The CDC Group plc (CDC) is the UK Government-owned development finance institution. It provides the investment capital to support the building of businesses throughout Africa and South Asia, to create jobs. The Commonwealth Development Corporation Act 1999 set a £1.5 billion limit to the overall amount of government financial assistance that can be provided. This limit was reached in 2015. The Bill would increase the limit to £6 billion. The Bill would also introduce a power to allow the Secretary of State to further increase the financial limit up to £12 billion by statutory instrument.
An expanded CDC is a key vehicle for the delivery of DfID’s economic development work. In 2015 the businesses that CDC invested in helped create over a million new direct and indirect jobs in the world’s poorest countries. It has a portfolio of £3.9 billion invested in over 1,200 businesses in over 70 countries.
CDC’s development impact is also amplified by the billions of pounds in local taxes generated by investee companies, which help support public services like health and education in developing countries. Over the past three years alone, these companies have generated over US$7 billion worth of local tax revenue.
The Secretary of State has made clear that her priority is to ensure that UK aid is used effectively and achieves value for money for UK taxpayers. DfID works closely with CDC to ensure it is at the forefront t of global standards including on transparency and development impact. The Bill does not reflect any change in policy about how UK aid is spent. Instead it focuses on only one routine issue – raising the limit on the level of financial support that can be provided to CDC.