The British aid money is used to put together multi-million pound business deals in Africa.

A recent deal, signed last year, helped finance the purchase of 10 Boeing 787 Dreamliners – the world’s most advanced passenger plane – by Ethiopian Airlines, owned by the Ethiopian government.

The EAIF is managed by the Frontier Markets Fund Managers (FMFM), which receives about £4 million a year for its services from the money it receives from the Department for International Development (DfID) and other governments.

FMFM’s staff are based at Standard Bank in London, which receives 70 per cent of the profits the fund earns.

But the company is registered in Mauritius, where foreign companies receive an 80 per cent discount on corporation tax, meaning any profits earned by companies linked to the fund pay tax at a rate of 3 per cent.

This compares with a UK rate of 23 per cent.

Critics said yesterday that DfID appeared to be using aid money to pay City bankers and fund corporate deals rather than help the world’s poor.

“International aid should be used to help the world’s poorest, not invest in international airlines,” said Matthew Sinclair, chief executive of the TaxPayers’ Alliance.

John Hilary, executive director of the anti-poverty charity War on Want, said: “DfID is legally obliged to use the aid budget to combat poverty around the world. Instead, it is now channelling hundreds of millions of pounds of taxpayers’ money to private investment funds run out of tax havens.”

He said using Mauritius as a base allowed companies funded by DfID to escape public scrutiny.

“The British public has a right to know why aid money is being used to prop up wealthy corporate enterprises rather than fighting poverty as it is supposed to do.”

EAIF was set up in 2002 by the then Labour government and received £68.5 million over the next eight years. The Coalition has committed £100 million of further funding until 2015.

FMFM also runs another investment fund called GuarantCo, which has received £64 million from DfID in the past decade.

The EAIF receives its money through the Private Infrastructure Development Group (PIDG), also registered in Mauritius. PIDG was set up by DfID with funding from the Swiss, Dutch and Swedish governments.

EAIF provided a £20 million bridging loan for the Ethiopian deal.

Nick Rouse, FMFM’s managing director, said the fund – because of its backing from DfID and other governments – could secure financing for schemes that commercial banks would not lend to.

Mauritius was used to register the varuious funds because it had a developed regulatory system able to handle large sums of money from a number of donor countries, he said.

Mr Rouse said the financing of the Dreamliners allowed Ethiopian Airlines to compete with rivals such as Emirates. “They couldn’t get the money anywhere else,” he added.

A DfID spokesman said: “Providing commercial loans when other finance is simply not available helps African economies to flourish and end their reliance on development assistance. This is an excellent example of how investing in local companies and creating jobs can lay the foundations for future growth.”