approach to achieving impact
have indicated that it would lead to lower and returns and a balanced approach
returns and increased volatility – even to managing and mitigating risk
before the COVID-19 pandemic. This is within these.
CDC Group plc Annual Review 2020
In 2020, we made £1.22 billion of new The portfolio generated a £173.9 million
£6.8 billion
loss (£268.6 million loss in 2019), which
Net assets (£m) New commitments (£m) Total return aer tax (£m)
commitments. This was lower than
2019 (£1.66 billion of commitments) as represents a portfolio loss of 3.7 per cent 800
8,000 1,800
investment pace was slower due to (6.2 per cent loss in 2019). The average 700
Total net assets the impact of the COVID-19
annual portfolio return since 2012 is 7,000 1,600 600
1,400 500
6.1 per cent. 6,000
pandemic. Our response to the 400
£5.2 billion
1,200
5,000 300
pandemic has now shifted from an There are three main reasons for the
1,000 200
acute response to a lasting one, and lower 2020 portfolio result. First, we track 4,000
604
800 100
returns in US dollars as most investments
6
as we refocus efforts on the rebuild 3,000
600
0
(372)
(282)
Portfolio are denominated in this currency. Due to -100
needed, we expect the pace of 2,000
(73)
400
changes in the sterling to US dollar -200
commitments to increase in 2021. Our
6,806
4,790
5,802
5,053
6,438
1,060
1,047
1,657
1,221
1,161
1,000 200 -300
exchange rate, the pound sterling result
£1.22 billion
investment pipeline is healthy, but 0 0
-400
suffered from currency translation losses.
the continuing crisis brings Of the £173.9 million portfolio loss in 2020, 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
uncertainty to the timing £121.8 million of that was due to this
Amount committed in 2020 of completing investments. exchange rate change.
Portfolio return (%)
We increased our total net assets to £6.8 Second, throughout 2020, the pandemic
billion (£6.4 billion in 2019) and increased caused extensive disruption to businesses 25 – Sterling – US dollar
our portfolio to £5.2 billion (£4.7 billion in and economic activities globally. The
2019). A higher pace of disbursements pandemic had a significant detrimental 20
compared with receipts in 2020 was the impact on the African and South Asian
main reason for this growth. markets we invest in, reflected in the 2020 15
Our overall result is a total loss after tax portfolio performance.
10
of £282.2 million (£371.6 million loss in Finally, the long-term shift in the portfolio
2019), which represents a loss of 4.4 per since 2012 to focus on investments in Africa 5
cent on net assets this year (6.4 per cent and South Asia only has continued to
1.8
22.6
18.0
14.2
11.4
13.1
4.4
6.3
4.2
7.8
5.2
7.3
6.1
loss in 2019). The average annual return on increase the financial risk in the portfolio. 0
net assets since 2012 is £77.1 million.
(6.2)
The largest contributors to portfolio losses
(0.7)
(0.9)
(0.9)
(2.2)
(2.6)
in the year were volatility in Africa and -5
(3.7)
India financial stocks, along with
construction and real estate, and -10
investment funds in Africa. 2012 2013 2014 2015 2016 2017 2018 2019 2020 Avg since
01/01/2012
06Home Overview This year’s new investments This year’s impact in numbers
Our impact
CDC Group plc Annual Review 2020
Regional perspectives
p.22–p.24
Impact on the planet
p.17–p.21
Impact on people
p.12–p.16
Our COVID-19
response We are rising to
meet the challenge
p.08–11
07Home Overview This year’s new investments This year’s impact in numbers
Our impact
CDC Group plc Annual Review 2020
Very early on we
realised that as a
company which
depends on its
workers, we needed
to do something to
make the world
safer for them.
Our
COVID-19
Vishal Gahlaut,
Co-Founder and CEO,
Noticeboard
response Read the full story on our website
The economic impact of COVID-19 has pushed around
two per cent of the global population – 140 million
additional people – into extreme poverty. Overall, the
FCDO predicts the pandemic has reversed progress on
world poverty by seven years. The impact of COVID-19
will be felt across the world, and particularly in the
countries where we invest, for many years.
08Home Overview This year’s new investments This year’s impact in numbers
Our impact
Our COVID-19 response
3.
