Select Committee on International Development Appendices to the Minutes of Evidence


Memorandum submitted by CDC Group plc

  As requested, please find our thoughts on the recently published White Paper—"Eliminating World Poverty: Making Globalisation Work for the Poor".

  We tended to focus on Chapter One (The Challenge of Globalisation) and Chapter Four (Harnessing Private Finance) as they seemed more closely aligned with our business.


  The Paper is very affirmative and realistic about globalisation. Globalisation is here to stay and should be seen as a positive process.

  Interestingly, the Paper criticises those who impede such progress unnecessarily—the implication is that certain elements of society (some NGOs for example) should not argue against world trade just for the sake of it. World trade is here to stay and we need to operate constructively within those parameters.

  The Paper discusses the role of the Western governments in facilitating markets. Not only does it recognise the importance of the big multinational businesses, but when discussing healthcare, it mentions the importance of adhering to intellectual property rights etc. . . .

  The Paper is quite financially-oriented with reference to the importance of minimising risk, creating appropriate tax regimes and supporting the entry of the multinationals. The importance of developing free markets is clearly recognised.

  The Paper does not go far enough in addressing the authoritarian and paternalistic approach to assistance from such multilateral institutions as the IMF, where it is fair to say that in terms of restructuring, stabilisation and financial assistance, one size does not necessarily fit all. That is to say that a more flexible approach towards funding should be called for.

  From a CDC perspective, the Paper could have spent more time discussing the attractions of equity financing and in particular, could have expanded on the role of CDC within this environment. The provision of equity allows for greater financial leverage and is a more direct, permanent form of financing.

  Debt financing is now more readily available in these developing economies and comes at a greater cost to the underlying businesses/economies.

  Rather than being mentioned towards the end of the chapter on "Harnessing Private Finance", it would have been interesting to explore how CDC is shaping itself to be a more effective financier in these emerging markets.

  The rest of the Paper covers a lot of familiar ground.

  In conclusion, the Paper is not simply a development wish-list, but is framed within a realistic and commercial context. However, we would like to see more discussion on the role and benefits of private sector financing—in particular, the provision of equity capital.

CDC Group plc
January 2001

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