CDC

CDC is the UK's own bilateral development finance institution (DFI) and is owned by DFID. CDC's mission is to encourage growth in sustainable businesses, helping raise living standards in developing countries.

To do this, CDC provides much needed capital to invest in promising businesses in developing countries where a lack of capital is holding back growth.

Crucially, CDC operates as a commercial investor, expecting an appropriate return from its investments. This encourages other private and public investors to put their capital to work alongside CDC in poorer countries and ensures that the businesses CDC invests in are sustainable.

It is a measure of CDC's success that it has received no fresh capital from government since 1995, and has returned a profit (which is reinvested) of £1.8 billion since 2004.

How the CDC works

Since 2004, CDC has mainly operated as a fund-of-funds. This means that CDC places capital with expert fund managers who then use their local knowledge and expertise to find promising businesses in which to invest. On occasions, CDC will invest directly in a business alongside a fund. The fund managers then work with the investee companies to grow the businesses and improve environmental, social and governance standards.

CDC is a public limited company (plc) with its own board. DFID sets CDC's strategic framework and development targets, but does not interfere in CDC's operational decision taking.

Harnessing the private sector

Our approach to working with the private sector in development seeks to harness the expertise and resources of private enterprise. This will boost investment and provide better public services in the world's poorest countries and create jobs and income opportunities for more than ten million people.

At the heart of this approach is a reformed and revitalised CDC which can help lead our efforts as the most pro-poor investor in development.

CDC will:

• Become a more pioneering investor, demonstrating the power of enterprise and private capital to reduce poverty in the poorest places in the world
• Be more focused on the poor than any other comparable Development Finance Institution. CDC's capital will be focused only on sub-Saharan African and South Asia, where 70% of the world's poor live
• Become bolder in its approach to innovation and risk: being more creative and accepting higher financial risks where these are justified by greater development benefits
• Use debt, guarantees and direct equity investment in addition to externally managed private equity investment
• Have a new performance framework, focused on development impact rather than on CDC’s corporate profitability alone and be better able to measure and demonstrate the development impact of its investments
• Be more transparent than before. CDC will have a Disclosure and Access to Information Policy and will aim to publish more data about its activities on its website.

More information about the development impact of CDC investments can be found in The CDC Annual Review 2010.