Future of CDC

Charles Walker Excerpts

Thursday 14th July 2011 Westminster Hall

[Mr Gyimah]

I thank the hon. Gentleman for his point. I totally agree that the British public need transparency about how the organisation is run. However, the success or failure of the fund’s operations also depends on such details.

I want the Secretary of State to clarify the points that I have raised. Let me say once again what a pleasure it is to serve under your chairmanship, Mr Walker.

[Mr Charles Walker (in the Chair)]

I call Miss Ali. [Interruption.] Sorry, Mr Lefroy—it would be helpful if Members could stand so that I can see that they want to speak.

[Jeremy Lefroy (Stafford) (Con)]

I was standing.

[Mr Charles Walker (in the Chair)]

You were? Very funny.

--- Later in debate ---

[Rushanara Ali]

CDC has an important opportunity to lead by example, and we must require it to set that example and to implement the focus on human rights, given the interest in human rights in those countries. I very much accept the hon. Gentleman’s point.

I also want to mention what the hon. Member for Brighton, Pavilion said about CDC acting as a fund of funds as well as a poverty alleviator. It is important to consider compatibility. There are many examples of incompatibility and, as she rightly stated, some bring into sharp focus the tensions between the two objectives. The two are welcome, but greater monitoring is needed to ensure that the objectives do not contradict each other.

The hon. Member for East Surrey (Mr Gyimah) discussed returns on investment. His insights included recognising the importance of creating the appropriate investment horizons and environments. He raised two key issues on skills: first, on skills and the knowledge base, he pointed out the importance of ensuring that that capacity and technical expertise is available as the investment takes place in developing countries; and, secondly, he indicated the importance of sector focus, in particular in agriculture. Several hon. Members mentioned accountability and transparency.

I will wrap up, because I am conscious that I do not have a huge amount of time.

[Mr Charles Walker (in the Chair)]

You have plenty of time.

[Rushanara Ali]

I have lots of time, which is good.

In 2010, CDC’s capital was invested in about 143 funds, supporting 930 individual companies worldwide. Companies benefiting from CDC investment employ almost 1 million people in 70 different countries. As the International Development Committee report acknowledges, CDC has contributed to employment and the tax base in developing countries, which are critical to development and economic growth. That is, however, only part of CDC’s contribution, and other notable examples of success can be found in developing infrastructure and technology and in linking those countries to the international economy. So CDC has a vital role to play in the future in infrastructure development and in poverty alleviation, although a number of issues were raised by the Select Committee report as well as by those who submitted evidence and who have campaigned for continued reform of CDC.

I want to ask the Secretary of State about ensuring the appropriate monitoring of impact, of what happens to the investment and of how development objectives are met. I also want to reiterate the points made in the debate about investments being ethical, fulfilling human rights objectives and not contradicting our overall national aims to ensure that our investments are appropriately geared towards economic development as well as poverty alleviation.

On smaller investments and support to SMEs, as hon. Members have mentioned, we must be vigilant in ensuring that CDC does not merely replicate what other investors do but provides added value. It should give support and investment to smaller investors or those from diaspora communities. As was acknowledged, such communities provide more investment in developing countries—their countries of origin—than all development aid put together. CDC has a great opportunity to tap into that resource and channel the aid and investment going into those countries to help fulfil economic development and poverty alleviation objectives.

I will cite one recent example from my constituency. A small group of UK Bangladeshi entrepreneurs developed a cargo business with their own investment—only a small amount of money—because they could not get access to resources elsewhere, and it is now a multi-million pound business. That is a small but significant example, because those entrepreneurs did not have access to investment from organisations such as CDC and because it illustrates the profound interest among diaspora communities in investing in their countries of origin to develop the economies of the cities that they come from. Many of their ideas are incredibly innovative, as in my example, and have the capacity to promote investment and connections between the two countries.