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, www.bis.gov.uk 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
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