Future of CDC

Debate between Rushanara Ali and Pauline Latham

Thursday 14th July 2011 Westminster Hall

[Rushanara Ali]

I accept that point. If CDC wants to be a trailblazer and to encourage investment by others, there must be some way of framing its activities to enable some appropriate risks to be taken. That might involve a special innovation fund to identify potential investments, which could recognise that failure rates are greater with particular kinds of investments such as smaller businesses.

Although innovation journeys in business, technology and elsewhere may attract a large amount of investment, there are often only a small but significant number of successes, but they may generate new sectors. There must be discussion about the level of risk that CDC can take, and it would be helpful if the Secretary of State were to reflect on some of those points and tell us whether particular efforts can be made to recognise that, for example, diaspora and smaller communities have a big role to play in those countries, but that there must be a way of enabling them to invest. The pool of investors is often smaller. Is there a way of pooling investments or collaborating to ensure that more targeted investment from those groups goes to developing countries? Those matters should be explored.

[Pauline Latham]

Is it not true that diaspora communities invest in and send money back to the communities that they came from, because they know those communities? Trying to get another organisation to co-ordinate how they spend their money might seem to them to be telling them how to spend that money. Would it not be better to leave them to form their own associations to help their own communities, because they often know many people in the area? They are better left to get on with funding in areas that they know and whose needs they know, instead of giving it to someone else to invest. If we are not careful, we might stop them investing at all.

[Rushanara Ali]

Diaspora communities may be interested in developing businesses that connect between, for example, the UK and Pakistan. They may need advice, support and technical assistance, and they sometimes need access to investment funds to start up a business. There may be areas where they can do that themselves, but my essential point is that opportunities are being missed. We do not want to duplicate or squeeze out direct investments to help families, but second and third-generation British citizens with links to their countries of origin are increasingly interested in investment in and support for business rather than direct support to family members. It is important that CDC looks at opportunities for such investment, which is different from the traditional support to families and friends because it involves putting money into businesses in their home country or city, or the area where they come from.

CDC’s business plan, which follows the various reports, including that of the International Development Committee and the Government response, is welcome, as is the general thrust of its focus on economic development, including its fund-to-fund focus, and on poverty alleviation, but we must look closely at where CDC goes next and how it implements the overall vision that it has set for itself, recognising the many issues that have been raised. Those issues include internal practices and how CDC is perceived by the public. Hon. Members have acknowledged that there are still concerns and reputational issues about how CDC is perceived to be using resources, remuneration packages, pay and so on, and how its money is spent. The public deserve the best value for money, as well as transparency and accountability, so that our investments create a genuine space for others to follow. In areas where CDC invests, it creates new opportunities for others to follow, and it acts as a trailblazer and a catalyst. That is the ethos that we all want CDC to achieve. We all want it to succeed.

I again commend the work of the International Development Committee and look forward to seeing CDC thrive and succeed in increasing investment in developing countries, in helping to reduce inequality through economic growth and in making its contribution to reducing poverty.