British International Investment: Is it effectively delivering on its remit to improve the lives of people living in poverty?

As Bond publishes a comprehensive review of BII’s evolution over the last 10 to 15 years, we look at how much the organisation has changed – and where more work is needed.

British International Investment (BII) – formerly the CDC Group – the UK’s development finance institution (DFI), has dramatically expanded over the last decade. This has been helped by the government providing almost £6 billion in capital to support BII’s investments in low- and middle-income countries (around 4% of the UK’s Official Development Assistance budget).

This capital began to flow after BII went through a major reform process in the early 2010s, following concerns about whether the institution was paying adequate attention to its remit “to contribute to economic growth for the benefit of the poor”. Since then, BII has continued to evolve, guided by a series of strategies which have introduced a range of new policies, practices and objectives.

Any objective analysis will confirm that the BII of today is unrecognisable from its former early-2010s self. But how has it fared since then? We have undertaken a review – published today – of BII’s evolution over the last 10 to15 years, informed by analysis of BII’s published reports on its investments, evaluations of its sectoral portfolios, parliamentary reviews and other independent analysis of its operations. This review concludes that the reforms BII has implemented and the capital provided by the UK government have significantly changed the institution.

Guided by its 2012, 2017 and 2022 strategies BII has:

more than tripled its annual investment levels (reaching £1.75 billion in 2024) and total investment portfolio (reaching £7.3 billion) during 2012-24
expanded its investments in Africa – from 46% of total investments in 2012 to 60% in 2024 – and restarted and significantly expanded its direct investments
introduced and then further developed processes to pre-screen investments for their potential development impact
introduced and scaled-up a new Catalyst Portfolio to undertake higher risk investments and more development-focussed investments
introduced strategies and targets to focus its investments on promoting women’s economic empowerment and tackling climate change; it has also introduced a commitment to increase investments in Black-African owned and led businesses
strengthened its approaches to applying environmental and social safeguards, tracking development impact, reporting and transparency.

To support these changes, the government has reduced the minimum level of financial returns required by BII investments (from 5% to 3.5% during 2012-17 and to around 2% during 2017-22). However, BII investments secured a weighted average return of 5.1% (in Sterling terms) between 2017 and 2024.

Despite the efforts BII has made in re-focussing its investments to secure benefits for people living in poverty in low- and middle-income countries and avoid doing harm to communities most in need of support, our analysis identifies a range of challenges that BII still needs to address to maximise its development impact and justify the level of UK ODA it receives.

Where is more work needed?

The challenges BII still needs to address:

Investing in the countries that need most support: Although a growing range of least developed countries (LDCs) and fragile states receive BII investments, available data suggests their share of BII’s portfolio may have declined in recent years. In 2024, only 17% of BII’s portfolio was invested in LICs and 12.6% in fragile states (5% without Nigeria), excluding investments not reported by country. However, BII argues its focus on Africa and the poorest countries compares favourably with other bilateral DFIs.
Responsible investing: Although BII has been judged to meet industry standards on responsible investing, it has failed to establish an independent complaints mechanism or adequately apply safeguards to intermediated investees.
Climate change: Although BII has committed to move away from the dirtiest forms of energy and be net-zero by 2050, and to support country net-zero plans, 6% of BII’s portfolio is still exposed to fossil fuels, and its 2050 deadline for net-zero is unambitious.
Tracking development impact: Although BII has strengthened its approach to, and capacity for, tracking development impact, it has made limited progress in generating data to understand who it is reaching and the degree of benefits for people who are marginalised, including women and those on the lowest incomes.
Promoting gender equality and decent work for women: Although BII has made progress on promoting women’s economic empowerment (partly guided by its work on the 2X Challenge), the proportion of jobs it has created for women has declined in recent years (from 30% in 2018 to 24% in 2024), and it is undertaking limited scrutiny of the actual gender impact of its investments.
Supporting Black-African owned and led businesses: Although BII has committed to “promoting and increasing representation of Black African-owned and led businesses”, it is yet to report systematically on how it has been implementing this, despite promising to do so.
Transparency: Although BII has made important improvements to its transparency – helping it to become the most transparent bilateral DFI in the world – it has not made any commitments to further deepen its transparency, and reporting on how its investments comply with environmental, social and governance principles is poor.
Tax practices: BII continues to channel significant volumes of investments to businesses registered in tax havens, and its policies in this area have done little to address this challenge.
Investing in education and health: Although BII has committed to scale-back investments in private education and health, its current strategy continues to allow such investments, especially by intermediaries.

BII’s next five-year strategy

Over the coming months, BII and the Foreign Commonwealth and Development Office will be developing BII’s 2027-31 strategy, which is thought to be published in spring 2026. This strategy, and the action taken to deliver it, must more ambitiously address the challenges identified in this review.

Given the damaging cuts the government is making to the UK ODA budget, every part of the UK’s development cooperation system must deepen its contribution to international development, prioritising the needs of people on the lowest incomes. In this context, any further ODA disbursed to BII must be made conditional on BII taking rigorous action to transform into a truly developmental organisation.

Moreover, as momentum builds in the international community for deeper change to development cooperation and partnerships – including the promotion of justice, solidarity and sustainability – it is vital that DFIs such as BII play their part. To contribute to this agenda, BII must do more to promote locally led development through responding to national priorities for economic transformation and supporting locally owned and led businesses. Bond will publish a second brief exploring BII’s performance and challenges in supporting locally led development at the end of 2025.

Find the BII review here.