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 unnecessarilythe 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
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
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
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
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 financingin particular, the
provision of equity capital.
CDC Group plc