From Apartheid to the BRICS Bank to BII: Leslie Maasdorp’s Journey Through Development Finance

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com. 600 million people in Africa have no electricity. The infrastructure to fix that is totally financeable. The returns on a risk-adjusted basis are competitive, and the demand isn't going anywhere.

So why aren't there institutional investors in the room? Most will tell you it's all about risk. But my guest today is Leslie Masdorp, and he has spent the last decade deploying capital in the places those investors avoid, and he maintains that the real problem is much simpler than that. He says they're simply looking at the wrong data, and the system hasn't given them the right structures yet.

Leslie is the Chief Executive Officer of British International Investment, the UK's 9.5 billion pound development finance institution that operates across 45 countries in Africa and Asia. Before coming to BII, he spent nine years as the CFO of the New Development Bank in Shanghai, which is the BRICS institution co-founded by Brazil, Russia, India, China, and South Africa. There, he raised over $15 billion in bonds and secured a AA plus credit rating for a bank whose founding members averaged triple B minus.

I bet you want to know how he did that. I sure did, so I asked him. In this conversation, he explains how BII's new 2026 to 2031 strategy shifts from deploying capital to mobilizing it and what that means in practice. He walks through how a $40 million first-launch tranche of financing with Alliance unlocked an $850 million climate fund.

He explains why guarantees are the most underrated instrument in development finance, and he makes the case that the development finance system needs a structural reset, not more aid, just smarter financial engineering. For investors in infrastructure, private equity, or climate-aligned portfolios who think frontier markets are outside their mandate, this episode will make you think again. And now, please meet Leslie Masdorf. Leslie, it's great to meet you and thanks for coming on with me today.

Thank you. And thanks for having me. Leslie, I want to start in what I think is the most unusual place that I've ever started one of these conversations. In 2002, you started a new period in your life.

You leave government and you became the first African to be appointed international advisor to Goldman Sachs International. And suddenly you're sitting alongside people like Mario Draghi and Peter Sutherland, former chairman of BP. How did that opportunity emerge? It was a remarkable period in my life, if you like.

I mean, I had the benefit of all of this experience in the public sector. But the transition, because of my interest in finance, I studied economics and finance. I did my master's in public finance at the School of Oriental and African Studies. So transitioning to the private sector, I always recognized how important the private sector is as an engine of economic development, an engine of job creation, and the functioning of an efficient private sector is vital for economic growth.

So going in to become an investment banker was something that I was always curious about. I learned a lot about banking during my role as Deputy Director General because many of the transactions we did, the privatization transactions, I worked with these banks, acted in an advisory capacity. So I understood the sort of technical finance in that sense. There was a South African at the time who was Chief Executive Officer of Europe for Goldman Sachs.

His name is Pat Ward. I literally was invited to apply for a role by him in Goldman Sachs. And it was a tremendous honor to join that advisory board and getting to know people like Mario Traghi. As I said, I reported into Peter Sutherland, who was uh the late Peter Sutherland, who was a very senior commissioner in Europe and also uh chairman of uh BP.

So that gave me such opportunity to learn from some of the biggest global corporate titans. And there's a beautiful irony there here at Goldman Sachs around the time that Jim O'Neill presents a research paper that coins the term brick, which to the room looks like a clever macro thesis concept. And you're listening to that, and we'll get to it. But a decade later, you become CFO of the actual BRICS bank.

By that time, it has an S at the end. And that's for South Africa. That's exactly the iron, that's exactly the point. At the time when Jim O'Neill presented it, I remember it very clearly around 2002.

South Africa was not part of it. And the fact that South Africa joined the BRICS acronym and that club. And then years later, and Jim, by the way, is a very good personal friend who I worked with obviously during my Goldman years, and still to this day we collaborate. It is quite ironic that I then would go on to be one of the founding members of the management team that created the bank.

And I spent, you know, a good nine years of my life building that institution from a complete startup to what is today a you know $40, $45 billion balance sheet institution. This Golden period started a period where you went through quite a few experiences in investment banking. Uh you co-founded a private equity firm, Yard Investment Holdings, and then you co-founded uh Bato Banke Capital with Tokyo Sexual. Sehuale is how he pronounced his name.

Yeah. And acquired 10% of ABSA and one uh landmark black economic empowerment deal. And then you became vice chairman of Barclays Capital and ABSA Capital after the Barclays Takeover, and then president of Bank of America, Merrill Lynch for Southern Africa. So I think that whole period encompasses around 13 years in global investment banking.

What did you learn about money during that period that uh changed your understanding of what capital can and can't do? Over that uh period, being at the center of and in the leadership of a number of these global institutions, you know, gave me a much deeper, more nuanced sense of the role of finance. Living through the global financial crisis was a very, very significant moment. I was in the United States at the time when the 2008 financial crisis happened.

I happened to have been there for the World Bank annual uh meetings. And at the time of the Lehman collapse, and by the way, you might know that Lehman, which was at the center of the collapse almost of the global financial system, was acquired eventually by Barclays. So it kind of goes full circle. But just the importance of the role of finance, this whole issue of the centrality of the state and central banks in providing macroeconomic stability in moments of stress was a major learning.

As the banks went through, you know, what could have been a major global systemic collapse, it was the central banks that sort of intervened to provide the kind of monetary stability that was needed during that time. I obviously studied monetary policy and and monetary economics during my earlier days, but this was like a real sort of living through that moment to sort of see a global crisis take effect and being inside the machine was a unique experience. At the end of that, around 2015, the South African Cabinet sends you to Shanghai to help build the new development bank from scratch.

So you're part of the founding team, and this becomes essentially, as we alluded to, the BRICS bank. You're one of five people, and you've said you arrived to no staff, no systems, no infrastructure, five people on a mandate. So take me into that first day standing in an empty building until you're building something from scratch, but you had a real mission to do there. How did you approach that?

The experience going to China was, you know, firstly it was a unique privilege to be an honor to be nominated by uh the government and to be appointed by the president of South Africa in that role. Secondly, it was very much seen as an historic mission because emerging markets always felt like second-class citizens in the global financial uh system. Because as the world economy evolved since uh Second World War, underpinned by Bretton Hood's the leading uh G7 uh economies, had the largest stake in the global financial architecture, whether it be in terms of the World Bank or the IFC, the voting power of the global north was just so much uh bigger.

So, this idea of forming new institutions was very much in vogue at the uh time. So we were endowed with considerable capital base, about $10 billion of equity. So the bank was founded with $2 billion from each of the five countries. And then each of the countries also gave what's called guarantee, it's called callable capital.

So in total, we had a $50 billion capital base. And I was super fortunate to work with, he was the president of the bank, he was nominated by Prime Minister Modi. His name is K. B.

Kamath. He was the former head of one of the largest banks in India called ICICI, and he was also chairman of Infosys. Infosys is one of the largest global IT companies. So one of the most prominent bankers in Asia, or global bankers, was sent to Shanghai with me.

So arriving there, at one level, I was super intimidated by this task. One, don't speak the language. Two, don't know China at all. But being surrounded by someone who was, he was already 70 years old at the time, incredibly wise, you know, having had a 40-year career in banking.

So having him around was really the sort of guiding load star for all of the different steps we had to take to build to build the institution. And he he was a master delegator, you know, so he knew that the most important first thing we needed to do was to get the bank a credit rating because once you have a very high credit rating, you know, you're off to the races, as they say, meaning you can go and raise money and build a pipeline of activities, fund those infrastructure projects.

And within the first year, we managed to do $1.5 billion of business in renewable clean energy alone. So the mechanics of setting up offers and so on, naturally, the Chinese government was, you know, really enabled that by providing sort of interim sort of support as we set up the offices and you know wanted to get new office space and so on. But it was a massive learning experience.

Yeah, what was the mission of that bank? So the task was to create a new financial institution that would be owned and controlled by emerging markets. If you look at the global financial architecture, let's take the World Bank, for example, or you take Inter-American Development Bank, or the European Bank for Reconstruction and Development, or the Asia Development Bank, all these global multilateral banks, they are majority owned by the G7 countries, by the global north. These are the countries that historically have been the largest in terms of GDP for the last 100 years.

