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1 ,,,~,, ~ ~ l lp Department ~ for International Development UKaid from the British people Stephen Twigg MP Chair, International Development Committee House of Commons London SW1AOAA Rt Hon Priti Patel MP Secretary of State ~ ovember 2016 ~ J~tj~ Thank you for your letter regarding the Government response to the International Development Committee's (IDC) Report on UK implementation of the Sustainable Development Goals (the Goals): Please find attached the information you requested on CDC, the Prosperity Fund and Civil Service Organisations (CSOs). With respect to your question on capital markets, DFID will provide an update in its next annual report. As you know, the UK was at the forefront of negotiating the Goals and we will be at the forefront of delivering them. As stated in our official response, the Goals should not require a new coordinating mechanism. The Government is keen to avoid the proliferation of government structures and reporting requirements and is using existing mechanisms to deliver the Goals. My officials meet regularly with Cabinet Office and work closely with other government departments to ensure policy coherence. The Goals cover a huge range of topics, policies and activities which cut across the whole of Government. They are discussed in a wide range of forums and meetings, and therefore it is not feasible to share with you the outcomes of each of these meetings. Given that the primary purpose of the Goals is to eradicate global poverty, DFID retains the policy oversight for the Goals. Departments across Government are responsible for their respective policy areas and the delivery of their commitments related to the Goals. Minister for the Cabinet Office Ben Gummer and I have agreed that Departments will report progress towards the Goals through their Single DFID, 22 Whitehall, London SW1A 2EG I I+44 (0)

2 Departmental Plans (SOP). Cabinet Office will therefore continue to have a role in coordinating domestic delivery of the Goals through the SOP process. Integrating the SDGs into the SOP process is a clear demonstration of the seriousness with which we take this agenda. As you know, the UN Statistical Commission is responsible for developing a global indicator framework that will be used to monitor global progress towards the Goals. The Commission agreed an initial framework of 230 global indicators in March An Inter-Agency Expert Group is currently refining them and will bring forward proposals for consideration by the UN Statistical Commission in March We expect the outcome from this meeting to provide the basis for the UN Genera.I Assembly to adopt the global indicator framework later in The current set of global indicators provides a practical starting point for monitoring progress towards the Goals. The Office for National Statistics (ONS) leads on reporting for the UK. I agree that this year's national voluntary reviews at the High Level Political Forum were very informative, providing an opportunity to learn others' approaches. The Government is still considering when to put the UK forward for its National Voluntary Review. We are currently working on report setting out the UK approach to Agenda I look forward to sharing this with you once it has been finalised. Rt Hon Priti Patel MP Secretary of State

3 Additional Information for the International Development Committee Inquiry into implementation of the Global Goals (the Goals) for Sustainable Development Prosperity Fund Overseas Development Assistance (ODA) spent through the Prosperity Fund will strongly contribute to the Goals. Through promoting economic development in ODA eligible economies, the Prosperity Fund will support sustainable economic growth which creates jobs and prosperity for poor people, generates taxes for investment by developing country governments, and is also good for the wider global economy. In particular Prosperity Fund programmes will contribute to meeting Goal 8: "promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all". They will also be relevant to other goals on quality education (Goal 4), affordable and clean energy (Goal 5), industry innovation and infrastructure (Goal 9), and sustainable cities and communities (Goal 11 ). The Prosperity Fund is also developing an approach to monitoring, reporting, evaluation, and learning which is in line with the Goals. Five intermediate outcomes have initially been defined within this theory of change to help orientate the activity of the Fund: infrastructure and human capital; innovation and knowledge transfer; trade, financial and economic reform; policy and regulatory capacity and ease of doing business. These are consistent with the findings of the Commission for Growth and Development's Growth Report (2008) on the underlying conditions for growth. CDC One of DFID's key priorities is encouraging economic development in developing countries. In , the Department spent 1.8 billion, 22% of its budget for that year, on economic development. CDC, which is the UK's Development Finance Institution (DFI) is one of DFID's key mechanisms for encouraging private sector investment in developing countries. CDC is one of a few investors in the world with the skills and risk appetite to create jobs and opportunities in the most difficult, frontier markets. CDC invests in businesses in Africa and South Asia, which combined are home to 80% of the world's poorest people. In 2015, 66% of CDC investments were disbursed to the poorest and most difficult countries. The finance needed to achieve the Goals is estimated to be approximately $2.5 trillion every year; however, current investment levels are less than half of that. This gap cannot be filled by public finance alone. There is therefore an urgent need for public finance to act as a catalyst to attract private investment, especially into countries where investors perceive investment to be too risky. This is the vital role played by CDC. CDC demonstrates to other private investors that investment in these difficult countries can be commercially viable. CDC invests in sectors where growth leads to jobs - both directly and indirectly. In sectors such as manufacturing, agribusiness, infrastructure, financial institutions, construction, health and education, the CDC promotes progress against the following specific Goals: Goal 8 - on sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all: this is fully aligned with CDC's mission to support the building of businesses throughout Africa and South Asia, DFID, 22 Whitehall, London SW1A 2EG Iwww.gov.uk/dfid I +44 (0)