Our approach 2. Rebuild:
a long-term partner to the
countries where we invest
We know that finance and support
As the scale and impact of the 1. Strengthen: from institutions like CDC will be
helping businesses respond critical to the rebuilding process
to economic and health including economic, social and
pandemic became clear early
challenges environmental recovery. Our aim is to
Preserve: Beyond assisting our current support the countries where we invest
helping our partners safeguard investees, we also focused on beyond the pandemic, through to
recovery and prosperity, by providing
last year, we knew we needed
impact and weather the crisis extending our support. That
We have direct and indirect included working with local banks much needed counter-cyclical funding
investments in almost 1,200 and other financial institutions to and being one of the first investors to
companies in South Asia provide the working capital that re-enter the market.
to act with urgency to provide and Africa employing over 950,000
people. Our first priority was to
support our current investee
businesses need. It also included
making investments that would
increase access to healthcare and
support and to rise to the
businesses affected by the crisis, basic services.
CDC Group plc Annual Review 2020
whether through providing
finance or advice.
challenge. We concentrated
our response on three areas:
09Home Overview This year’s new investments This year’s impact in numbers
Our impact
Our COVID-19 response
Helping businesses Supporting MSMEs
affected by
Increasing access to vital COVID-19
medical supplies
respond to economic the pandemic
and health challenges MedAccess – established by CDC of supply shortages, making it more
to increase patient access to life- difficult for health workers to protect
Whereas Government support has
changing medical supplies in Africa and citizens.
As part of the ‘Strengthen’ pillar been swift in developed markets, it
South Asia – responded rapidly to the
of our response, we’ve helped Keeping trade going at times of has largely been absent in emerging
pandemic. In July, it agreed a guarantee
The guarantee provided by MedAccess
businesses to meet the economic and frontier markets when it comes enables UNICEF to secure essential
and health challenges of the crisis.
economic uncertainty to supporting entrepreneurs and
of up to $50 million to support UNICEF
supplies in the fight against the virus.
in securing vital COVID-19 medical
setting up effective support and It supports UNICEF’s high-volume
supplies, including diagnostic tests and
First, that’s included channelling
CDC Group plc Annual Review 2020
recovery programmes. purchasing orders with manufacturers
clinical management supplies, for low-
much-needed liquidity to local banks to in responding to countries’ demands
Financial institutions provide and middle-income countries.
enable them to support their business for medical supplies and diagnostic
critical access to financial services
customers. Companies have needed Healthcare workers in both South Asia tests at affordable prices.
for low-income and vulnerable
urgent working capital to survive and sub-Saharan Africa continue to face
At a time when commercial investors We’ve also been working with populations across Africa and South
this period. acute shortages of medical supplies for
have withdrawn from the markets these partners, such as Absa Bank, Asia. Strained liquidity due to
treating patients as the pandemic
Local banks are crucial in providing where we invest, we’ve been providing Standard Chartered Bank and SMBC COVID-19 has jeopardised their
continues to spread. Countries whose
funding to those companies but, liquidity to local banks to enable them Bank International, to adapt trade sustainability and capacity to
health systems were already weak
at a time when commercial investors to support their business customers. A finance to meet the immediate needs of continue lending. That means they Investment type: Catalyst Strategies
before COVID-19 have borne the brunt
are withdrawing, can only do that if key part of this has been to ensure the businesses during this period of need support to keep financing Featured investment: MedAccess,
organisations like CDC step forward Africa and Asia
continuation of trade, supporting uncertainty. This involves us taking on micro, small and medium-sized
(see case studies on our trade finance supply chains, and in turn helping a higher share of the risk, so banks feel enterprises (MSMEs), which provide
facilities and our investment in the protect economies and livelihoods. confident underwriting more trade in the backbone of economic growth
COVID Emerging and Frontier MSME priority sectors and countries, where and employment in developing
Working with international financial
Support Fund, opposite). we feel our impact can be greatest. countries.
institutions, we’ve used trade finance
Second, it’s included supporting to provide businesses in Africa and Although these adaptations are recent, As part of our efforts to respond
those with a direct role in combating South Asia with continued access to they’re already having an effect. Our to the economic challenges of
the pandemic, investing in businesses short-term liquidity to minimise facilities have financed trade volumes the crisis, we invested in Blue
providing healthcare or access to disruption of their operations and exceeding $1 billion, involving priority Orchard’s COVID Emerging and
basic goods and services. For example, supply chains during the crisis. sectors such as PPE imports and food Frontier MSME Support Fund.