So the principles that were introduced in the bank was a new set of fundamental foundations. So the aim of the bank was also to finance core infrastructure and clean infrastructure, green infrastructure. You might remember 2015 was also the year that the Paris Agreement was uh signed, which is the world's biggest legally binding kind of commitment to net zero and to the concept that we need to decarbonize our economies and the recognition that climate change is a major challenge.

We started out with a mandate to be almost exclusively uh green, to invest only in green assets. We we told ourselves from day one we will not build a co-fired power station at all, even if any of our five countries at some stage feel that they're energy insecure. So we started out with a mandate to be one of the cleanest and greenest financial institutions owned and controlled by emerging markets. You built a lean and flat structure that allowed to get you around six-month approvals anyway, compared to DFI 18-month industry average.

Was that a philosophical choice when you built it? Well, there was clear and deliberate intent to move faster and to have a more agile management set of and approval structures for investment decisions. But around COVID, it was done even much quicker. We did not take six months to disperse billions of dollars.

We took, in some instances, a matter of two, three weeks because of the sheer enormity of that emergency. So we disbursed, I remember this distinctly because it was so dramatic. In March, we approved a loan to South Africa. It was the 31st of March, if I remember correctly, a billion dollars.

And by May, which is two months later, that the billion dollars already left the bank. And the request probably came two weeks before it was approved. So it was all done in a very quick uh because of COVID was uh, you know, out-of-ordinary event, of course. But in general, our aim was to have roughly a six-month approval uh process, which was much faster than other institutions because we were smaller.

And if you have uh time, we probably had 150 people or so. It's not like you know the IFC with 5,000 people, you know, where the processes are just a lot more cumbersome. Over nine years, you raised more than $15 billion in bonds, and you got a double A plus credit rating from SP and Fitch for a bank whose founding members averaged triple B minus. So I think you just explained it.

These countries capitalized the bank, and then the bank was issuing the bonds for these infrastructure projects. It wasn't the countries who were issuing the bonds, it was the bank, right? That is that is exactly right. So we get the capital.

Now remember, if you sit on, if you go to a bank and you say, you know, you've got $10 billion in an account, and you now want the ability to go and raise money, $10 billion is a lot of money. So your leverage ratio at that stage was zero because you've got no liabilities. We have at that stage we haven't issued any bonds, we have no uh loans outstanding. So basically, the first thing is to obtain a credit rating.

We have to study the rating methodologies. What are the variables that they take into account to get you a credit rating? So our first order of business was to persuade them that we will be a highly creditworthy entity because these are our risk management policies, and we copied and mirrored all of the risk management approaches. And the financial metrics that we adopted were all from the AAA institutions.

So we modeled ourselves on AAA institutions with a liberate intent to try and obtain the highest possible rating. This, by the way, the bank, New Development Bank, is the only bank in all of the emerging markets that have a rating at uh AA plus. There's no bank that comes close to AA plus anywhere in the world. And the reason for that, as I mentioned, is because it's got this very high uh capital adequacy and its risk management policies, it's low levels of leverage on all the dimensions.

It looks like a triple A institution. During your time uh NDB, you did not move your family to Shanghai. Were you there a lot? Well, I um uh I I'm divorced.

I have a uh son, uh Mikhail, who is uh married to Samantha, and uh they live in uh Johannesburg. So my my son is an adult and he is grown up, and I have uh two lovely young uh grandchildren. So they both you know work in in uh uh South Africa. So my other siblings, I've got a big family, as you mentioned earlier on.

One stage, actually many years ago, my sister also worked in uh China. She worked for VW Audi, the German company. So, from a family perspective, my South African family was not uh um living with me. They were in South Africa.

And fortunately, my work took me to South Africa, so I saw them at regular intervals because we issued bonds in South Africa, we issued bonds in in Rand. We did a lot of projects, about five and a half, six billion. By the time I left, we did five and a half, six billion dollars of loan approvals in South Africa. When COVID hit, China famously locked down for 18 months rather harshly.

Did you say you were in South Africa when it locked down, or were you stranded the entire time? So I was in South Africa for five and a half, six months during COVID and then left during COVID. The government uh of South Africa and the government of China arranged a special plane for about, I think it was 12 of us from South Africa, all the only employees of the firm uh of U Developer Bank. And we went in a plane just with the 12 of us uh to China under you know very strict quarantine uh conditions uh at the time.

And was when we were in China, we couldn't travel because China had very strict conditions to manage COVID. You were still processing all these things, building the bank, but then Russia invades Ukraine. And of course, Russia is a major shareholder of the bank, so that had to be a pretty complex moment. How did you lead the institution through something like that when one of the people who owns the building is now somewhat of a global pariah?

Look, it was a challenging period for sure. The bank had to sort of navigate the consequences of having one of its founding shareholders uh sanctioned. But the fact that the bank operated in uh US dollars, its balance sheet was in dollars, the fact that the bank had dollar liabilities in terms of, you know, the we needed to pay back the money that we borrowed from others, from central banks and all these people who bought our bonds, committed the bank to continue with accessing its its capital in uh dollars.

And there was a predetermined path that uh flowed from that. So the bank did the responsible thing to pause all lending to Russia and all disbursements to Russia. So the bank took appropriate and correct decisions to preserve its financial integrity uh at the time. And I was involved in those conversations as chief financial officer.

I want to go back to 1986. You're 19 years old. You've just been elected president of the student union at the University of West Cape, which is located in Belleville, outside of Cape Town in South Africa. And then the state came and they arrested you and put you in a cell for a year.

Can you take me into that moment and tell me what you remember about that day? Sure. Let me take you one moment back, actually. The previous uh year in October 25th, to be exact, 1985, the government declared a state of emergency in select provinces in South Africa.

At that stage, I was also a member of the student representative uh council, and uh I was arrested for the first time. So my first sort of entree to prison was a 90-day stint in uh the same prison, Victor Fester prison, where I was arrested. And at the time, what a state of emergency means, Scott, is that you get detained and you can be detained indefinitely for as long as the state wishes to keep you. So the particular prison that I was in is called Victor Pfester, as I mentioned, just outside Cape Town.

They clear the prison of your traditional convicted criminals, so the people who committed, you know, uh armed robberies and uh rape and all kinds of crimes. Fortunately, you don't interact with because the law provides for political detainees to be detained in separate uh facilities. So we are in a traditional prison, but you don't interact with uh criminals, which could, you know, also put your life in danger and so on. So I was detained for 90 days.

We don't know why you are there. You are never you never face a court of law, you do not have access to the legal system. A state of emergency means that the laws are suspended in a country. Martial law is what it's often called in other jurisdictions.

So my my brush with uh the horror of being detained without trial started the previous year. But to come to your question of the following year, this was now a lot more serious because this time there was a national state of emergency. Political resistance to the apartheid system was reaching very high uh levels. South Africa was really comprehensively isolated internationally.

There were multiple UN resolutions condemning the South African government, compelling, urging the government to uh remove the policies of you know racial discrimination and apartheid, and to free the long term political prisoners. So resistance was reaching a fever stage. And as part of the Student Representative Council, I was involved in organizing students to protest, to oppose the government's policies and to demand an end to the state. Emergency.

You're in a single cell, about the size of half a studio room. You have a toilet, a basin, and a floor mat, and nothing else. And for the first four months, the only thing they let you have was a Bible. 18 hours a day in that space.

So what was the conversation happening inside of your own head? Let me say that prison is a very lonely experience. In my case and the section of the prison that I was in, we were occupying single cells. Let's be very clear, it is hard to be alone for that long.

I was extremely, extremely fortunate that after four months, the university rector, his name was Professor Jake Hervel. He has since passed on, but he became the cabinet secretary and the head of office, director general in Nelson Mandela's office many years later. But he was the head of the university at the time, Professor Hervel, and they fought the university fought a case in the I Court which led to students being able to access their books if they were already registered students at the time of their detention.

