CDC, created in 1948 formerly known as the Commonwealth Development Corporation, has operated since 2004 as a 'fund of funds' manager that invests in developing countries with the aim of promoting growth. It is owned by the UK's Department for International Development (DFID), and as such its investments are assessed as UK Official Development Assistance.
The Chair of the Committee, Malcolm Bruce MP said:
"There has been a lot of fuss about the high salaries at the Government’s development finance body, but CDC must do more to reduce poverty especially in the world’s poorest countries."
Over half of CDC’s portfolio is in four 'middle-income' countries - India, China, South Africa and Nigeria.
It should be working in poorer countries and with poor people such as farmers and small business owners and accept lower returns."
MPs also believe that CDC makes some investments that the private sector would have done anyway. The report suggests a radical solution by splitting CDC into two parts. Malcolm Bruce MP said:
"The 'fund of funds' model is profit-making and leverages much extra finance. Therefore we suggest it is retained in the arm we suggest calling 'CDC Funds'.
Some of the profits from this could fund a second arm called 'CDC Frontier' which would have a specific mandate to reduce poverty, and invest in pro-poor sectors including agriculture and infrastructure."
The Committee is pushing for greater oversight of CDC by DFID, so that there is greater alignment of poverty alleviation aims. It also said that current salaries are excessive at CDC, and that quality staff could be attracted for far lower salaries.
The Committee wants HM Treasury to look into the use of tax havens, and for CDC to adopt best practice on tax. Chair of the Committee, Malcolm Bruce MP, added:
"DFID should be a more active shareholder in future. It should call CDC to account for excessive remuneration, and its lack of transparency."