public health systems are severely Throughout 2020, we agreed trade supply, and to the least developed The fund will provide much-needed
constrained in the countries where finance facilities with four partners, countries, including Malawi and loan finance to financial institutions
we invest: there’s a lack of access to PPE, with commitments of £305 million Uganda. Despite the crisis, this is a across Africa and South Asia facing
ventilators are scarce, and, even ($385 million). It’s playing an important significant increase on the same period strained liquidity due to the impact
when they become available, access role in counteracting the economic in 2019. In some cases, we took on 90 of COVID-19.
to vaccinations may be slow (see case impact of COVID-19. per cent of the risk, the most the terms
study on MedAccess’ guarantee to help would allow, and it’s unlikely the trades
At a time of crisis, it’s been crucial to
UNICEF secure vital COVID-19 medical would have taken place without these
work with established partners so we
supplies, opposite). enhanced terms.
can provide finance quickly and at
greater scale.
Investment type: Catalyst Strategies
Investment type: Growth Portfolio, Catalyst Strategies Featured investment: COVID Emerging and
Featured investments: Absa Bank, Standard Chartered Bank, SMBC Bank International Frontier MSME Support Fund, Africa and Asia
10Home Overview This year’s new investments This year’s impact in numbers
Our impact
Our COVID-19 response
Providing support beyond
investment capital
Using technical assistance Through these facilities, CDC Plus supported: Providing guidance and advice
to enhance our response Sharing knowledge as swiftly and widely as
+ Eight projects working with
In March, our technical assistance healthcare SMEs in Africa that
possible is key to responding to any crisis,
facility, CDC Plus, stepped into action, especially one that escalates so quickly
receive loans from our investee
working with FCDO to gain approval and with such wide-ranging and long-
Medical Credit Fund. Combined,
CDC Group plc Annual Review 2020
for launching two new initiatives to lasting consequences. Our teams drew on
these projects are expected to train
their expertise to produce bespoke advice
respond to COVID-19. The first, the over 2,500 healthcare professionals,
and guidance to support businesses,
‘Business Response Facility’, was to protect over 2,000 clinicians and
investors and financial institutions as the
support our investee businesses in health workers with PPE, and support
situation evolved, on issues ranging from
adapting or scaling up to form part of clinics that reach over three million
job protection, customer protection,
patients annually.
the response to the pandemic. The remote working and returning to work.
+ An online healthcare company
second, the ‘Emergency Technical
in India, mFine, which we worked We complemented this guidance
Helping portfolio companies
Assistance Facility’, was set up
to develop guidance and provide
with to accelerate the roll-out of by hosting webinars for portfolio engage and protect employees
a platform that enables over 2,000 companies and others when each piece of
advice to companies on how remote doctors’ appointments every guidance was published. These virtual
to respond to the crisis. day, and to launch a new app to assess sessions focused on how to apply the
During 2020, CDC Plus approved £5.2 COVID-19 symptoms and provide guidance in practice, as well as
million for 65 COVID-19 technical guidance that has been downloaded troubleshooting issues faced by
assistance projects, providing direct by over 3.5 million users. companies.
support to 84 businesses in our portfolio. + An international microfinance group, As part of our efforts to help our + Health and safety: working with
You can find a full list of guidance
These projects affected over four million Advans, which we worked with to roll existing investees respond to the seven companies as they continued
provided on
people in the countries where we invest, out a customer engagement platform, various challenges that resulted from operations or returned to the
CDCs website
through increased access to healthcare, to understand the impact of the the pandemic, we set up a workplace after lockdown.
and basic goods and services, as well as pandemic on customers. The platform new facility focused on worker + Workforce planning and
helping businesses adapt to weather has been used to directly engage over engagement and protection, engagement: working with four
the pandemic. 450,000 customers. Responding to funded by CDC Plus. In total, companies on the workforce
changing customer needs as a result this has supported 26 companies implications of COVID-19, including
of the pandemic, Advans launched 26 Guidance Returning to the in our portfolio, which employ revising HR policies, understanding
workplace during
new financial products, with over 30 COVID-19: Labour over 75,000 workers across Africa and worker needs, and moving the
per cent uptake by existing clients. and workforce
considerations South Asia. workforce to working remotely.