To put it uh simply, I was a registered university. The court found that there's no reason why I can't have access to my books because you know you could be detained for a month, two months, a year, two years. So when that moment arrived, suddenly my world uh opened up. So the first four months was a real horror, lonely experience.

When I was able to access my books, you can dream and imagine things and live a very different existence when you are confronted with so much material. I had four large boxes of books, which my lecturers and several other people donated. Material that naturally had it to be approved by the police first, but anything to do with what I was studying, economics, macroeconomics, you know, microeconomic theory, you know, political economy, and then also psychology. These were my two majors.

So I had so much material to keep myself busy with. And essentially, in a nutshell, I read and read and read. You teach yourself the entire third-year economics and finance curriculum with no lectures, no classmates, no one to ask questions to, and you still graduate with distinction. How did you actually do that?

I literally had nothing to do. It's all about structure. Everything, if you ever land up in prison and for a long-term prison uh stint, you need a rhythm and routine. It's like anything in life, if an uncertain situation, you need to create some form of structure, right?

When I was alone, it is a real discipline that you learn over time and you learn from others who have been in long-term prison. I was very fortunate that in my section of the prison, for the three months that I was there, also I was in a single cell, but I was fortunate to be accompanied by what we have as fellow detainees, people who have been to Robin Island before. I have been with people who have faced uh prison during the 1980s under different acts. At that stage, it was not a state of emergency under which they were detained, but they were able to impart their lessons about how to manage under those conditions.

So when you are alone and you've got nothing else to do, there are a few things you can do, right? One, structure your thoughts. You can do exercise. If you really apply your mind, you know, you can apply your mind to different things at different moments in a structured, routinized way.

That's an extraordinary experience. Very few people have. But now let's uh jump back to the beginning. You grew up in Bethlesdorp, which is a township in Port Elizabeth.

Your second eldest of seven children. You described your parents as working class stuck because of apartheid, they couldn't vote. And yet every single one of their seven children now holds a postgraduate degree. Every single one.

That doesn't happen by accident. Your parents must have had something to do with that. So tell me about your parents and who they were, and how did two people couldn't even vote under apartheid and still that kind of drive in seven kids? My parents firstly were deeply religious Christians, firstly.

Secondly, they recognized education as the platform, as the means, as the channel through which we could have some form of economic upliftment under the very difficult conditions. My dad was the chairman of the school governing body at our primary school. All seven of us went to the same primary school, it's called West End Primary School. All seven of us went to the same high school, it's called Bethelstorp High School.

All seven of us went to the same university called University of the Western Cape, and then migrated into doing different postgraduate degrees at different uh places. But my dad was also the chairman of the school governing body at the high school. No coincidence. He was deeply passionate about education.

He gave his own time to help the school. This is all very micro-level. A parent is taking interest in the community. It was very community-driven.

And that community consciousness also, I got from my mom, who was a nurse all her life. This notion to serve uh society and this notion that you can commit your skills, talents in service of others was deeply ingrained in us through her work as a nurse in the public health system. So both of them, the two role models together, certainly inspired and gave me courage to step forward and play leadership role in the student movement, in the youth movement, and to become more prominent in the anti-apartheid struggle.

I grew up in America learning about apartheid in South Africa, but South Africa is a long ways away from America. And when you're young, don't travel much. It's hard to really understand it. So I'd like you to talk about your reality.

You were classified as colored under the apartheid system. You couldn't study medicine or engineering at the UWC because those disciplines weren't offered to students of your classification. So the state literally decided what you were allowed to learn effectively based on the color of your skin. What does that do to a young person's sense of self?

Did you ever believe the ceiling they put on you even for a moment? I think when I try and I've you know traveled abroad and you know lived an international life over the last 25, uh, 30 years. For many people, it is just so bizarre when you describe a past date, you know, this notion that even the beaches were segregated, right? That there were beaches, the most beautiful beaches, the sandy beaches, which were reserved for whites only.

And, you know, we used to go for drives on a Sunday. For me as a kid, it was bizarre. This notion that you can walk into a post office at the time, and there are separate queues in the center of town at the post office. And even if the white queue was, there were no people, the queue for blacks, colors, and Indians were well, let's say there were 20, 30 people in that queue.

The queue that's dedicated for whites only cannot be used. It was just as a kid, as a very young kid, these things did not make sense. And when you ask your parents why, you can see that, you know, they find it difficult to explain the fact that, you know, these are laws, that the government is made, and then you ask, and you realize that I realize at a very young age that the state, our collection of institutions that either have legitimacy or they don't, that they are they are man-made, that they are created.

And in a similar way, if they were created, they can also be destroyed. I mean, I was a little firebrand revolutionary just through asking questions. And my teachers, I have a cognition that when I was about, I'd say 11, 12, where I asked a teacher about whether governments have the right to, have the legitimacy, have the divine sort of ability just to make laws, even if the population disagrees with uh them. So this notion that all functions of the state are man-made and they can be destroyed is a very powerful uh idea, which really instilled later on.

I got a bit more understanding of political organization, and you cannot just go out in the streets, you're gonna get arrested. You need organized formations, you need strategies, you need plans to take communities uh with you and a more structure to the opposition. And at 15 years old, you're already chairman of the student representative council at your high school. You're leading boycotts.

By 19, you're detained without trial for the first time, which you already alluded to. What politicized you so young? You know, was there was it just overall these experiences you just described, or was there something specific? You know?

Yeah, it's the experiences because that's my lived experience. No one told me there are laws called apartheid. Of course, I learned it just from talking to my dad and having this lived experience of real racial discrimination. My mom would come home from her workplace.

Now, there was a ceiling for nurses colored or black. They could not advance above a certain level, independent of their qualifications, because the supervisors were white in the public health system. So, you know, my mom would talk about her frustration of having a boss who understands considerably less than her. So, firstly, that there's that component that certainly influenced my activism.

But then, secondly, and I have to say that I was extremely fortunate to have had very powerful role models, one or two teachers who took a very particular interest. It's always the case if you're a teenager, there is another adult typically outside of your parents who can influence you and will give you more attention, give you a sense of self-belief and confidence. So one of these teachers, Derek Swaritz, he became a rector of one of the leading universities, uh, Nelson Modela University, rather, it's called in Port Elizabeth, which is my hometown.

He left South Africa, went into exile, and um obtained a PhD in from Essex University. But in his formative years, when he was a teacher, he had a profound influence in my life in a sense that, you know, he gave me things to read, to give me more political structure to my ideas, you know. So I read Gromsky, I read uh Karl Marx and Political Philosophies at from the age of about 15, 16. And then in 1984, you entered UWC to study economics and psychology.

Uh, why UWC and why those particular majors? UWC was the only university earmarked for colored students. This university was earmarked for my particular national group under the apartheid classifications. I was interested in how an economy functions because, you know, reading political philosophy and, you know, being influenced by my mentor, I was always interested in how an economy uh functions.

I was interested in power relations. I was interested in the class structure in society. When I was reading at age 14, 15, sort of uh classic political philosophy, and I wanted to sort of understand this notion of a working class, a bourgeoisie, how societies evolve. So the notion of the economy being at the center of human existence was for me a profound interest.

So you you eventually were released. We've already discussed your rather extraordinary experience in university, and you essentially graduated while you were in prison, uh, but you got out and then you go into the trade union movement and were the regional secretary for the Garmin and Allied Workers Union in the Eastern Cape. I guess it's your first job uh outside of school. Sure.

I mean, I was, you know, all of 21 years old. My first job was to organize workers and in the clothing, textile, and leather industry in Eastern Cape where I was from. And uh this was the only real form of political organization, in a sense, that could still function under the state of emergency. You cannot ban factories from uh continuing to produce.

Workers have to go to the factory floor. So at the time, as political activists, we recognized the importance of workplace organization. So I was encouraged by my mentors at the time, and I left prison with the intention of going to work for a uh trade union. Kosatu was just born, which is the trade union movement in South Africa, and it became the most visible form of organization against apartheid.

