Doing more harm than good: Why CDC must reform for people and planet
This report details the failures of the government’s development bank, CDC, to invest in a just and responsible way. Despite a series of reforms and promises to change, CDC continues to invest heavily in unaccountable private equity funds around the world, giving money to projects with dubious development impact to make a high rate of return.
This is not development as we know it. CDC has continually failed to show how its investments are genuinely tackling poverty around the world. What’s more, our report shows that the aid money being channeled through CDC is actually exacerbating inequalities, damaging the environment and undermining human rights.
Resistant to change?
A decade ago, CDC was an institution that seemed to be immersed in a new scandal every other month. It attracted sustained criticism that its investments had questionable impacts for poor communities, were more focused on securing high financial returns than dealing with poverty, were opaque, made extensive use of tax havens, and that its executive salaries were extraordinarily high for an organisation with a supposed development mandate. CDC oversaw a portfolio of dubious investments, ranging from luxury hotels and shopping centres to gated communities and private hospitals.
In 2011 a package of reforms were introduced to transform CDC and, in 2017, a law was passed lifting the limit of aid money the bank could receive from £1.5bn to £6bn, with an option for this to increase further to £12bn. In light of its growing importance, nine years on from the Coalition government’s reforms, we have taken another look at CDC. What we have found is that the reforms have made little difference. In this report, we find that CDC remains a deeply flawed organisation that is often doing more harm than good.
However, CDC looks set to become more important to UK aid policy in the coming years.
CDC has been at the cutting edge of the increasingly financialised approach to development that we have witnessed in the UK in the past decade. With the proposed merger of DfID with the Foreign Office now looking set to go ahead, CDC will take an even more important role in UK development strategy. That is why we must take a stand now – against CDC’s financialised, “market knows best” approach to development – before it is too late.