DFID 7984 CDC Longitudinal Study : To what extent does CDC activity crowd-in private sector investment?

The Department for International Development (DFID) is seeking to contract an organisation or consortium to design and implement a large- scale, long-term study analysing the impact of DFIs, including CDC, on private sector investment activity. This is a novel and complex area of research. It is therefore anticipated that a mixed methodology approach is taken, following significant consultation during design phases. This could include econometric methods, longitudinal survey data, and case studies. In CDC, the UK Government owns a Development Finance Institution (DFI) which supports the building of businesses throughout Africa and South Asia to create jobs and make a lasting difference to people's lives. Successful businesses are vital to drive a country's economic growth, which provides a sustainable route to poverty reduction. Businesses provide jobs for people to lift themselves out of poverty, and tax receipts enable a country to fund its own public services, reducing aid dependency. Businesses in many countries in Africa and South Asia are in need of additional investment capital, which they fail to attract in sufficient amounts due to (i) limited long term domestic capital, and (ii) high actual or perceived risks, including political, corruption and currency risks. Institutional investors have additional constraints, such as regulatory restrictions, which hamper investments in these geographies. These are market failures that DFIs DFID aims to overcome through its programmes. Investing through CDC is a significant part of this effort. 1. This research piece will provide evidence on whether the investment activity of CDC is mobilising private sector investment. 2. The research will analyse what changes, if any, are being seen through time across CDC investment contexts. This will address the question of whether progress on mobilisation is context-specific. Further, the research will analyse to what extent changes seen are attributable to CDC or other factors. 3. It would be desirable to include some assessment of comparators, including other DFIs in this study. However, it is intended that analysis on mobilisation focus on CDC and its impact on private sector investment. 4. The expected output of the study is data collection and analysis released regularly over 10 years (e.g. every two years). This will, where appropriate, and at minimum at the study's conclusion, include relevant policy and practice implications and recommendations on what works in investing for development, particularly with regard to mobilising private sector investment. 5. The expected outcome of the study is that DFID and other international and developing country actors will use quality evidence to develop more effective policies and interventions through DFIs and better mobilise private sector investment.

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