So, what it meant was that I would organize the shop stewards of the, in other words, the official elected representatives in these factories and go negotiate with the employers to get increases in workers' uh wages and better conditions of employment. So I did that for a few years, and it was an incredible and a humbling experience. The numbers I remember so uh clearly. You know, a qualified uh sort of machinist at the time was uh earning uh 92 Rand.

I mean, in today's terms, it's you know, literally eight dollars per week. And then the ANC was unbanned in 1990, and uh shortly a little after your life changes shape, very quickly, you win a foreign and commonwealth scholarship to study economics at the University of London at the School of Oriental and African Studies. And after you did that, you came home and joined the ANC's Department of Economic Planning and worked under Trevor Manuel. Suddenly you're writing macroeconomic policy for a country that didn't really exist in its current form two years earlier.

Until that point, you were an organizer, a disruptor, and now you're an architect. So things changed. Were there things about the old version of yourself that you had to let go of to make that transition? Oh, absolutely.

I mean, I'd say firstly, the idea of being a scholar and actually, you know, reading with an interest to do well in uh in an exam and just acquiring new knowledge. I'm the true university experience when I came to London at University of London doing my master's uh degree. You know, when I was at the University of Western Cape, my principal purpose of going to class was, you know, to organize students and to organize students into political formations because we were fighting apartheid.

In 1990, with the unbanning of the ANC, as I said, I was very fortunate to receive multiple scholarships, by the way, because if you like, I mean, I had already now quite prominent as a student leader, had you know superb academic uh marks, and I was the perfect candidate to be eligible for a number of these out of scholarship to go to Holland, for example. I had a scholarship that applied to the Ford Foundation in the US. So I was very, very fortunate, and I was with a larger group of people.

There were at least eight, nine of us who went to SOAS. One of them is Maria Ramos, who later on became the Director General of the National Treasury and later on also head of one of the largest banks. Another person who came with me to SOAS at university, he's currently the governor of the South African Central Bank. So we had the opportunity to do postgraduate studies at a time, at that point of the transition.

And as all of us, you know, in our 20s at the time, we were able to go into the policymaking department of uh the African National Congress, which is the party of Nelson Mandela, who obviously of all of us, he was really our sort of uh childhood hero. And when he formed the African National Congress internal machinery, it was a no-brainer for us to go and work for the ANC. It so happened that in my case, I spent that entire year with Trevor Manuel, who became later the head of economic policy when Mandela came out of prison.

When he formed his national executive committee, he appointed the same guy, Trevor Manuel, as head, and he obviously knew me very well from prison. And then I started to work for the ANC then, yeah. Before that, you were an activist, you were a disruptor, now you had to build. So there's a change of mind there.

Absolutely. It was a profound transition. The idea that the ANC was now a government in waiting had there was such a load and a burden of responsibility on all of us. I think the idea of what kind of institutions do we want to uh build?

How are we going to transform? Which laws will need to be repealed and which new ones will we need to put in place? What's the appropriate macroeconomic policy? How are we going to bring down inflation, reduce the debt, and create macroeconomic stability?

There were major, major questions that we were debating at the time. We have to study international best practice, look at other economies that went through transition. May I remind you that that was the time of the fall of the Berlin Wall? So all of these former socialist countries were going through a series of economic changes to adjust to a more market-based uh economy.

So we learned a great deal from the experiments and the policies that came out of those uh countries. It was an intense period of deep reflection around policy tools. So it was very much a night and day moment for all of us in terms of now thinking through how to govern rather than how to organize. Now you're working in Nelson Mandela's government for the special advisor, Minister of Labor, Titan Bawini.

You helped design the National Economic Development and Labor Council and draft the Labor Relations Act. And then in 1999, the cabinet appoints you Deputy Director General at the Department of Public Enterprises, and you went on to restructure some of the country's biggest state-owned enterprises. Tell me how you did that. Well, look, throughout that uh period, it was just such a period of immense learning.

I mean, we were in effectively a laboratory. This government was new. I mean, Mandela and the senior cabinet members, I would say probably half of the cabinet uh came from exile at the time. The other, another third or so would have emerged from prison.

So very few people had the tools of the trade, understood the business of running a uh government, of uh how to make policy, how to design white papers and make laws. So there was a huge expectation and responsibility on the technocrats. And I was now in the technocrat mode, right? I transitioned from political activists to a technocrat with a whole bunch of people.

And I recognized that a state, a government, has a collection of tools at its disposal, but those tools can also be ineffective. In the case of South African government at the time, large numbers of state-owned enterprises, the airline was owned by the government, the rail company was owned by the government, the telecoms company was owned by the government, the energy company provider was owned by the government. Many of these entities were loss-making. They were a burden on the uh state.

And now they needed to provide not just for a narrow white population, but provide services for the entire country. So transforming these institutions to make them more effective, to get them to adopt modern technologies, to get them to adopt modern management practices, to get them to hire people on merit, there were a whole range of things we needed to do. And especially also at a time when the governments globally, throughout Latin America and in Asia, governments were moving out of the provision of certain services.

Telecoms, for example, the mobile telephony started to grow in the 80s, late 80s and 90s. So governments moved out of ownership of telecoms and privatizing those assets. So when I was appointed in that role, the AMC, the political party, and I was in those meetings, we made a decision to sell off state assets in order for us to raise revenue for the government, because the government was heavily indebted. And if those services are run by the private sector, they could be run along market principles in a more efficient uh way.

So we got a lot of uh strategic advisors to advise us on that. Telcom was listed, which is like British Telecom, a landline telecom company. We sold a stake in the airport's company to our Air Porti de Roma, and a whole series of initiatives were embarked on at the time to make these state-owned enterprises more effective and efficient and profitable, obviously. Yeah, and those kind of situations, and at that point in time, you also mentioned the Berlin Wall falling, and the same type of dynamic was going on and throughout Eastern Europe.

Those kind of situations where the government's running all these monopolies, and then all of a sudden you're going to privatize. It brings all kinds of people out of the cracks, right? And uh it's like it can turn into a feeding frenzy. With 30 years of distance, do you think those privatizations worked?

And is there one you'd do differently if you could go back and have a redo? Oh, for sure. There's so many things that I would do uh differently. That is a very hard question at one level, but it's an easy one at the same time.

There's no question that, with the benefit of our hindsight, there are some things we could have done earlier, some things we've done better. But in the main, I would say as a political project of transformation, the South African experiment is really unique in global terms, Scott. I mean, we quickly went over the entire 1990s, but in South Africa, if you think about it, South Africa represented a rare moment and a very special moment of, if you like, moral courage that Mandela showed and restraint.

Remember, we had this kind of model of reconciliation, truth and reconciliation. The aim was to build a nation. South Africa was a very divided country. So it was a very fragile democracy.

We made all these policies against uh the backdrop that this was not a united country, right? There was a lot of resentment from the black population about suffering and apartheid and a lack of dignity as a result of the apartheid laws. Because of the leadership that Nelson Mandela displayed, and a lot of people think it was just symbolic, uh fluff, and so on, but it was real. He embodied something very special, right?

He he built a nation around this concept that our futures are intertwined, as simple as that might sound, right? But he encouraged, for example, white public servants, and I was very critical at the time, like many of my colleagues in the ANC Department of Economic Planet. Planning, why he's encouraging all the white civil servants to stay. We would have had state failure, in my view, if we had, or state collapse, even, if we had all the skilled people suddenly disappear in one go.

So we built painstakingly a more integrated public service. We built elements of a new nation, as imperfect and incomplete as it might appear today, with the benefit of hindsight. Those were the ingredients of uh success. You know, it was his views were, you know, very sort of uh disarming at one level.

A lot of people thought that it is just informed by this naive optimism. But I think it was central to making South Africa successful over that period. After nine years in Shanghai, then you've come to where you are now in London to run British International Investment, which is known as BII. So you've been inside a BRICS institution built by emerging economies, four emerging economies, and now you're leading a 78-year-old DFI that was literally founded as the Colonial Development Corporation.

