HL Deb 12 June 2002 vol 636 cc255-7

2.44 p.m.

Baroness Rawlings

asked Her Majesty's Government:

How far their policy of eliminating poverty dictates their Commonwealth Development Corporation investments.

Baroness Crawley

My Lords, all investments by CDC must be, in the opinion of the directors, for the benefit of a developing country. The investment policy requires 70 per cent of CDC's investments to be for the benefit of poorer countries. Individual investments must of course be approved by the board, not by the Government.

Baroness Rawlings

My Lords, I thank the Minister for that. This is, I believe, the noble Baroness's first time at the Dispatch Box.

Noble Lords

Hear, hear!

Baroness Rawlings

I therefore congratulate a former colleague from the European Parliament and wish her the best of luck in her new post.

Does the Minister agree that one manner in which CDC Capital Partners might improve its capacity to reduce poverty would be to have greater interface between CDC Capital Partners and DfID officials in the countries in which they work? What is being done to improve the interaction between CDC and DfID employees on the ground?

Baroness Crawley

My Lords, I thank the noble Baroness. It is good to have an opportunity to acknowledge her work and commitment in this area. She is absolutely right. We cannot be complacent about communication between DfID officials and CDC. The Government believe that that communication is very good, but it can always be improved. The noble Baroness will know that DfID employs 35 enterprise development advisers and field managers in poor countries and in the UK and that it currently has a portfolio of project commitments totalling more than £200 million. I agree that we should never be complacent but the arrangement is doing well.

Lord Judd

My Lords, it is good and encouraging to see the Minister bringing her experience to this new role. Does she agree that one of the most important elements in the distinguished history of CDC is that it has had a hands-on approach in which a priority is building up local talent to manage genuinely locally based enterprise? Is it not terribly important to ensure that CDC is not now tempted to go along the road of becoming just another financial institution£another merchant bank?

Baroness Crawley

Yes, my Lords. I thank my noble friend for that question. He is absolutely right to talk of the respect for CDC's responsible handling of business development in developing countries, particularly in poorer developing countries. He should have confidence in the fact that when investments have been sold, this was done responsibly. When CDC sells businesses, it seeks to sell them to companies that are better placed to take them on to the next stage of their commercial development. I refer, for example, to CDC's Ugandan tea business, Rwenzori Highlands Tea Company, which was sold to Finlays, which has a very good international reputation as a tea specialist.

Lord Oakeshott of Seagrove Bay

My Lords, as the Minister is new to her responsibilities, I wonder whether she is aware that investments made by the new management, CDC Capital Partners, which are expected to earn a full risk-adjusted return, cost the British taxpayer £61 million on capital of £406 million two years ago and another £162 million on capital of £521 million last year. At the same time, the traditional agricultural investments, which are being run down, actually made a profit of £11 million. Why is CDC's sole shareholder—the British taxpayer—gambling on mobile phone networks and Internet ventures? She referred to Rwenzori in Uganda, which is being sold. It is investing in a shopping mall to which ordinary Ugandans cannot afford to go.

Baroness Crawley

My Lords, I do not agree with the premise of the noble Lord's question. I believe that investments by CDC in services such as telecommunications and energy and in its property portfolio—the noble Lord talked about shopping malls—are very important, particularly so far as concerns energy. That is of benefit to poor people— both the rural and urban poor. Telecommunications is also important if we are to enable people to go from a position of simply being sustained in rural agriculture, for example, to medium and long-term economic development for their countries.