International Development Secretary Priti Patel presents Bill to Parliament to ensure UK can continue to create more jobs and boost economic growth in the poorest countries.
The Commonwealth Development Corporation Bill is an essential step that will ensure CDC – the UK’s and world’s oldest Development Finance Institution - can continue to make pioneering investments in the poorest and most fragile places in order to open up the hardest to reach markets, and empower the poorest to work and trade their way out of poverty.
The Bill will raise the limit on the level of financial support that can be provided to CDC over the coming years. The current capital limit was set 17 years ago and has now been reached. Raising the cap will enable the life-changing work of CDC to continue and allow it to build on its current success to create more jobs and boost economic growth in the poorest countries in Africa and South Asia so that people can lift themselves out of poverty.
International Development Secretary Priti Patel said:
“No country can defeat poverty and leave aid dependency behind without the prospect of a functioning economy, sustainable economic growth, jobs, trade and investment.
“There are currently only a few investors in the world with the skills and risk appetite to create jobs and opportunities in the hardest to reach places. CDC is one of these investors and having modernised and transformed its approach in recent years it is a great British success story.
“Development investments via CDC complement our other work, and allow us to fight the scourge of poverty on all fronts. And this Bill is fundamentally about people: improving life prospects by helping individuals find work and earn money so they can feed their families and send their children to school; empowering girls and women to determine their own future; and giving people hope so they don’t feel pressures to migrate or turn to extremism.
“Let’s be clear: the Bill does not commit us to increasing financial support to CDC. We will only invest in CDC when this will continue to achieve value for money, have a clear development impact for the poorest and deliver in the UK’s national interests.”
CDC, which is wholly owned by the UK Government, uses its expertise to support over 1200 businesses in over 70 developing countries. Since 2012 all of CDC’s investments have been focused in developing countries in Africa and Asia with nearly half of all investments being made in fragile and conflict affected states.
CDC delivers significant development impact while at the same time generating a financial return, every penny of which is re-invested. In 2015, the businesses that CDC invested in helped to create over a million new jobs, and over the past three years they have generated over $7 billion worth of local tax revenue, helping support improvements to public services like health and education.
Raising the limit from £1.5 billion to £6 billion will mean CDC can continue to grow and create jobs by opening up the hardest to reach markets and giving other investors the assurance and confidence to invest in the poorest countries.
The additional financing needed to achieve the UN Global Goals by 2030 is estimated at $2.5 trillion every year - current investment levels are less than half of that. CDC is pivotal in demonstrating that you can invest in the hardest places and do so responsibly, encouraging more much-needed investment.
Raising the cap that CDC has now reached does not guarantee a capital increase. Any new capital to CDC will require a full and detailed business case that will show how further investment will continue to achieve value for money, clear development impact and deliver in the UK’s national interests.