ANNEX A
1. CDC is the main instrument under the UK's
bilateral aid programme for directly mobilising investment in
developing countries. CDC provides loans, risk capital and, in
some cases, management to encourage the development of sustainable
businesses in developing economies. CDC now has investments totalling
£1.6 billion in 400 businesses and 54 countries. It is financed
by interest free Government loans (£755 million) and reserves
(£564 million).
2. CDC's financial performance over the last
five years is summarised in the table below. The 1997 results
have been significantly impacted by the South East Asia crisis
and the requirement to take provisions against the portfolio in
the region.
| 1994 | 1995
| 1996 | 1997 |
| £ million | £ million
| £ million | £ million
|
| Gross investments | 1,373
| 1,487 | 1,526 | 1,562
|
| New investments | 240 | 276
| 305 | 284 |
| Post-tax Surplus | 63 | 75
| 63 | 64 |
| Internally-generated funds | 222
| 236 | 313 | 254
|
| Return on capital employed1 |
8.7 | 8.1 | 8.3
| 7.6 |
| Aid programme loans (net) | 122
| 202 | (-5) |
(-10) |
| UK corporate tax paid | 6.2
| 15.3 | 17.3 | 30.9
|
1 Three year average—as per target agreed with HMG.
2 Net of interest.
3. KEY STATISTICS
— £1.6 billion portfolio;
— 29 per cent in Sub-Saharan Africa, 28 per cent
in South Asia;
— 25 per cent in equity investments;
— 27 per cent in agri-business, 24 per cent in
infrastructure;
— 33 managed businesses employing over 40,000 people
in 16 countries;
— 15 managed private equity funds; committed funds
of US$ 357 million.
4. With effect from April 1994 CDC was placed on a "nil
net funding regime" whereby interest payments were waived
and principal payments limited to the level of principal repayments
due from CDC to the (then) ODA. This was later changed such that
CDC was required to make net repayments of between £5 million
and £10 million per year. However for the fiscal year 1998-99
DFID has indicated that nil net funding will be re-established.
In addition ODA/DFID have supported CDC's borrowing from EIB under
Lome IV (£27 million) to finance loans to small and medium
sized enterprises in ACP countries.
5. CDC's operations are focused on poor countries. In 1997
85 per cent of approvals were in countries which fall within the
World Bank's low income and middle income categories.
6. CDC is unique among similar institutions in having a portfolio
of managed businesses. In these enterprises CDC has generally
played the leading role as project promoter and developer and
is normally the major shareholder. It manages companies involved
in palm oil, sugar, forestry, food and beverages, electricity
and cement. It also manages private equity funds and financial
intermediaries, providing vehicles for the private sector to invest
alongside CDC.
Commonwealth Development Corporation
26 May 1998
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