+ An Indian tech company, Noticeboard, + Mental-health support: working
The facility has supported companies
which enables companies to with 11 companies to offer live
in four areas:
communicate with non-desk workers counselling, webinars, and app-
without an email account, to + Job protection: working with based therapy to their workforce.
convey critical information during In association with
six companies that faced
the pandemic. Noticeboard’s 250 constraints due to COVID-19 and
COVID-19 health and safety videos, Published: June 2020
Last updated: 22 June 2020 had considered retrenchment or job
Guidance lead:
shared in eight local languages, have CDC Group
protection measures.
provided health guidance to over Investment type: CDC Plus funded
1.3 million people.
11Home Overview This year’s new investments This year’s impact in numbers
Our impact
CDC Group plc Annual Review 2020
We’ve seen that
women who are
running their own
businesses are twice
as likely to send
their children to
school, so there is an
intergenerational
impact on families.
Impact
on people Roshaneh Zafar,
Founder and Managing Director,
Kashf Foundation
We invest to make a lasting difference to people’s
lives, in line with our commitment to the UN’s
Sustainable Development Goals, beginning with
Goal 1 on eliminating poverty.
12Home Overview This year’s new investments This year’s impact in numbers
Our impact
Impact on people
Using technology to create rural jobs
Investing in Loadshare is an Indian logistics know that the staff employed by the
workers
company that uses technology to bring ‘last mile’ delivery partners, as well as
together small and medium logistics the truck drivers, are typically
companies to create a pan-Indian low-income workers with limited prior
network reaching local suppliers and access to formal employment. Our
rural customers. By bringing together expectation is that these jobs will have
these smaller companies, Loadshare a significant positive impact on
enables them to have better market earnings. Delivery staff also receive
access, which in turn boosts their training from the company, which can
growth and creates jobs. help them progress to other jobs.
One of the reasons we invest is to The company now has around 6,000 Through our technical assistance
improve economic opportunities. workers in its network, including staff facility, CDC Plus, we’ve supported the
That might mean making an employed by ‘last mile’ delivery company to strengthen engagement
investment because we believe it will partners and truck drivers, and over with its growing workforce.
provide more and better jobs, that it the past four years has expanded Conducting a worker survey has helped
CDC Group plc Annual Review 2020
will improve incomes, or that it will across 18 Indian states, with 500 Loadshare to understand the issues
provide jobs that are inclusive. branches. The company has ambitious workers face and how the business can
growth plans to provide up to 90,000 support workers to overcome them –
In 2020, our portfolio of businesses in jobs by 2025, propelled by the rapid such as helping people to progress from
Africa and South Asia provided direct growth of the Indian delivery market. being self-employed, and providing
jobs for 951,930 people (in full-time COVID-19 health insurance.
equivalents). Of these workers, 33,890 To support this growth and to create
were new hires. more jobs, we co-invested in the
business in 2020 with Stellaris Ventures
However, the rate of job growth in
our portfolio in 2020 is likely to have been
Transforming farmers’ incomes as part of our ‘Venture Scale-up’
Catalyst Strategy. Levels of
negatively affected by the social and unemployment are high in the markets
economic crisis of the COVID-19 where Loadshare operates, and we Investment type: Catalyst Strategies
pandemic, falling to 3.7 per cent Featured investment: Loadshare, India
(compared with a background growth rate
of 2.7 per cent). This overall portfolio
growth was attributable to a sizeable supplied by power companies in our We also need to bear in mind that while
Agriculture in much of Africa and South company operating in the east Indian about the payments due, and these are
minority of firms growing faster; around portfolio supports an estimated 0.8 we ask investees to provide data that
Asia remains dominated by small-scale states of Bihar and Jharkhand, procuring processed immediately after receiving
60 per cent of the businesses in the million jobs across the wider economy. relates as closely as possible to the
farming. Low yields, inefficient practices, milk from over 20,000 small dairy the milk and paid into farmers’ bank
portfolio were simply maintaining or even Finally, we estimate the credit that year-end of 2020, most of the data
and post-harvest losses are common. In farmers. We invested in the company in accounts within 24 hours.
reducing their employment. CDC-backed financial institutions offer reported here reflects 2019-2020. That
India, agriculture represents just under 2019, as a co-investment with Lok Capital.
