Investment for Development: the UK’s strategy towards development finance institutions new inquiry launched

• International Development Committee

Background

The UK Government’s strategy for international development sets out to ‘deepen economic, security and development ties globally, while delivering jobs and growth in both the UK and low-and-middle income countries.’ Through British Investment Partnerships the UK intends to mobilise up to £8 billion of financing a year by 2025, including from the private sector.

A significant part of the British Investment Partnerships agenda hinges on the role of British International Investment. British International Investment is a UK Government Development Finance Institution that supports development through private sector investment, and is increasingly becoming a central part of the FCDO's development strategy. British International Investment was formerly known as CDC Group and changed its name in April 2022.

Billed as ‘the UK’s development finance institution,’ BII says it will invest between £1.5 and £2 billion each year in green infrastructure, technology and other sectors. Over the next five years, it aims to invest at least 30% of total new commitments in climate finance. There are plans to expand its reach into the Indo-Pacific region and parts of the Caribbean.

However, in light of diminishing Government budgets and the impact of the war in Ukraine, it is important for projects to deliver maximum impact overseas in lifting people out of poverty.

Chair's comments

Chair of the International Development Committee, Sarah Champion MP said:

“We want to understand the UK Government’s new investment driven approach to development and how British International Investment operates within it. How much influence do Ministers have over BII's funding decisions? What are the implications of pursuing a shift to the Indo-Pacific and Caribbean? How will BII go about achieving their climate and gender-based targets and how is this targeted towards delivering real change?”

“As we await the Autumn Statement, we will be asking whether BII delivers impact and value for the UK taxpayer, do the funds reach those most in need and is there transparency and accountability over where this money is invested.”

Submitting written evidence

The committee welcomes evidence to inform its inquiry from a wide range of people. These may include experts, stakeholders, government leaders and officials - but we welcome contributions from anyone with insights. In this instance we will be gathering written information until a deadline of Friday 3 February 2023.

For information on how to submit written information to us, and how we then use that information, please see here. As well as taking written evidence the committee will hold question and answer sessions. These sessions will take place in public and will be announced in advance on our website.

Scope of the inquiry

The Committee invites written evidence on the following terms of reference:

• What are the British Investment Partnerships (BIPs) and what are their objectives? What role does British International Investment (BII) play within them?
• How does the BII’s strategy align with the FCDO’s development agenda?
• How does BII’s strategic outlook compare with that of other comparable overseas institutions?
• How effective are the governance structure and internal oversight mechanisms of BII (e.g., oversight over direct investments, fund investments, BII controlled companies)?
• How is BII’s budget determined? How does the budget inform BII’s programme of work and to what extent can BII scale up or scale down on its investment activity?
• How are the decisions of BII’s management scrutinised? What transparency is there over BII’s performance monitoring and reporting?
• What criteria does BII use to determine investment decisions and how are financial returns balanced with achieving impact?
• How do external events influence the investment decisions of BII (e.g., in response to the crises in Afghanistan and Ukraine, the depreciation of Sterling etc.)?
• What due diligence does BII undertake prior to making investment decisions and how does this compare with best practice?
• What current investments does BII hold?
• How effectively does BII manage funds following its initial investment?
• How does BII evaluate the impact of its investments?

Further information

• About Parliament: Select committees
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