HL Deb 07 May 2002 vol 634 cc988-90

2.44 p.m.

Lord Astor of Hever

asked Her Majesty's Government:

Why the Commonwealth Development Corporation has reduced its investments in sub-Saharan Africa and in the agriculture sector of developing countries.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos)

My Lords, in 2001, almost half of CDC's new investments were in Africa. CDC remains a significant investor in the agribusiness sector both in sub-Saharan Africa and elsewhere.

CDC's reasons for selling investments in the agricultural sector may vary from case to case, as in other sectors. Considerations may include poor rates of return, fluctuating commodity prices or the opportunity to sell a successful investment to a business better placed to take it forward commercially.

Lord Astor of Hever

My Lords, the Minister paints a rosy picture. Why has overall investment in Africa by CDC capital partners dropped by one-third between 1996 and 2000 and agricultural investment collapsed to just five per cent? Why are the Government abandoning the poorest and most needy countries in Africa?

Baroness Amos

My Lords, I do not at all agree with the noble Lord. I made clear in my Answer that we are committed to investment in Africa and we continue to be committed to its agricultural sector. I must make clear that we absolutely support the current process of change in CDC. Noble Lords will recall that we debated legislation in this House under which CDC has been directed to become a provider of equity capital for business in poor countries. A switch has been made from debt to equity in all sectors. We continue to support the agricultural sector in Africa in a number of other ways. Noble Lords will know that sustainable development—a key part of which is agricultural development—remains a key part of our strategy.

I repeat that under the investment policy, 70 per cent of new investment as measured over a rolling five-year average must be in poorer countries. CDC should aim to make 50 per cent of new investments each year in sub-Saharan Africa and South Asia. Those targets have been met.

Lord Hughes of Woodside

My Lords, no policy change meets with universal approval or is without controversy. Having said that, is my noble friend satisfied that the current changes, designed to move the poorer countries of Africa out of the poverty to which they have been condemned for far too long, have the balance about right?

Baroness Amos

My Lords, I entirely agree with my noble friend. We are considering investment and development in Africa in a number of ways. Noble Lords will know from previous debates that development assistance is but one aspect of that. The engine and motor for change in African countries will be economic growth and investment. We are committed to ensuring that such investment occurs in the right way.

Baroness Gardner of Parkes

My Lords, is the Minister aware that a similarly worded Question was asked in her absence? There were many press reports at the time about how concerned everyone was about the extreme change of emphasis whereby big, smart offices were being set up and great emphasis was placed on business success without any thought for agriculture or for really poor people. It was said at the time that it was a great pity that the Minister was not here, as she would have been able to answer the Question. Does she appreciate how concerned are those of us who are interested in helping the poorest of the poor and how, frighteningly, the new policy does not appear to be directed in that way?

Baroness Amos

My Lords, I understand that extreme concern has been expressed not only in the House but elsewhere and I have read press reports of the change that has taken place. If I may say so, the concern comes from a lack of understanding of our strategy and policy. We remain committed to the policy set out in the 1997 White Paper, which is to work towards the elimination of world poverty. We are considering how best to achieve that. One aspect of that is to promote economic growth and investment and to create the right conditions within African countries to attract that investment but also to retain the savings within African countries—40 per cent of savings in African countries leaves those countries to he invested elsewhere.

But we have also developed our own rural and sustainable development policies. Since 1998, the Department for International Development has committed more than £580 million to projects that directly support sustainable agriculture. So, although CDC may be moving away from investment in smaller agricultural projects in Africa, the large-scale infrastructure projects to which it is committed match our commitment to ensuring that there is ample investment and growth. That means that the poorest of the poor will benefit.

Lord Oakeshott of Seagrove Bay

My Lords, is the Minister aware that, on their funds of £1 billion, the hotshot investment bankers who now manage CDC produced a negative total return—a loss—of £155 million last year? Does she accept that, given such a performance, there is no chance of its raising and managing private sector capital and that the public/private partnership that the Government have tried to launch for five years is a dead duck?

Baroness Amos

My Lords, I do not agree with that at all. All noble Lords will know that last year was a difficult year in investment generally. Noble Lords who have private investments will recognise that. We want to see a public/private partnership, and we are committed to ensuring that it happens. It will lever private sector investment into African countries. I do not accept that that will not happen. We are committed to it and are considering several ways in which we can ensure that it happens.

Baroness Trumpington

My Lords, does the Minister agree that economic growth is not a matter that readily comes to the mind of a woman in a remote village in Tanzania? Sub-Saharan Africa is not exactly rolling in milk and honey. The CDC was doing an excellent job in agriculture. I do not know whether the Minister has seen it at work, but I certainly have. That help is still greatly needed.

Baroness Amos

My Lords, I agree that CDC has done a good job and continues to do an excellent job. I agree that economic growth is not what springs to the mind of a woman in Tanzania who lacks access to water and sanitation. However, if the poor in Africa are to be pulled out of poverty, African countries need an average growth rate of 7 per cent per annum. We must help them to achieve that.