With this new direct procurement to businesses supports as many as 2.6 means it does not yet fully capture the
Over the past five years, the businesses we 50 per cent of all jobs – yet 50 per cent
Traditionally, milk would be procured model, payments to farmers have million workers across the economies health, financial and employment impacts
invest in have grown their workforce of farmers own less than two hectares
through a network of village collection increased by a significant 46 per cent. of Africa and South Asia. of COVID-19, which we predict will be
annually by an average of 5.9 per cent. of land, and 90 per cent of them earn
centres, managed by agents called ‘dairy Farmers are naturally more willing to seen more fully in the 2021 data.
This compares with an average growth on average less than $2 a day. Smallholder These indirect job numbers are all
promoters’ – but this system affects bring their milk to the company’s
rate of 3.2 per cent for all employees farmers also lack access to formal estimates, from a model we first Further information about our portfolio’s
quality and price transparency, as well as collection centre, and the new payment
in Africa and South Asia, according markets at fair prices due to the developed in 2014. The results are also impact on employment can be found in
delaying payments to farmers. Instead, set-up has brought them into the formal
to International Labour Organisation structure of supply chains, often down to the success of our portfolio ‘This year’s impact in numbers’ on pages
the company has piloted a new approach, banking network.
(ILO) statistics. dominated by middlemen, as well as businesses. Our capital and know-how 31–35.
buying the milk directly from the
lacking market information. are only two reasons among many for
In wider economic impact, we estimate farmers. It also involves analysing the Further information about our efforts to
this success. This is why we don’t
that in 2020, our portfolio companies’ One company using an innovative model quality of the milk using a sensor-based help our investees respond to the
attribute the increase in job numbers
supply-chain purchasing supported an to address this issue, helping farmers machine and collecting this data through challenges of the pandemic, through a
in our portfolio to ourselves.
additional 2.6 million indirect workers, improve their profit margins and a cloud-based system. Farmers (and the new worker engagement and protection
and the spending of wages supported livelihoods, is Osam Dairy. It’s a dairy company) are then notified directly Investment type: Growth Portfolio Featured facility, can be found in ‘Our COVID-19
a further 1.5 million workers. Electricity investment: Osam Dairy, India response’ on page 11.
13Home Overview This year’s new investments This year’s impact in numbers
Our impact
Impact on people
Investing in women
Increasing diversity in the finance sector
Over the year, we’ve continued to
champion gender-smart investing.
We’ve provided resources to The business case for a gender- Support provided by the partnership
encourage other investors to become diverse workforce is clear – it can includes diversity and inclusion
gender-smart by publishing our; lead to higher productivity, lower training, online tools, networking and
CDC Group plc Annual Review 2020
Gender Toolkit and Gender- absenteeism, improved market access practical guidance for financial
and higher retention rates. Recent institutions. Drawing on FAFW’s
smart Investing Guide for Fund
research also estimates that if financial existing network and peer learning
Managers , and by continuing to be
services firms met the needs of female platform, the partnership also provides
a key leader of the 2X Challenge, an customers fully, this would generate at support to our existing investees and
initiative first set up by G7 DFIs least $700 billion of extra revenue a year. the wider financial sector.
to support the economic Women have historically suffered
empowerment of women. Almost We’re also seeing progress at some
restricted access to financial services
of the financial institutions we invest
$200 million of our investments in because of difficulties in meeting
in, where we’re helping them
2020 qualified under the 2X criteria, requirements – for example, ‘know your
strengthen gender equality. For
and since the initiative first set up customer’ rules often ask for official
example, over the past two years, we’ve
began in 2018, we’ve invested $430 identity documents and asset
provided guidance and support to HBL,
million that meets that standard. ownership that many women don’t
a bank in Pakistan, which
have. This is harmful not only for
Since launching in 2018, the 2X Challenge has set ambitious targets to increase
women but to wider society, as it limits
has encouraged more than $6 billion in female employment. We’ve supported
opportunities for economic participation.
such investments and increased its the bank as it has developed a plan
membership from seven to 18 DFIs and In 2020, we partnered with the Financial to strengthen gender diversity at
MDBs. In 2021, it will set an even more Alliance for Women (FAFW), the leading the firm, and by training 80 of HBL’s
ambitious financial target and grow its members’ network of financial senior managers on the value of
membership. This year – given the organisations dedicated to championing gender-smart banking. Since 2016, HBL
disproportionate impact of the pandemic the female economy, to strengthen has grown its proportion of female staff
on women – that partnership has meant gender diversity in the finance sector. from 12 per cent, to 18 per cent in 2020.
working together to ensure a gender- Through a partnership funded by our
sensitive approach in immediate technical assistance facility, CDC Plus,
responses and longer-term recovery CDC and FAFW are working together on
solutions to the pandemic. diversity and inclusion to help financial
institutions meet the needs of women as
customers and employees effectively, and
capture the associated business benefits.
