Richard Laing, chief executive of CDC, the UK’s development finance institution, has called on international governments and investment organisations to pool resources and efforts to st
Richard Laing, chief executive of CDC, the UK’s development finance institution, has called on international governments and investment organisations to pool resources and efforts to stimulate growth in emerging markets.
He says: ‘Emerging markets have been hit by the knock-on effects of the severe economic crisis in the G20 countries. A sharp decline in export markets, banks reluctance to provide basic business finance and difficulties raising private equity funds will contribute to the worsening economic crisis that threatens to put between 50 million and 90 million more people into poverty in low-income countries.
‘The G20 countries should seek to boost trade and investment finance to prevent the shortage of available capital from hampering the economic growth that is the best way out of poverty. In particular, a stimulus for infrastructure is needed in Sub-Saharan Africa, where some vital projects are taking too long to get off the ground.
‘Despite tough investment conditions the International Monetary Fund is still predicting growth in emerging markets, while the developed world is in recession. CDC will continue to provide capital to promising businesses in emerging markets and is exploring new ways to work with banks to facilitate lending to local businesses, as part of its remit to alleviate poverty by generating economic growth.’
Laing says businesses in emerging markets are struggling to get working capital, as banks are more cautious in their lending. This is restricting growth and there are likely to be some business failures in the coming months.
‘It is a tough environment for private equity funds and many have scaled back on investment targets,’ he adds. ‘Short-term valuations have dropped and it is harder for funds to exit investments – some investments are being valued at 50 per cent less than this time last year.’
