The UK’s International Development Committee, which is responsible for scrutinising UK aid and development assistance, has launched an inquiry on the UK’s strategy towards development finance institutions.
The inquiry focuses on the role of British International Investment, the UK’s development finance institution that supports international development through investment and is increasingly becoming a central part of the Foreign, Commonwealth & Development Office’s development strategy.
Mobilising private capital for global development challenges
We have responded to this inquiry because private capital plays a vital role in that strategy, including by deepening economic ties globally to deliver jobs and growth in both the UK and low-and-middle income countries, as well as supporting the global transition to net zero.
British International Investment is key to this success, and we have appreciated collaborating with them over the years on their role in mobilising private capital for global development challenges.
Given the UK’s position as a global financial centre, and particularly so for green and responsible finance, British International Investment has a clear opportunity to leverage private capital at the scale and speed needed, in line with the UK’s international development priorities.
Key recommendations
We therefore recommend that the UK government supports British International Investment to:
- Develop private capital mobilisation as a core objective and business activity, with the aim for it to become of equal importance to balance sheet investment at the time of British International Investment’s next business strategy.
- Increase de-risking investment propositions in target emerging and frontier markets, in particular through the increase in ‘blended finance’ solutions.
- Build a stronger investment offer in emerging and frontier markets, in partnership with asset managers and other capital markets ecosystem players.
- Share relevant performance data to reduce misperceptions and encourage greater capital flows.
We strongly support British International Investment’s role in contributing to sustainable development around the world and see significant potential in how it can play an even greater part in mobilising private capital for the delivery of the Sustainable Development Goals in the future.