DfID’s private equity arm under fire from the National Audit Office and development groups

DfID’s private equity arm under fire from the National Audit Office and development groups

Date: 28 November 2016

The head of the National Audit Office (NAO) today said that it is a “significant challenge” for DFID’s private equity arm CDC “to demonstrate its ultimate objective of creating and making a lasting difference to people’s lives in some of the world’s poorest places,” as a new report was launched.

In 2008 the last report from the NAO on CDC “was positive about CDC’s performance in securing a good return on public funds, but raised concerns about excessive remuneration packages and the Department’s ability to demonstrate how  CDC investments contributed to poverty reduction.” (see page 3).

The NAO report has come out the day before a bill is due to have its second reading in parliament that would allow the government to massively increase the amount of money it can channel through CDC. Campaigners are questioning how the government can justify massively increasing the amount of money to be channelled through CDC if after eight years the NAO is still questioning CDC’s fundamental development objectives.

Aisha Dodwell, an aid campaigner for pressure group Global Justice Now said:

“This is the latest in a series of studies that has highlighted the fact that while CDC might be good at returning on investments, its falling a long way short of meeting basic development goals like raising people out of poverty or providing access to basic public services like education and healthcare. While the report from the National Audit Office identifies some improvements in CDC’s governance, it raises serious questions about its relation to the  fundamental objective of aid – lifting people out of poverty in some of the poorest regions of the world.  

“This criticism was made back in 2008 by the National Audit Office, and then in 2011 by the Commons International Development Committee but CDC continued to pour millions of pounds of UK aid money into a string of luxury project developments around the world. This ‘trickle down’ approach to development has been condemned by experts as based on dangerously outdated neoliberal economics that only benefits the wealthiest in host countries. In 2014 a study revealed that an incredible two thirds of the investments being made through CDC were being channelled through secretive tax havens.

“It’s incredibly irresponsible for the government to be trying to massively ramp up the funding stream through CDC without longstanding criticisms of its flawed approach to development being addressed. This push to amplify the billions of pounds going through CDC seems to be partly based on the government’s ideological drive to channel aid through corporations and the private sector, but also a means for DfID to wash its hands of the many controversies associated with development projects.

“We should be proud of the fact that the UK has enshrined a small proportion of GDP to be allocated towards overseas aid spending, but by trying to increase the amount of that money that is being funded through CDC, the government is fundamentally perverting the intention of aid to alleviate the conditions of structural poverty and inequality and instead transforming it into a public subsidy for corporations around the world.”