How did this opportunity uh BII come about for you? Maybe one point to make is that, you know, at the end of serving two terms in uh China after nine years, I was naturally reflecting on what's next. Having built such a strong set of credentials, understanding of development finance over that uh time, it was always my intention to stay in the development finance world. I just derived so much more satisfaction from working where you have meaning, and I've got so much more passion from making a difference from my activities rather than just going to work for a for-profit institution.

So the idea of joining an institution like BII, conceptually, I already had in my mind to lead one of the global private sector formations in development finance was certainly one of my ambitions. It was a particular uh privilege to be called by a head hunter to lead what is the oldest development finance institution in the world. BII was created, as you just said, in 1948, the first one after the Second World War, and a strong global enterprise investing in over 65 uh countries, the Commonwealth countries of the UK.

And given that I've worked, that I've lived in the UK, you know, as a student, that I worked for Barclays Capital in Goldman Sachs reporting into a London time zone. I know the city of London and the United Kingdom. There was already a familiarity, if you like. But more importantly, BII is recognized for being quite innovative, for being quite pioneering.

So before my time, this entity really sort of did a lot of innovative maneuvers that kind of interested me in uh in this role. You took over at the home from uh Nick O'Donohoe, who was on the show last year. And I've also had other people on, like Yasiman Saltuklami, who worked on developing some of the frameworks. So the listeners of the show have heard a bit about different aspects of BII from different people who've been there, but never from someone who is currently there.

To start off with, for anyone listening who doesn't know what BII is, give me an overview of BII as if I know nothing about it. What does BII do? Why does it exist? And what does that mean when you say your founding principle is to do good without losing money?

Literally, the founding principle was exactly what you said. The first CEO famously used those words of do well without losing money. And that to this day is ingrained in the DNA of what we do. So if you rewind back to 1948, and if you look at the sort of you know, the years following and the decades that uh followed, this is a period of independence, decolonization.

Many of the countries that used to be part of the British uh colonies, if you like, became independent, right? And the model that informed the work of BII, BII is premised on this concept that the private sector is the central driver and ingredient of economic prosperity, right? That if you want an economy to grow, as I inferred earlier on, you need a functioning private sector set of markets, right? So what BII does, it received capital from the UK government.

It invests in businesses, right? So our first big industrial investment was uh Chlunga Cement, for example, in Zambia. So we are an impact investor, I should start there. Firstly, we believe in the private sector being the engine of growth and development, right?

Uh government plays an important role in creating the enabling policy conditions, policy certainty, predictability of uh regulatory frameworks and so on, so that it's always private entrepreneurs who make the most decisive sort of interventions in improving lives. People build businesses which go on to transform lives. Even you know, I lived in China for many uh years. And if you listen to the stories of sort of older people, and I've met many uh people, you discover how it was ordinary people who even shaped that mega success story.

And in many of our markets where we work today as BII, which is 45 countries throughout Africa and another 20 or so countries in Asia, you will see how BII companies have been central to the sort of economic trajectory of those companies. Whether it'd be in power, we build and upgrade ports. We're central now to the creation of the electric vehicle industry in India, for example. We have a company in Africa called Global Ec that is central to the production of power.

We have a company that is involved in also power transmission called Gridworks. So what we do is we look at a market, let's take Sierra Leone or Burundi, and we look at what are the market failures, what are the structural barriers that is inhibiting that private sector from growing. And we look at how can our capital make a difference? And this is how we fund businesses.

So, in short, we invest, if I want to summarize it, we invest for a return. We make sure that these companies have a development impact. It employs people, we stimulate entrepreneurship, we create opportunities for women. These businesses ideally also reduce carbon emissions.

And then after a certain while, we sell those businesses and then use the money that we receive from the exit to invest in new businesses. So we recycle the capital. So we don't pay a dividend, if you like, to the British government, but we recycle capital all the time and uh help grow private sector uh in that sense. Just to make sure people understand the scale here, what what's your AUM and the asset classes that you're investing in?

So we have roughly 9.5 billion pound full portfolio. That would be about 11 to 11 and a half billion dollars or so, let's just speak, dollars to be example. So last year, in a single year, we invested $2.

4 billion. $1.4 billion was invested in Africa and the other billion dollars in Asia. The year before, we invested $2.

1 billion. So roughly every year, we do investments of that order of uh magnitude. Now, if you look at the financial structure of these transactions that we do, you can either provide equity where you're part of the ownership structure of a business, or you can provide debt to these businesses in order for them to have capital to grow, and then they obviously repay you on certain defined intervals. Or you could put your money into funds where you have the diversification effect.

If you put money into a fund, that fund can invest in manufacturing, it can also invest in power, it can invest in healthcare. So those are the three broad products we have, if you like equity, debt, and funds. What would be the split between those? The split right now is roughly a third, a third, a third.

But over time, over its history, BAI has been renowned or is most known for the fact that we are a large equity investor, and we're specifically an equity investor in some of the more difficult markets to invest in where capital is most scarce. And that's because of the model that we have, which we're trying to play a role as an equity investor to encourage capital formation. We are trying to what we call build markets. We also call it market creation.

So us investing, it's not just us investing in a project. What is your geographic footprint in terms of your investments? So we have, as I said, the uh, you know, what was known as the Commonwealth uh countries as our base. We have 45 countries in uh mainly sub-Saharan Africa.

Egypt is our largest country of operations, followed by Nigeria, South Africa, and these are the larger economies in Africa. But we are also significant investors. In fact, going forward over the next five years, we have a target of allocating up to 25% of our capital to what's called the least developed countries, or frontier markets. These would be countries where the markets are nascent, underdeveloped.

In Asia, largest countries India, Pakistan, Sri Lanka, Bangladesh, Nepal, Vietnam, Indonesia, Philippines, all of those countries, including uh Thailand and Malaysia. So in Asia, we cover all of those emerging markets. You've called BII a laboratory of ideas, which is kind of a bold thing to call a 78-year-old institution. What makes you feel that you have permission to experiment there?

We have permission to experiment because you know the board has uh given us this mandate. The shareholder and the minister yesterday, Minister Jenny Chapman, she's the Minister for Development, expects us to do more, if you like, with less. As you know, in the G7 countries, public budgets for overseas development assistance have shrunk. Governments are under significant fiscal pressure, and there's less money available for development because these governments have to spend much more on defense and national security.

However, development remains a core fundamental principle of the UK government. And we have been told to look for fresh ideas, to innovate, to look beyond our existing financial structures and to explore with new ideas. So I know that my board supports the idea of, you know, and when I say experimentation, we want to see what works and then scale those ideas that do uh work. Like now, for example, we're going into an era where technology is going to play and artificial intelligence will be a significant driver of change going uh forward.

We're watching those trends very closely to see how we can find those opportunities to leapfrog for Africa to to be able to adopt new technologies that can help with some of the infrastructure uh bottlenecks. So, in short, we are humble in our approach in a sense that we don't have the answers, but we are willing to experiment and we're willing to go into markets that normal commercial players would not uh go into. And also, I should say, very importantly, you know, there's uh close to 700 people who work here, all very driven, driven with uh they come to work, they have passion.

And for me, that is the inspiration to wake up every day and to lead the teams here. You've said that the development finance system needs a structural reset, that the donor-recipient paradigm is broken, that countries are uncomfortable with almost a paternalistic donor-recipient relationship. What do you mean by that? So, over the last number of decades, since actually 1971, when the idea of 0.

7 was born, I don't know if you know, but in 1971, after the Pearson report, he was the former Prime Minister of Canada and he did this report for the United Nations, which led to a resolution that 0.7% of gross national income from the developed world should be devoted to overseas development assistance. So there was a decision taken a good 55 years ago. That created a dependency, Scott, where a number of countries, I mean, the number of programs, when USAID was closed down by the United States government, a number of health programs on the African continent from one day to the next evaporated.

