Nairobi - Britain's overseas investment arm plans to invest about $300m a year in coming years in African companies because the continent is registering high economic growth rates and it has become easier to do business in Africa.
The $300m figure, some of which will be directed toward infrastructure and consumer goods companies, represents about 50% of CDC Group's new investment portfolio in the coming years, chief executive Richard Laing told The Associated Press late on Tuesday.
"What we are seeing in these economies is for the first time many individuals have discretionary (spending money) available and they are looking for ways to spend that money. They want to have good value in goods and services," said Laing, explaining the group's motivation in putting more money into African consumer goods companies.
"I think Africa compares extremely well with Asia," Laing said, referring to the rate of return on private investments. He said that the CDC Group has had an average return of 16% a year on its investments in sub-Saharan Africa.
CDC Group is owned by Britain's Department for International Development and has been investing in the private sector of emerging economies for more than 60 years.
Laing said it has become easier to do business in sub-Saharan Africa compared with 10 to 20 years ago. The World Bank said earlier this month that 10 sub-Saharan African countries were among the world's top most-improved economies for doing business over the past five years.
Last month, the International Monetary Fund said the region is recovering fast from the global financial crisis and it will register the second-highest growth rates in the world, behind Asia.
The Washington-based institution said in its 2010 economic outlook that sub-Saharan Africa's economic growth will be 5% this year, compared to 2.5% in 2009. But the region has not recovered fully from the crisis, IMF officials warned.
They, however, said that next year's economic growth for sub-Saharan Africa's is projected to be 5.5%, bringing it closer to the high average rates of 6% to 6.5% it registered between 2004 and 2008.
The CDC Group has invested in a wide range of companies in sub-Saharan Africa, including in the power, telecommunications, industrial and financial sectors.
CDC Group generally does not invest directly in companies, but through local fund managers. The group also has investments in Asia and Latin America. Last year, it made global investments worth about $500m.
When the group was formed in 1948 it was called Colonial Development. It later changed its name to the Commonwealth Development Corp. before abbreviating it to CDC. In Africa, it concentrated its investments in former British colonies. But recently, the group has expanded to other African countries.