TNAG-0340-FCO40-376-Aid-to-Hong-Kong-from-UK-1972 — Page 77

ii. should enable us to justify the delegation to others of much of the

work involved in selecting and appraising investment projects in the

private sector;

iii. will accord with one of the proposals of the Pearson Commission

which reads:·

"Smaller investment projects may also require support, and there is

then a case for the assistance of national development banks and similar

institutions, public and private. These institutions, particularly the

development banks, are especially important because they can reach the

small investors, their administrations are generally more decentralised

and fast moving than larger enterprises, and they result in such important

institution-building as the strengthening of local capital markets.

Therefore we recommend greater help to development banks and similar

institutions in developing countries."

Policies and Objectives

4. Our aim should be to channel funds through development banks which themselves

have positive developmental objectives and which concentrate on sectors of the

economy which accord with our own aid priorities for the country concerned.

Farticular value may be obtained by lending to banks who give preference to the

development of medium sized and small scale indigenous industry in the private

sector; although due consideration has to be given to the fact that our aid

can in most cases be used to finance only off-shore costa.

5. It is also our aim to seek to extend the provision of official aid to

development banks for use in joint ventures with British private capital

(paragraph 16 of Cand 4656 refers); and recipient Governments and development

banks should therefore be encouraged to look for suitable investments in

association with British private investors.

Many British firms recognise the

value of associating local interests with their investment projects: and in

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