CDC must control costs as it faces new investment challenges

Tuesday 25 Apr 2017 @ 11:43
Parliamentary Committees and Public Enquiries

The Public Accounts Committee report on the CDC, the Department for International Development's principal mechanism for encouraging private sector investment in developing countries.

The Department and CDC have addressed a number of the significant concerns raised by the previous Committee, such as the issue of excessive remuneration within CDC, and by implementing a new strategy with greater focus on investing in the poorest countries which is better aligned with the Department’s priorities. CDC has also met its objectives for the financial return and the expected development performance of its investments agreed with the Department. However, issues remain: for example, neither the Department nor CDC can set out a coherent picture of CDC’s development impact, the Department has been slow to evaluate CDC’s performance, and the relationship between the Department and CDC lacks clarity.

CDC is on the cusp of significant changes to how and where it invests in developing countries. It is embarking on a taxpayer-funded expansion of its business and needs to appoint a new chief executive. Not only is it moving more to direct investment but government has the power to increase funding to a total of £12 billion. This raises concerns about portfolio management, the measurement of success, and the relationship between the Department and investment decisions. It also faces the challenge of identifying a suitable pipeline of projects in which to invest and building capacity to make investments. At the same time it needs to make sure it controls costs.

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