The future of CDC

In this report the International Development Committee finds that the Government development fund - CDC - is not doing enough to alleviate poverty, does not focus on the sectors most in need and is paying its bosses too much. CDC, created in 1948 and formerly known as the Commonwealth Development Corporation, has operated since 2004 as a 'fund of funds' manager that invests in developing countries with the aim of promoting growth. It is owned by the UK's Department for International Development (DFID. But over half of CDC's portfolio is in four 'middle-income' countries - India, China, South Africa and Nigeria. It should be working in poorer countries and with poor people such as farmers and small business owners and accept lower returns. The report suggests a radical solution by splitting CDC into two parts. "The 'fund of funds' model is profit-making and leverages much extra finance and should be retained (suggested name 'CD Funds'). Some of the profits from this could fund a second arm called 'CDC Frontier' which would have a specific mandate to reduce poverty, and invest in pro-poor sectors including agriculture and infrastructure. There should also be greater oversight of CDC by DFID, so that there is greater alignment of poverty alleviation aims. Current salaries are excessive at CDC, and quality staff could be attracted for far lower salaries. The Committee wants HM Treasury to look into the use of tax havens, and for CDC to adopt best practice on tax.