GOVERNMENT STATEMENTS ON CDC
Prime Minister, Tony Blair, October 1997:
"the Corporation has made a major contribution to promote economic development, particularly in the areas of greatest need, such as Sub-Saharan Africa and South Asia. But despite this success, I believe it is an under-utilised asset. It can do more. It has the capacity to play a much greater role in mobilising new private finance for poor countries. I can announce that we have decided to allow CDC to develop a new relationship with the private sector . . . turning a state corporation into a partnership between the public and private sectors. "
DFID White Paper Eliminating World Poverty; Making Globalisation Work for the Poor, December 2000:
210. Since 1948 the Commonwealth Development Corporation (CDC) has been the UK Government's main instrument for investing directly in commercial activities in poorer countries. In the 1997 White Paper we indicated our commitment to enlarge the resources at CDC's disposal by introducing private sector capital and turning CDC into a partnership between Government and the private sector, to encourage greater flows of beneficial investment into poorer countries.
211. The purpose of this partnership is to maximise the creation and long-term growth of viable business in developing countries (especially the poorer countries), to achieve attractive returns for shareholders in order to demonstrate that there are profitable investment opportunities in developing countries, and to implement social, environmental and ethical best practice.
212. Following the passage of the CDC Act 1999, CDC has been transformed into a public limited company. CDC is implementing a new code of business principles. CDC has also adopted a new investment policy. This requires 70 per cent of all investments to be in poor countries, and aims to make at least 50 per cent of investments in sub-Saharan Africa and south Asia. This is protected by the Government's golden share.
213. At the same time, CDC is shifting its portfolio towards the provision of equity in private business, and is positioning itself to attract private sector involvement. The Government will invite the private sector to take a majority shareholding in CDC while retaining a substantial minority holding."
HM Treasury paper: Public Private Partnerships: The Government's Approach,
The Government's objectives are to leverage CDC's position as an important investor in poor countries by drawing in additional private investment, while ensuring that CDC's unique investment and business principles are maintained. All CDC's investments are for the benefit of developing countries, with at least 70 per cent for the poorest of these countries. CDC also aims to ensure that at least 50 per cent of its investments are for the benefit of countries in sub-Saharan Africa and South Asia.
The PPP would meet these objectives by:
transferring the company into the private sector so as to benefit from private sector funding, drawing on the disciplines of the private sector to ensure the extra investment is used to maximum effect, and using CDC's exposure to private sector capital markets to help leverage in funds from third parties into CDC's target markets in the developing world;
protecting CDC's business principles and investment policy through the partnership arrangement; and
allowing taxpayers and staff to share in the long-term success of the business by retaining in public ownership a substantial minority stake and by plans to develop an employee partnership scheme.