For the first time in 20 years, the UK government will invest over $1.1bn (£735m) over 3 years in its development finance institution, CDC to target promising businesses in Africa and South Asia.

Justine Greening, International Development Secretary, said: “Our investment will allow CDC to target more support to job-creating sectors, such as agribusiness, manufacturing, infrastructure, financial institutions, health, education and construction.”

Greening said the investment will stimulate growth in some of the world’s poorest countries and end dependency on aid.

“Too many developing countries find their job creation and economic growth is held back because their businesses cannot find the capital they need to grow and expand,” he said.

There remains a considerable shortfall of investment capital across the developing world, particularly in countries and sectors where there are higher levels of risk.

Estimates for total investment needs in developing countries range from $3.28trn to $4.27trn (£2.1trn to £2.8trn) every year, according to the UK Department for International Development (DFID).

The changes the government made to CDC in the last parliament have ensured CDC’s support is now targeted to countries and investments where it is needed most and where it can have the greatest impact.

Some of current CDC investments in Africa include an agribusiness that operates across more than 30 African countries, such as South Sudan and Guinea-Bissau, to connect hundreds of thousands of smallholder farmers with consumers; and Cameroon’s electricity supplier which has ambitious expansion plans to deliver an increase in power in a country where nearly 50% of households don’t have access to electricity.

CDC will target job-creating sectors in areas where the shortage of capital is particularly acute and the investment climate is challenging.

Diana Noble, CDC’s CEO, said: “Over the last 70 years we have backed many thousands of successful businesses and helped to change millions of lives for the better. I am excited that this extra capital will allow us to do more and live up to our proud history.”

“A job is the best route out of poverty, and we know from experience that people in developing countries have the vision and drive to build the businesses to provide these jobs. What’s lacking is long-term, supportive investors with experience and this is where CDC can make a difference,“ she said.

The capital invested by DFID will be returned over time and will be reinvested by CDC in other businesses.

CDC committed approximately $1.56bn (£1bn) in 2013-14 and anticipates demand for its capital to be over $999m (£640m) in 2015.

Since 1948, the UK Government has invested a net $224.75m (£144m) into CDC, which has now been turned into net assets of $5.31bn (£3.4bn).