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DFID's Economic Development Strategy inquiry launched

27 March 2018

The International Development Committee is holding an inquiry into the Department for International Development (DFID) Economic Development Strategy.

Summary

The International Development Committee is launching a short inquiry on DFID’s Economic Development Strategy, as published in January 2017. DFID has in recent years focused increasingly on promoting economic growth, both through its bilateral programmes and through its contributions to multilateral agencies such as the World Bank.

Scope of the inquiry

The International Development Committee invites written submission on all aspects of this topic, and is particularly interested in the following:

  • Is DFID now striking the right balance between its economic growth programming and the other areas of its development work?
  • Does the Economic Development Strategy strike the right balance between big business, SMEs, co-operatives and social enterprises?
  • Does the Economic Development Strategy strike the right balance between agriculture and other industries?
  • Is the Economic Development Strategy suitable for all the countries in which DFID operates, including those in which the investment climate is more hostile?
  • Are DFID’s chosen financing mechanisms (principally grants for bilateral programmes; some loans through multilaterals) appropriate for the economic environment of the recipient countries?
  • How effective are World Bank and IMF programmes in promoting economic development?
  • How effective is CDC, DFID’s wholly-owned development finance institution, and how have recent changes contributed to its effectiveness?

This short inquiry is intended to complement the work done by the Independent Commission for Aid Impact (ICAI), and by our own Sub-Committee on the Work of ICAI. ICAI produced a report on DFID’s approach to supporting inclusive growth in Africa in June 2017, on which the sub-Committee took evidence in February 2018. ICAI is expecting to produce a report on CDC in the autumn, which this inquiry is intended to inform.

Written Submissions

The deadline for written submissions is Tuesday 8 May 2018. The Committee values diversity and seeks to ensure this where possible. We encourage members of under-represented groups to submit written evidence.

The Committee considers requests for reasonable adjustments to its usual arrangements for taking evidence and publishing material, to enhance access. Please contact indcom@parliament.uk or telephone 0207 219 1223.

Written evidence submitted should:

Have a one page summary at the front
Be no longer than 3000 words in length
Have numbered paragraphs
Avoid the use of colour or expensive-to-print material

DFID's Economic Strategy

The strategy sets out how DFID proposes to support its partner countries to create a more business-friendly environment and mobilise domestic resources, and comprises the following elements:

  • Focusing on trade as an engine for poverty reduction;
  • Stimulating investment to spur economic growth in developing countries;
  • Supporting countries to mobilise their own domestic resources, improve their enabling environment for business and reduce reliance on aid;
  • Focusing on sectors that can unlock growth;
  • Making it easier for companies – including from the UK – to enter and invest in markets of the future;
  • Supporting our partner countries to harness new technologies for growth and look to emerging and innovating economic sectors;
  • Working with, and challenging, the City of London to become the ‘development finance hub of choice’;
  • Using country presence, knowledge and expertise to bring economic opportunity to some of the world’s most fragile states;
  • Building a sharper focus on nutrition, human development and skills for work into economic development programmes;
  • Focusing on the poorest and most marginalised people, the majority of whom work in the informal sector;
  • Establishing new links both in the UK and internationally with civil society organisations and other innovative partners.

Commonwealth Development Corporation

A central part of DFID’s economic development work is its wholly-owned development finance institution, CDC. CDC invests in private enterprises in developing countries, primarily by buying shares in companies which would otherwise find it difficult to attract investment. It aims to demonstrate the commercial viability of such investments and hence catalyse further financing.

CDC has recently undergone a period of change: its investment strategy now allows it to make direct investments as well as investing through intermediaries; its list of eligible countries for new investments now consists exclusively of African and South Asian countries (not Latin American countries); and the Commonwealth Development Corporation Act 2017 increased the maximum limit on its investments from £1.5bn to £6bn (with the potential to increase to £12bn without further primary legislation).

Further information

Image: Crown Copyright

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