CDC’s investments in low-income and fragile states

The UK’s multi-billion pound development finance institution did not do enough to maximise the impact of its UK aid investments.

Score: Amber/Red
  1. Status: Completed
  2. Published: 26 March 2019
  3. Type: Performance review
  4. Subject: Development finance
  5. Assessment: Amber/Red
  6. Location: Kenya, Malawi, Nigeria, Tanzania
  7. Lead commissioner: Richard Gledhill
  8. SDGs covered:No poverty, Decent work and economic growth

Latest news

Our review of CDC’s investments in low-income and fragile states was published in March 2019.

In this review, we awarded an amber-red score and made six recommendations. We published our follow-up in July 2020, but found the government’s responses to be inadequate, as while CDC had put in place mechanisms and tools for improving its attention to development impact, there was not clear evidence that they were sufficiently shaping investment practices. We returned to this review in a further follow-up process, published in June 2021, and found much better progress.


CDC is the primary vehicle through which DFID invests development capital and plays a key role within DFID’s Economic Development Strategy. It aims to “support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people’s lives in some of the world’s poorest places”.

CDC invests capital in businesses either directly (by investing equity or providing loans and other debt finance) or indirectly (by investing through commercial funds), through a structured process of investment selection and portfolio management seeking to generate both positive development impacts and a financial return. Financial returns are then recycled into new investments.

There have been significant and ongoing shifts in CDC’s approach over the period covered by this review. Since 2012, CDC has sought to better align its portfolio of investments with DFID’s priorities. It has increased its focus on Africa and South Asia, particularly in low-income and fragile states where the private sector is weaker and financial risks are greater. Between 2015 and 2018, CDC received investments of new capital from DFID totaling £1.8 billion, and further capital injections of up to £703 million per annum are planned until 2021. CDC’s net assets are projected to increase to above £8 billion by 2021 as a result of these capital injections and earnings.

Sustainable Development Goals

The United Nations’ Sustainable Development Goals relevant to this review are:

  • Sustainable Development Goal 1: No poverty
  • Sustainable Development Goal 8: Decent work and economic growth



Published 29 May 2018

Evidence gathering


Review publication

Published 26 March 2019

Government response

Published 7 May 2019

Parliamentary scrutiny

IDC hearing 22 May 2019

ICAI follow-up

Published 23 July 2020

Further follow-up

Published 23 June 2021