These were life-saving programs funded by the US government through USAID. These countries recognized that they ought to be in charge of their own economic trajectories and their own economic development. It's a travesty that in 2026, people who were dependent on antidotrovirals, women with HIVH, for example, those are life-saving drugs. The government should really be providing that medical assistance to their population.

So a dependency is just a bad symptom out of the past year. That's number one. The second reason is that development should be, for simplicity, my first point, be more locally owned. This idea of a donor recipient is an outmoded concept, right?

Thirdly, there's a lot of inefficiencies inherent in how development and aid was done, meaning there's multiple institutions working in parallel in a super inefficient way. So the third reason why development system is out of uh no longer fit for purpose is because there's uh a lot of bureaucracy and inefficiencies associated with how it is being delivered. And then fourthly, because there's less money now and we live in an era where national security and defense is so central to countries, you have to find new models of delivering development that is not just promised on more money every year.

We're gonna have to be smarter, we're gonna have to find money from elsewhere to be more catalytic, as I as I said. These are just four or five of the of the main reasons why I said that the old system is no longer fit for purpose. What exactly the new system looks like, though, has not taken shape yet. We are still the development finance thought leaders, and everyone is still thinking through what might the future hold.

Your current strategy runs through 2026, built on three pillars: the productive, sustainable, and inclusive. At least 30% climate finance, I think you're tracking closer to 40. And 25% gender qualified, I think you're close to 30. And a new strategy comes into effect in 2027.

Are you able to say what stays and what's going to change? Sure, sure. So fortunately, the new strategy has just been launched, Scott, literally yesterday. So it's out of the press.

It was still embargoed until yesterday. So that's why you you did not have it uh in advance. We should have sent it maybe to you in advance. But there is a 2026-2031 strategy that has just been released by the minister yesterday.

In that strategy, we indicate that we will, in terms of headline numbers, we'll be able to commit at least $8 billion over the next five years for development. And we plan to mobilize, to crowd in another $7 billion. So in total, during my period at BII, we intend to invest up to $15 billion. Half of it or so we will deploy ourselves from our own capital, and the other half we will mobilize from the private sector.

So we've indicated three core shifts in the new strategy. The first one is a commitment to what we call, as I said, private capital mobilization. And this is the idea that there's large pools of capital in the commercial world, in pension funds, asset management firms, insurance, sovereign wealth funds, trillions of dollars that are invested out there. They have long-term liabilities, those funds, like pension funds, have to pay out.

If you're a member of your pension fund, they have to make sure when you retire in 20 years or 15 years that they can generate a return on the capital that you have paid in and your employer has uh paid in. Those funds typically don't invest alongside development institutions. We now can design specific structures in such a way we will de-risk projects. I'll give you one example how we do this.

Let's take a solar project. If we put up a big solar park, when you start out, it is still a bit risky because there's construction risk, right? The project is not being built yet. Once the project is built and your solar panels are up and you start generating power, you have clear visibility into the cash flows for the next 15, 20 years because the sun always shines and you will get power.

So we can take on the first risk, we can de-risk the project by taking on the construction risk for the initial period. Once the project is built, we can then bring in other investors. So this is all about financial engineering, making it possible for other investors who have higher return thresholds, higher IRRs, the risk return profile of these projects. Our projects don't always meet that of the commercial institutions.

We're going to do things to de-risk the projects so that they can indeed participate with us. That's the first major part of our strategy. The second piece I already touched on early on, we won't just invest for looking at the impact of our project or our investment. We will look for more ecosystem-level changes we can engineer in a particular market.

And again, I'll make you one quick example. We invested in the second mobile operator in Ethiopia, where we, as a result of us bringing in competition, there was a monopoly before in Ethiopia. Only the government seller provider existed. Once we came in together with Vodafone, the cost of data went down almost 60%.

So what I'm saying is that we invest, and as a consequence, a lot of investments now are followed because businesses, entrepreneurs are unabled to grow their businesses because they can access data, which in the past, mobile telephony was super expensive in Ethiopia. So that's market-level impact. A third level change that I will touch on in our strategy is our focus on what I call the least uh developed countries and frontier markets. We now will allocate going forward 25% of our capital to these markets in the next five years.

When you talk about one change being de-risking in order to crowd in institutional capital, does that indicate like that BII is going to take like first loss? Exactly. That is exactly right. Yeah.

So we've done already a number of deals like that. You are spot on, uh, Scott. We did recently, for example, with Allianz, the big insurance company, we anchored a fund called the ACE Fund, Allianz Climate Emerging Markets Fund, and we put in $40 million. We got in other development finance institutions to put in another $110.

So in total, we have $150 million in a concessionary tranche or junior tranche, as we call it. As a result of that, Allianz have been able to, we've been able to raise $850 million. So the fund is a billion dollars now. And it's as a consequence of that junior tranche that you can now bring in the so it's a six times multiplier.

And those types of structures now we want to replicate. And I think it's important for people to know BII is not recapitalized or anything by the government. You're always making back your what you're investing, your principal, right? Let's take the last uh nine, 10 years, you know, generated a profit of about 1.

6 billion pounds. As I said earlier on, we do, however, we make a return, but we do have what I call long-term, we represent long-term patient capital. We would sometimes invest and take a much more longer-term lens because you often need patience in particular markets to grow for the markets to mature and for financial markets to deepen for others to feel comfortable coming, invest alongside you so that you know there's greater competition, there's greater disclosure standards, there's greater, you know, policy predictability.

So, you know, markets mature over time. You can't just do it overnight. So you do need a little bit of long-term lenses. You have that luxury, but I guess the point I'm trying to make is you're not just taking taxpayer money and recapitalizing.

I think that when Nicodono left, he had shown that uh BI had made around 5% returns, but the target was actually two, right? Well, I'd say that it depends how you look at uh returns. The key point is that we do make a financial return, but the way in which we look at return, as Nick would have explained, because Nick has been one of the leading thought leaders around impact investment, we assess, we look at return through those two lenders, that the impact that we deliver is one component of the return.

We don't only look at financial return. We look at the impact metrics through that productive, sustainable, the inclusive dimensions, so that in some instances that the return would be more modest, but we the financial return would be more modest, but the impact outcomes justify us making the investment. So we have that conceptual logic. Not every business generates, for example, a 2 or 2.

5% return, but we do have in the new strategy a 4.5% target return uh rate. I want to talk about how BII actually deploys capital. You've got three sub portfolios growth, catalyst, and kinetic.

You use a proprietary impact score with country need weights. I think it's unique. And so for someone who manages money professionally but who's never been inside a DFI, take me inside the machine. How does a deal go from pipeline down into the Belly of the beast to commitment.

Yeah. Sure. Let me start at the beginning. I think the first point to make is that we have a very rigorous due diligence process from deal screening, which is kind of pre-screening, where we assess whether the deal meets the impact criteria that is anticipated.

So the impact metrics are assessed both at the beginning of the deal as well as at the end of the deal, and then regular reporting thereafter. So that's the first point to make. Secondly, we our investment committee processes are not just driven by deal teams inside BII. We also have very experienced, typically people who have had long careers in the world of investment or investment management, who serve as external investment committee members.

So we have these weekly investment committee or IC meetings where we assess every single transaction. So it's not just the executives who sit here. We also have that external view that is applied. Thirdly, as I referenced earlier on, we cannot just invest in large companies which have already been de-risked because they already have got a track record, they already have an established financial sort of profile, they have audited financial statements, and it's easier.

They've already been de-risked, those companies. We need a pool of capital, which is really what kinetic and catalyst is all about, where we can take a little bit more risk. And Catalyst, I think, was started probably around 12 years ago or so, maybe 10 years ago, uh, kinetic a bit later. But we look at opportunities where we believe we can take more risk because the impact metrics justify us taking on more uh risk.

