WASHINGTON – A new report from anti-poverty campaigners Global Justice Now has found that Britain’s development bank, CDC Group, is doing more harm than good around the world, nearly a decade after the Conservative-led government pledged to reform it following a string of scandals.
As the sixth international development secretary in the last five years, Anne-Marie Trevelyan, takes up her role, the campaigners are calling for CDC to be given a new mandate and structure as part of a root and branch reform.
The report, Doing More Harm Than Good: Why CDC must reform for people and planet, finds that CDC, a private bank wholly owned by the Department for International Development and eligible to receive up to £12 billion from the aid budget, has continually backed privatised health and education services and companies facing serious allegations of human rights abuses.
The investments include repeated loans given to Canadian company Feronia Inc in recent years, despite serious human rights allegations at its palm oil plantations in the Democratic Republic of Congo. The report also shows aid money being invested in elite private hospitals which advertise to international patients, a cosmetic surgery clinic, an elite private school chain, and multiple fossil fuel projects in Africa and Asia.
Despite a series of reforms and promises to make the bank “more socially and environmentally responsible” in 2011, the report finds that CDC continues to prioritise profit over fighting poverty, investing heavily in unaccountable private equity funds around the world, as well as investing directly in projects with dubious development impact to make a high rate of return.
The report also finds:
- Two-thirds of major CDC investments are based in tax havens, many in Mauritius alone;
- CDC is making more than three times more profit (9.2%) on its investments than its target of 3.5%;
- Although reforms made in 2011 were supposed to reduce the amount of money spent by CDC through private equity funds (then £2 billion a year), this figure has stayed roughly the same (now £1.9 billion);
- The average CDC salary in 2018 was £104,150, with 48 employees earning more than the UK prime minister.
The bank, which is financed from the UK aid budget, had its funding limit raised from £1.5 billion to £6 billion in 2017, with the possibility of rising to £12 billion over time. It is expected to play an increasingly significant role in the government’s Global Britain strategy and featured prominently at last month’s UK-Africa Investment summit hosted by the prime minister.
Daniel Willis, aid and climate campaigner at Global Justice Now and co-author of the report, said:
“This is not development as we know it. CDC has continually failed to show how its investments are genuinely tackling poverty around the world. What’s more, the aid money being channelled through CDC is actually exacerbating inequalities, damaging the environment and undermining human rights.”
“CDC has demonstrated a near total resistance to reform by continuing to make more profit than it should and by channelling its investments through tax havens. This “market knows best” approach to development uses aid money to facilitate the extraction of wealth from the global south to the global north – the exact opposite to what any institution with a development mandate should be doing.”
“To continue receiving public money, CDC must demonstrate that it is able to perform proper due diligence and publicly disclose the expected development impact from its investments. But CDC’s opaque and unaccountable business model is the real problem, and only fundamental reform will make it an institution that leaves a positive impact on the world.”
The report recommends that CDC introduces an Independent Complaints Mechanism for communities affected by the projects it funds, as exists for German, French and Dutch development banks.
The report follows months of speculation over whether the Department for International Development would be merged into the Foreign Office as part of the government reshuffle. Nearly 10,000 people have signed a Global Justice Now petition calling on Boris Johnson not to hijack the aid budget for the benefit of British businesses.
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Common Dreams | Radio Free (2020-02-17T18:58:05+00:00) UK Development Bank 'Doing More Harm Than Good' After Failed Reforms—Report. Retrieved from https://www.radiofree.org/2020/02/17/uk-development-bank-doing-more-harm-than-good-after-failed-reforms-report/
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