British International Investment: Aid and investment

In 2022, the UK Government relaunched the UK’s development finance institution, previously named the Commonwealth Development Corporation (CDC), as British International Investment (BII).

As a development finance institution, the BII uses UK aid funding and its existing assets to invest in businesses and programmes in low- and lower- middle income countries. Its investments are intended to generate a return.

This briefing sets out what development finance institutions are, funding the CDC/BII has received, its strategic objectives, and how these are intended to complement UK foreign policy and development aims. It also assesses the BII’s impact on development and the transparency of its work.

What are development finance institutions?

Development finance institutions (DFIs) have the primary aim of creating jobs and increasing economic opportunity and thereby contributing to poverty reduction. They are usually majority-owned by national governments or international organisations like the World Bank.

DFIs are becoming an increasingly important source of development finance. Based on a survey of 30 institutions, annual investments by DFIs are estimated to have risen from US$12 billion in 2000 to US$87 billion in 2017. As their investments grow, they are more able to self-fund their activities.

What funding has the CDC/BII received?

The CDC was founded in 1948. From 1999 to 2015 the CDC was self-funding, meaning it used its assets and investment returns to fund its investments. From 2016/17 to 2024/25, the UK Government invested £5.1 billion.

Capital injections are counted as part of the Official Development Assistance (ODA) budget. ODA is aid intended to promote the economic development and welfare of lower income states. These capital investments between 2016 and 2025 represented around 4% of the annual aid budget.

Following the announcement that UK aid will be reduced to 0.3% of gross national income by 2027/28, the International Development Committee Chair Sarah Champion has suggested that the government consider allowing the BII to borrow to invest to protect other parts of the aid budget. The government says it is considering ways for the BII to raise new and more private finance to stimulate private sector activity (PDF). It has not announced future funding.

What are the BII’s priorities?

The BII’s current strategy runs from 2022 to 2026. Its three priorities are productive development (including job creation), sustainable development (the global response to climate change) and inclusive development (gender equality and alleviating poverty). The BII aims for 25% of its new investment in this period to support gender equality and women’s empowerment under the 2X challenge and 30% to be in climate finance (PDF).

How does the BII support UK’s aid policy?

The BII makes its investment decisions independently from the government, though the government sets its strategic direction. The Conservative Government aimed for the BII to raise “patient capital” (long-term investment) and “pioneer capital” (investments in hard-to-reach areas), in order to target “the poorest and most fragile countries” in Asia, Africa and the Caribbean, to promote gender equality, and to provide climate finance.

The Labour Government says that the BII will help to deliver economic growth, clean energy, and unlock private capital for development. In 2024-25, the BII has announced a £100 million Mobilisation Facility to raise more private finance and a £50 million African Resilience Investment Facility.

How does the BII support development goals?

Historically, CDC investments tended to focus more on stable and middle-income countries, and much of its legacy portfolio is in India.

In its 2023 report on the BII, the International Development Committee criticised some investments by BII as being “poorly targeted” on poverty reduction and not reaching the most marginalised groups. The Committee also said that the BII’s focus on middle-income countries risked a loss of focus on sustainable development goals. The UK’s Independent Commission for Aid Impact has also questioned whether the BII’s investments in India are “additional” to private sector investment and if they sufficiently targeted low income and marginalised groups.

The Conservative Government said it had set the BII a “more concentrated and challenging geographic remit” than other DFIs. The BII says that its investment decisions are centred on retaining capital while maximising development impact. It has lowered its profit target (PDF), partly to facilitate greater investment in higher-risk environments and businesses. It has also launched a new India strategy.

In May 2025, the Labour International Development Minister Baroness Chapman said that the BII was a “good model” but “conversations […] about countries and climate” were needed.