The future of CDC - International Development Committee Contents

1  Introduction

1.  CDC Group plc (formerly the Commonwealth Development Corporation) is a public limited company wholly owned by the UK Government. It is the UK's Development Finance Institution (DFI) and aims to help fill a shortage of finance for investment that is a major constraint to economic growth and poverty reduction. CDC is a major element of the support provided by the Department for International Development (DFID) for the private sector in developing countries. CDC's objective is to invest in the creation and growth of viable private businesses in poorer developing countries to contribute to economic growth for the benefit of the poor; and to mobilise private investment in these markets both directly and by demonstrating profitable investments as part of the mission of the DFID to fight world poverty.[1]

2.  CDC has been self-financing since 1995 and has had some significant successes. Since 2004, CDC has generated substantial growth in its assets from £1.2 billion to £2.7 billion.[2] However, concerns have been growing regarding CDC's development impact, its 'fund of funds' model[3] and operational practices. These mounting concerns led the Secretary of State for International Development, the Rt. Hon Andrew Mitchell MP, to announce a review of CDC on 12 October 2010, "in order radically to increase its development impact." He stated that he wanted CDC to be "more pro-poor focused than any other DFI, doing the hardest things in the hardest places."[4]

3.  Following the Secretary of State's announcement of a review of CDC, we decided to carry out an inquiry into the future of CDC. We aimed to consider CDC's development impact and how this could be maximised in the future. We also wanted to evaluate the implications of potential reforms. In parallel to our inquiry, DFID has held a consultation regarding the future of CDC, prior to the publication of CDC's new business plan. This inquiry follows on from our predecessor Committee's report on Private Sector Development and the Public Accounts Committee's report on DFID's oversight of CDC.[5]

4.  We received 27 written submissions of evidence from a variety of sources ranging from non-governmental organisations to CDC's fund managers. We have also received a briefing from the National Audit Office (NAO). We held three evidence sessions, during December 2010 and January 2011, with: the Secretary of State for International Development, CDC executives, academics, fund managers, non-governmental organisations and journalists. We are grateful to all those who provided oral and written evidence for their valuable contributions. We would like to thank our specialist adviser Dr Dirk Willem te Velde of the Overseas Development Institute.

1   CDC, Department for Business, Innovation and Skills Online, Back

2   Ev 65 Back

3   For description see Chapter 2 Back

4   HC Deb, 12 October 2010, col14-15WS Back

5   International Development Committee, Fourth Report of Session 2005-06, Private Sector Development, HC 921-I and Public Accounts Committee, Eighteenth Report of Session 2008-09, Investing for Development: the Department for International Development's oversight of CDC Group plc, HC 94 Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2011
Prepared 3 March 2011