Govt failing to keep tabs on development company
A government-owned company tasked with investing in developing countries have been “selective” in proving their achievements.
A National Audit Office report on the government’s own CDC Group company expressed concerns about how successful it has been tackling global poverty.
Shadow international development secretary Andrew Mitchell said: “Today’s sobering report reveals that ministers are failing to keep a close eye on CDC.
“It is deeply worrying that the Department for International Development (DfID) is failing to demand real evidence of the impact of CDC in reducing poverty, and that it failed to keep tabs on executive pay.”
The company has been producing impressive financial results with an average annual growth rate of 24 per cent giving it assets of £2.7 billion in mid-2008.
But there are worries about the results the company’s success has achieved.
DfID has not received adequate information from the company on its impact in poor countries or its progress implementing ethical business practises, the report argues.
Seventy per cent of CDC’s portfolio is targeted on poor countries and since 2004 it has increased its investment in China, Nigeria, India and South Africa, which now account for two thirds of its portfolio.
These countries contain most of the world’s poor people, but they also attract investment from other sources. DfID has not been shown enough evidence of how far CDC’s investments add to total private investment.
Similarly, the company has been selective about details of its ethical practise – such as environmental impact of health and safety compliance, “saying nothing about levels of compliance with them”.
Those evaluations that had been conducted “lacked depth”.
There is also evidence DfID has not sought proper evidence of the level of executive pay in the company.
Tim Burr, head of the NAO, said: “By achieving strong financial performance with a portfolio weighted towards poor countries, CDC will have made a credible contribution to economic development in those countries.
“But the scale of that contribution, or the direct effect on poverty reduction for poor people, is harder to demonstrate.”
The CDC was established as the Colonial Development Corporation in 1948 and tasked with investing, and encouraging private sector investment, in some of the world’s poorest countries.
It became a public private partnership in 1997.
It has committed to investment totalling £1.7 billion over the next few years, although it has previously over-estimated the rate at which cash would be needed by its fund managers.