4 to create jobs and make a lasting difference to people's lives in some of the world's poorest places. Goal 5 - gender equality and empower all women and girls: in 2015 alone, CDC investments helped create 326,000 direct and indirect jobs for women, whilst the microfinance institutions CDC invest in have reached millions of female clients. CDC's annual monitoring from July 2013 has included a contractual obligation for all investee businesses to report total employment broken down by gender. CDC also provides a toolkit on Environmental, Social and Governance standards providing guidance and case studies to show companies and fund managers how they can implement policies and practices that benefit women in the workplace. Goal 7- ensure access to affordable, reliable, and clean energy: CDC investments are providing 56,000 gigawatt hours of electricity to light homes and power businesses that will help fuel the growth of the poorest economies in Africa and Asia. In 2015, CDC acquired a majority stake in Globeleq Africa, the largest independent power producer on the African continent, to add thousands of megawatts of electricity generating capacity over the next ten years - to light the homes and power the businesses that will help fuel Africa's growth. Beyond Globeleq, CDC have invested over $16m in Green Infra India, an independent wind and solar power producer which has helped the local community nearly double its energy production to over 650MW, reaching one million people in four Indian states. Goal 13 - taking urgent action to combat climate change: CDC ensures its investments meet the highest Environmental, Social and Governance standards, including working with companies to use their energy and water resources more efficiently. As set out in CDC's climate change policy, CDC proactively assesses climate change risks and opportunities in its investments, incorporating climate factors into due diligence processes, investment strategies and internal procedures. CDC is supporting Rainbow Hospitals in India for example by, in 2015, beginning a programme of energy and water audits to help it find ways to lower its carbon footprint and energy costs whilst maintaining standards of care. Goal 10 M reducing inequalities: CDC investments in electricity, financial institutions and connectivity look to provide equality of access in these sectors. This has included providing 3 million households on grid electricity in Cameroon, Uganda and Cote d'ivoire through CDC's support for distribution companies and half a million households through off grid (solar and mini-grid) in East Africa. DFID has set CDC both a financial return and a development impact target. CDC's development impact grid is an ex ante tool to incentivise CDC to make investments in harder geographies and in sectors which have the highest propensity to create jobs. All Development Impact scores for disbursements are externally assured on an annual basis. CDC also gathers information to measure the ex-post impact of its investments in businesses - jobs created (disaggregated by gender), revenues generated, tax paid and resources mobilised. In addition, CDC conducts independent evaluations across a theme or sector that allows it to understand the wider impact of its investments. Civil Service Organisations DFID, 22 Whitehall, London SW1A 2EG I w1,w1.gov.uk/dfid I +44 (0)

5 DFID recognises the contribution small Civil Society Organisations (CSOs) make to delivering improvements in the lives of poor people in communities across the world and the importance of making funding accessible to them. Small CSOs can apply for central DFID funding through UK Aid Direct Community Partnership grants. The Civil Service Partnership Review (CSPR) emphasised that DFID welcomes funding bids from a broad range of organisations, that UK Aid Direct is the main central competitive fund for small and medium CSOs and that the smallest organisations are welcome to apply. UK Aid Direct is now open for funding applications. In this first post CSPR funding round, up to 40 million is available; double the value of grants agreed in the previous funding round. In addition to central funding for CSOs, many DFID country offices provide funding to small southern CSOs. For example in Bangladesh the Manusher Jonno Foundation manages DFID's 16m Governance and Human Rights challenge fund, providing grants and technical support to over 100 small and medium CSOs. DFID country offices will continue to directly fund civil society programmes, including those targeting smaller organisations. These programmes will contribute to the delivery of the UK Aid Strategy, whilst responding flexibly to the specific priorities, needs and opportunities of that country. All DFID funding will continue to be subject to rigorous pre-grant due diligence checks. Through these checks and robust monitoring and evaluation, we will ensure that organisations have the capacity to manage UK Government funding to the standard we require. We are concerned about the trend of increasing restrictions on civil society activism, media freedom, social movements and human rights in many countries. This issue has strong links to the Government's manifesto commitment to "continue to promote the golden thread of democracy, the rule of law, property rights, a free media and open, accountable institutions". As part of the Civil Society Partnership Review I committed to support civil society abroad and to standing alongside civil society against encroachments against freedom of thought, association and expression. DFID country offices and Foreign and Commonwealth Office (FCO) staff are responding to these issues in each country on a case-by-case basis and we are considering what broader UK action, including at the international level, may be useful and not exacerbate the problem. We work together with the FCO to raise concerns with governments at the appropriate level. In many cases, this must be done out of the public eye in order to avoid 'backlash' against the very groups we are seeking to assist. We have also been a strong supporter of the Open Government Partnership which plays an important role in driving a global movement on transparency and openness. The engagement of Civil Society Organisations is a central principle of the overall partnership and its implementation at country level. DFID provides 1.47 million over 4 years to the Support Unit ( ), helping to expand overall country membership and ensure participatory National Action Plans. DFID, 22 Whitehall, London SW1A 2EG I W'>WJ.gov.uk/dfid I+44 (0)

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