Secretariat draft
21 June 1993
As
6.14 CDC has a substantial investment in the poorer countries of Southern
Africa (though provisions have had to be made against much of this).
these countries pursue reform programmes new opportunities for profitable
investment should arise. But wider portfolio considerations will continue
to warrant caution. Much of the recent investment in poor countries has
been in India and Pakistan. Particularly if India continues to liberalise,
a more demanding poor country target is likely to favour a further build
up of CDC's portfolio in India (subject to the limitations on exposure to
any one country which CDC themeselves have set).
6.15
However, a target for investment in poor countries per se is an
imperfect proxy for the objectives which underlie the target:
some large poor countries are creditworthy and increasingly
able to attract private investment;
some poor countries have hitherto followed policies that have
driven away potential investors; and
other countries with higher income per head may experience
particular problems in attracting capital, notably e.g the small
island states of the Caribbean and Pacific. Traditionally CDC has
played an important role in such countries (the Pacific and
Caribbean Region were [19] per cent of total investment and
commitments at 31 December 1991)
6.16 The ODA itself has moved recently to emphasise the need to match aid
instruments to the income and other circumstances of particular countries,
moving away from particular political groupings: in particular to put the
midlle income countries of Eastern Europe and the former Soviet Union
within the same planning framework as other countries.
6.17 It is a basic aid programme objective to concentrate resources on the
poorer countries. However, to the extent that investment in poor countries
may be a proxy for increased risk, there is an argument that CDC should be
able in invest in middle income (and possibly safer) markets as
a way of
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