Investment type: Growth Portfolio, CDC Plus funded Featured investment: HBL, Pakistan
14Home Overview This year’s new investments This year’s impact in numbers
Our impact
Impact on people
With our partners we also invested in the whom are women, in considering
first ‘2X Flagship Fund’ this year – funds gender-related challenges such as
focused on emerging markets that have increased caring responsibilities, as its
committed to investing with a gender lens workforce moved to working from home.
using the 2X criteria. DPI’s African Meanwhile in Gabon, despite challenges
Development Partners III Fund was posed by the pandemic, we successfully
chosen as the first 2X Flagship Fund – helped logistics business ARISE train 50
affirming its clear and long-standing women to drive and operate heavy
commitment to advancing women’s machinery at Owendo Mineral Port and
economic empowerment and promoting the New Owendo Industrial Port.
gender equity both at DPI and within its This has increased the trainees’
portfolio companies in the fund. employment potential and the
opportunity to stay within the business.
We’ve also provided practical guidance
and tools to help others invest in women. We’re also continuing our strategic
A key part of this work is helping to move partnership with TheBoardroom Africa, In terms of economic
gender-smart investing from being which has now become a thriving impact, for women who
viewed as niche into the mainstream. network of over 1,000 women ready to
have been with us for two
CDC Group plc Annual Review 2020
The feedback we increasingly hear from take on board-level positions across the
companies and funds is that they want to continent. The company aims to double Pakistan’s ranking for gender equality to three years, over 70 per
integrate gender into their processes and women’s representation in African remains one of the lowest in the world,
with one of the lowest rates of female cent of them report an
operations, but often don’t know boardrooms by improving access to
where to start. board opportunities for women and participation in the workforce globally. increase in their income
Kashf Foundation is one of the leading
For example, although we’ve seen an
promoting the benefits of gender and savings. In terms of
diversity in corporate leadership and microfinance institutions in the country.
increase in gender-smart investing
decision-making. It promotes female entrepreneurship social impact, a majority
amongst investment funds, many were and has so far enabled more than a of women tell us that
also telling us that there wasn’t guidance We also know that the private sector has million low-income families across
for how gender-smart investing should be an important role to play in addressing Pakistan to improve their standard
because they run their
applied. That’s why, in partnership with gender-based violence and harassment. of living. own businesses and their
IFC, we published a new guide for In partnership with the European Bank
investors to help strengthen gender for Reconstruction and Development The company believes in creating an economic agency has
diversity and incorporate a gender lens (EBRD) and the IFC, we developed enabling environment for women improved, they’re able to
micro-entrepreneurs and is committed
into the investment process. We’ve also guidance that provides emerging good be more influential in
created a free-to-use, accessible online practice in addressing gender-based to creating products and services based
toolkit aimed at investors and companies violence and harassment risks for on client needs and demands. With a 50 family decision-making.
working in our markets. The toolkit companies and investors, with an per cent gender ratio at all staff tiers, We’ve also seen that
Kashf Foundation demonstrates best
brings together resources, guidance emphasis on emerging markets.
practice in gender diversity and
women who are running
and templates that focus on gender-smart
investing, gender diversity and inclusion, leadership development. their own businesses
and gender considerations across a range This year, we made a $15 million loan to are twice as likely to
of sectors. the company, which qualified for the 2X send their children to
Challenge. Our investment will support
In 2020 we worked with our portfolio school, so there is an
companies to safeguard valuable progress Supporting Kashf Foundation as it works to further
enhance women’s productivity across intergenerational
they had made on gender equality,
throughout the COVID-19 pandemic. female its network of branches, develop more impact on families.
customised solutions for its clients,
In India, we supported AI business iMerit,
which employs 3,000 people, over half of
entrepreneurship and expand its outreach to more
in Pakistan female clients.
Roshaneh Zafar,
Founder and Managing Director,
Investment type: Growth Portfolio Kashf Foundation
Featured investment: Kashf Foundation,
Pakistan
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