So we dissect every deal through that uh lens. It is a different proposition when you do growth equity or when you look at a growth company which is already an established company that needs typically either equity or debt in order for it to become a bigger enterprise. Because as I said early on, often there's market constraints, financial market limitations, why some companies don't grow. Companies have got a clear market need, they serve a particular product where there's a clear market need, but they're unable to access the necessary finance in that particular market.

So every deal, a rigorous process is undergone to assess which bucket it sits in. So historically, as I mentioned, uh BII has been known for doing a lot more equity. Today our book is roughly two-thirds equity as a consequence of that uh historical legacy, but we have now moved towards a more balanced sort of portfolio where you know we focus on third equity, a third debt, and a third through uh funds. We have, over the last few decades, most of the established funds in Africa, for example, were incubated by BII.

We were the foundational early-on investors in you know firms like Ilios and a whole range of other firms in Africa that were established, some of them in the 90s and some of them early 2000s. You will find traces of, it was called CDC then, Commonwealth Development Corporation. So our legacy is very deep throughout the financial world. And the strategy that you're still running out on.

The hurdle rate, I think, was 2%, your target rate, but you're running around 5% on a seven-year average. So someone listening right now might be thinking: if you're beating the hurdle by that much, are you really taking enough risk? Are you really being catalytic enough? Or are you crowding out private capital that might have shown up anyway?

The question about whether we're taking enough risk is always put to us. It's always put to us by our board, it's always put by our shareholder, because we have to, in order as a development finance institution to be impactful in executing our mandate, we have to take on more risk than a traditional financial, through the traditional financial uh lens. Just to be clear, we have not exceeded the target by uh 3%, which we have just outlined now over seven-year aggregate. The key point I want to uh make is that financial returns is one of the metrics against which we assess our investments.

We do take on more risk, especially, as I said, in markets that are considered almost uninvestable. We are recognized in terms of the size of the portfolio in least developed countries, and there's various public sources around this from various sort of bodies like ODI and so on. BII has a larger portfolio of investments in these more riskier markets. Now, there's return, and then there's the final impact of currency depreciation, which is an important variable in many of these economies.

As you know, there's often macroeconomic stability in these countries, inflation and a depreciation of the currencies, which you can have a perfectly healthy return. But the value of that, the quatchas in Zambia or the shillings in Tanzania, when it's converted back to dollars, which is what our balance sheet is in, and it's converted back to pounds, it erodes your profits. That is one of the biggest challenges facing development finance institutions. How to ensure that you can finance, you can do local currency financing, because many businesses providing financing in local currency is often a significant requirement to have sustainable economic development in these markets.

You've said guarantees are the most underrated, underutilized instrument in development finance. And you've launched a 100 million sterling mobilization facility to crowd in private capital. And you've partnered with Mercer to source proposals. Why has it been so difficult to unlock UK insurance and pension capital for the emerging markets?

And is this facility going to change things on the ground for that? Let me start with a 100 million pound facility. The Prime Minister, in around sort of uh September, October or so of 2024, made available a 100 million pounds to BII with a mandate for us to use on a concessionary basis that capital in order to crowd in private sector institutional investor capital. So we decided instead of us just deploying this capital as we see fit, we thought, let's explore this and let's go through a deeper exercise where we have a competition where we actually ask, you know, the insurance companies, the pension funds, if we were to give you 100 million, how could we multiply this 100 million?

How can we ensure that we can crowd in, you know, four or five times the 100 million or six times, you know, even eight times if we can. So we ran a competition and we got MERSA as an independent company to assess the proposals. One of the proposals that was successful is the one that I have just referred to earlier on when I spoke about Allianz. So that's one of the proposals that were successful in that competition.

So that 100 million was specifically used in a few transactions to crowd in. And as I just pointed out, we have successfully been able to mobilize the amount six times in that ACE fund that Allianz have established. The second question was: why is it so difficult to bring UK insurance and pension funds and asset managers into investments in Africa, for example? There are several reasons.

One of the first ones is that those markets are outside of the fiduciary scope of those companies. So prudential, you know, a UK insurer cannot invest in the DRC or in Rwanda or in Sierra Leone. It is not allowed. Even if the investment committees or the executive management they are desirous to do so, they cannot do so.

These markets are considered too risky. These markets are too underdeveloped. Some of them don't have credit ratings, some of them are rated sub-investment grade. A lot of pension funds have a mandate to only invest in investment grade markets.

There's a whole series of conditions that limit them. The second reason why these institutions don't typically invest is because these transactions that we announced, in the case of this Alliance one, it took us a long time to develop the structure. When a deal takes a very long time, you know, the private sector, you know, would tend to kind of lose interest because the transaction costs are just too high. They don't want to work for 12 months on a transaction.

So the transaction costs are too high. Often the deals are too bespoke. They would like something which is done that can be standardized and scaled. So there's a number of impediments also in the structures of the deal.

In short, we are trying to overcome a lot of those barriers with regards to bringing in private capital, which is why the new strategy is so clear and focused on us putting in place new measures to mobilize third-party capital. Let's talk about what this looks like on the ground. Climate is your number one strategic priority. You've committed over 300 million pounds in climate finance in Southeast Asia alone.

Can you walk me through a couple of examples of deals that are good examples of how BII invests differently? So let me just say that we have a target of 30% of all of our investments must qualify under the climate finance definition. Our new strategy that we announced yesterday, the target has been up to 40%. We have been uh trending closer to that 40% already in the last few years, meaning the teams have been able to exceed the targets that we had before.

And that number keeps on going up, but it is roughly in line with where most of the development finance institutions are, almost half of all commitments. So climate remains core and central to what BII does and our approach to development. I'll give you one example of a very successful climate deal we have done. In 2017, BII, this is on the back of Prime Minister Modi announcing in 2015 that by 2030, 15 years later, India wants to generate 500 gigawatts of clean power.

Now that's a big number, 500 gigawatts, right? So in 2017-2018, BII decided to create a new company. It's called Ayana, a platform company, which we started from scratch. We backed a management team, and we then brought in over time, we diluted and brought in other equity holders as well.

And then we mobilized $1.8 billion. And by 2025 last year, that company generated close to five gigawatts of power. One company that we started, seven years old.

We sold that business last year for $2.1 or $2.2 billion. Now we're able to reinvest the returns.

Just to be clear, we weren't the only shareholders. We do that in, and the example that I made of Ayana is a good case study of the kind of things we now want to replicate. So 600 million people in Africa don't have electricity. 600 million.

And BII is part of Mission 300, which is a partnership to connect 300 million people to electricity by 2030. There have been big promises about African electrification before. Why should anyone believe this one's going to be different? I think that it has been recognized for some time, as you know, that Africa is the epicenter of the energy poverty crisis.

I mean, of the all the people in the world who don't have electricity, 80% reside on the continent. If you don't have power, you can't live a dignified life, Scott, as you know. I mean, just think about it. You know, kids can't study, hospitals can't uh function, you know, women can't give birth.

It is a nightmare to not have uh power, right? I mean, dignity of life, power is so central to economic existence. So the idea of making this the central, or first amongst equals, a lot of things are important, but power, access to power is the single biggest objective. I believe that this campaign is real because it's public.

You can hold institutions to account. So M300 is about getting electricity to 300 million people by 2030. So you can count every year. Started a year and a bit ago.

So every year, we'll have to make X amount of progress. And it's been led by the World Bank, who has a president, Ajay Banga, who is probably one of the most consequential leaders of the development finance industry. He's committed himself to this target, together with the Africa Development Bank and all of the other DFIs we have brought into this idea that let's focus our activities to work in a more partnership fashion to reach this 300 million number. The number gets tracked.

We all contribute. Like we have a company called Gridworks that focuses on mini-grids, micro-grids, off-grid solutions, because not all the places are connected to centralized grids. So you need different business models in order to deal with this problem of electricity. Because you can generate now a huge amount of power, you know, 50 megawatts in a particular country.

But you have to get the power from the place where it is generated to the people or to the factories or to the communities. And so you need, there's no centralized transmission in many of these countries. So sometimes you will need off-grid, mini-grid solutions. So we are recognizing that each one of us can't do this alone.

