Mitchell: Harness dynamism and energy of private enterprise in development

31 May 2011

Businesses, entrepreneurs and investors will take a more prominent role in the UK’s development work in African and other poor countries, as part of a new approach aimed at utilising the potential of private enterprise in fighting world poverty, Andrew Mitchell announced today.

The new approach paper on the role of the private sector in development will seek to harness the expertise and resources of private enterprise to boost investment and provide better public services in the poorest countries, creating jobs and income opportunities for more than ten million people.

At the heart of this new approach will be a reformed and revitalised CDC; the development finance institution owned by the UK Government. CDC’s new business plan, launched alongside the UK’s new approach, will make their work more tightly focused on the poorest countries, more flexible, more transparent and entirely driven by the objective of development.

The UK’s new approach follows a Coalition Government review into the UK’s approach to development that concluded that a great deal more could be done to capitalise on the potential of the private sector.

The new approach includes:

A reformed CDC: Previously narrowly focussed to investing through third party private equity funds, CDC has been unable to direct its capital to where it is needed most.  They will gain the ability to invest directly in companies and begin to invest through lending and other instruments. They will become more flexible and better able to control and manage capital with a direct influence on the results it achieves. In addition, all future investments will be made in the poorer countries of South Asia and Sub- Saharan Africa.

Make it easier to do business: by reducing barriers, costs and risks of doing business, cutting red tape and expanding markets and trade.

Investment in infrastructure: We will increase private investment in long-term infrastructure schemes through the Private Infrastructure Development Group. Since it was launched in 2003, it has helped secure $14.5 billion of private investment in telecoms, energy and transport infrastructure to serve nearly 100 million people in the poorer developing countries.

Wider access to finance: Support programmes to provide 50 million people with financial services, for example through mobile banking and supply credit to 300,000 enterprises.

Improved public services: Working with the private sector to extend and improve the delivery of healthcare, schooling and other basic services. For example, supply chain experts will speed up the delivery of free bednets in high-burden malaria countries like Nigeria and find more effective ways to deliver anti-malarial drugs in Mozambique.

International Development Secretary Andrew Mitchell said:

"For too long, not enough has been done to tap into the potential of the private sector as part of the UK’s wider development efforts.

"Aid alone will never be the answer - it is business, trade and enterprise that will stimulate the economic growth that will help people, communities and countries to lift themselves out of poverty.

"This Government is determined to harness the dynamism and energy of private enterprise.

"This new approach will help to do just that, bringing jobs, investment and opportunity to countries that desperately need it."

Commenting on CDC’s new Business Plan, Andrew Mitchell said:

"This is a bold and exciting new departure for CDC. The reforms will help them direct their capital better, fostering economic growth in countries which need it most.

"CDC will be better able to drive investment into areas currently starved of capital. It will become more nimble, flexible and transparent, able to influence and control the impact of their capital and measure its success in reducing poverty, not simply in turning a corporate profit.

"I will continue to work with CDC's Board as they embrace the Coalition Government’s agenda in this important endeavour of the work of the private sector in international development."

For more information contact DFID press office on 020 7023 0600.