So this is anchored around a new approach where it is anchored around partnerships. The World Bank is in the lead, and Ajibanga has committed his institution to drive and be the center of the initiative. And BII is very proud to be a partner in that endeavor. Before we got together today, you told me the story you most want to talk about is the launch of Growth Investment Partners in Zambia in uh last year actually, 2025.

Can you tell me that story and how that came together? Sure. One of the things that is really spectacular and unique about my job, uh Scott, is my ability to go into these markets and touch and feel. And that's where you really get a sense of the pulse of what we do.

I'm sitting in London now in Victoria, you know, near Westminster's Houses of Parliament and Big Ben and nearby. So give you a sense of where I am. When I travel, you know, in two days' time, I'm going to uh Nairobi, I visit our investee companies and I meet these entrepreneurs who create these incredible businesses that are both profitable and deliver all this impact. Last year, we launched a funding vehicle for small and medium-sized businesses.

Not only was that business launched, you know, with huge publicity, we had the president of the country there. He had half his cabinet there. It was done live on television. And this is only a, I mean, $70 million is not small in Quachas, but it's a relatively modest investment, right?

But the impact, that initiative will create thousands of jobs. When you hear and speak to the entrepreneurs who have been funded by these initiatives, we started one in Ghana already, as I mentioned, in 2023. We have already created through this funding platform a number of investments that have created thousands of jobs. You feel the pulse of what we uh do.

So for me, just driving around Lusaka and visiting businesses, the work of PII come to life. It's not, you know, it's why we wake up every day to come to work and do what we do, which is using our capital to improve lives on the continent and in Asia. I think this is a good moment to ask you about something you wrote in Project Syndicate. You argue that DFIs need an entrepreneurial mindset, that DFIs should stop waiting for deal flow and start creating it, start founding companies and taking majority stakes.

Now that inverts the classic additionality test. How do your shareholders feel about BII owning businesses? So BII historically, and this is one of the areas that I found most attractive as I was looking at potentially joining BII. BII has had a track record of starting businesses from scratch.

You know, it started a business in the power space, it's called Global Ec. And then eventually it brought in Norfund, the Norwegian Development Finance Institution, and there is a power company that we've identified power to the biggest continent in Africa. Instead of looking for entrepreneurs or independent power producers that we can support, we went in ourselves to create a power company. Similarly, we created GridWorks, which, as I said, does mini grids, microgrids, which is in the transmission space.

We created Agdevco, which supports small older farmers. Agriculture, small older farmers are often constrained by, do not have access to information. They don't have the technology to do climate diagnostics. And there's a lot of weather information that, for example, if you just had access to some basic technology where you can improve yields and you can have a sense of weather patterns if you have access to the right technology.

So having a company that is a platform company, you can aggregate some of those tools. So BII, Ayana is another example in the power sector. This concept that you need to think out of the box is embedded in BII. We shouldn't just look for entrepreneurs who are already doing something and then you support them.

If there's a market failure, we step in. We created MedAccess, for example, which 10 years ago, which is really responsible. What Med Access does is it brings governments together, it brings donors together, it brings pharmaceutical companies together, and it brokers transactions, which then provide a guarantee for manufacturers so that you de-risk, you bring that the pricing goes down because you're almost guaranteeing X amount of volume that is going to be procured. So you bring the pricing down.

All of these things is about, these were platform companies created years ago by BII. So what I said in that article is that this model of being entrepreneurial is embedded in what BII has done in the past. And we believe more in the DFI system should adopt that model because we are searching for answers. We don't have all the answers, Scott.

We are looking for new ways to be more effective. Leslie, let's zoom out to the big picture for a moment. The world needs $2.4 trillion a year flowing into emerging markets for the climate transition alone.

The U.S. has left the Paris Agreement. UK aid's been cut.

European DFIs are under pressure. And you've said you need to do more with less. If you could sit in front of every head of state and every institutional investor in the world for five minutes and could only make one argument for why the system needs to change, what would you tell them? One, my first starting point would be to for the policymakers in the room, is that we need a stable, predictable policy environment because that's the enabling uh framework that we need in order to make the kind of uh decisions that are required.

So that's for the policymakers. Secondly, I would make a compelling case to the institutional investors that the perception of risk is often not connected to reality. There's considerable data out there which shows that the default rates in these markets are significantly lower than what it is perceived to be. The third point I would make is that we can generate, and there's significant track record, we can generate reasonable strong commercial returns in investing in many of, for example, in power.

We can demonstrate from many projects that we have investing over a long period of time that can generate commercial returns over a sustained period. And then finally, DFIs are now ready, the development finance system as a whole are now ready to de-risk projects to bring that sort of return profile that are acceptable to the institutional uh investors. So, Leslie, I always wrap up with a few rapid-fired questions. So just give me whatever comes to your mind, or if nothing does, feel free to take a pass.

That's okay too. If you had to name the single most important challenge in the development finance space at this time, what would that be? I would say that the single biggest challenge facing the development finance system today is to change the culture. It's more the softer variables, it's the plumbing, it's the internal mechanisms that can make the institutions function better together to get rid of institutional silos, to function more in a systemic and cohesive way.

Leslie, what do you know now about development finance that you wish you knew when you were part of the founding management team at the New Development Bank back in 2015? For me, it would be about the importance of partnerships, the idea that uh individual institutions only have so much capacity to execute that you need to leverage off the complementarities and strengths of other institutions to deliver on your mandate, that each institution cannot. Deliver optimally on its own.

Can you describe an investment that you had some level of skepticism about? Or maybe you initially passed on it at the time you were investing, or maybe you you passed on and didn't invest. And in the end, that turned out to be far better than you expected. And what was the investing lesson learned from that experience?

Investments that have really sort of exceeded uh expectations are the ones which were made during a time when the enabling environment was just so much more favorable. In renewable energy, for example, even though the entrepreneurs were fresh in the in the industry with not a you know a long track record, because the sector and because of this great ambition for clean energy into the energy mix, our investments in renewable energy, both uh solar as well as battery storage, have been enormously successful.

If someone wants to get into development finance space, where or how would you advise them to start? I think firstly doing internships in these institutions and all of the institutions ourselves, FMO in Holland, NOFAN, DEG in Germany, Propaco in France, the World Bank, the IFC, all of these institutions, we take in young graduates as recruits. We also bring in people to work as interns, which gives them a flavor of the buzz and the excitement of development, where you have to apply the tools of finance in a very different context.

Not to maximize profits, because that is almost implicit, but to do so many more other things to bring this other development impact into the equation of finance. Leslie, you've been very generous with your time today, and I really enjoyed this conversation. You've got one of the most remarkable personal and professional stories that I've come across. So thanks for coming in and taking the time to tell me all of this.

Thank you for having me, Scott. It's been a pleasure talking to you. Now tell everyone what's the best way they can find out about BII and the great work that you guys are doing there. BII.

co.uk, of course, is our website, but uh you know, we are very active in you know 65 countries. Those of you who reside in Asia, we have you know offices in Mumbai, offices in Bangalore, we have offices in Singapore, you know, in Africa, in uh South Africa, in um Ghana, in Nigeria, in Egypt, and so on. Um, so BI is very active in all of these emerging uh markets, and we always welcome engagement with people who are interested in our work.

Right. And if someone wants to get in touch with you, what's the best way for people to contact you? Drop me an email. It's very straightforward, El Mastorp, which is just my initial and my surname, at bii.

co.uk and always welcome a dialogue and uh try to be active in LinkedIn and other social media so that while I have an opportunity to disseminate ideas and to listen to um to ideas. Perfect. So uh everyone go to bii.

co.uk to see what's going on at uh BII, and uh we'll put Leslie's website and uh his email both on the screen and show notes. Okay, Leslie, thanks again for coming in today. Pleasure.

Thank you so much for having me. All right, goodbye, everybody. You've been listening to SRI 360. If you enjoyed it, please hit the like button and subscribe to get future episodes.

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