‘America’s development bank’ sets ambitious agenda

The US International Development Finance Corporation (DFC) was launched in December 2019 in a bid to vastly expand the work of predecessor agency OPIC.

African Business spoke to Shalini Soopramanien, DFC assistant general counsel, to find about how the new organisation was formed, its successes in 2021 and its priorities for the months ahead.

What does the International Development Finance Corporation (DFC) do and how is it different from its predecessor, the Overseas Private Investment Corporation (OPIC)?  

The DFC is America’s development bank. DFC was launched in December 2019 with a mandate to partner with the private sector to finance solutions to the most critical challenges facing the developing world today. 

DFC was created through landmark bipartisan legislation [the Better Utilization of Investment Leading to Development (BUILD) Act] which recognised that the world’s emerging markets have a great need for investment and that private capital is essential to solving the significant challenges they face. 

The BUILD Act was signed in October 2019 and consolidated OPIC and the US Aid Development Credit Authority (DCA) into a modernised development bank. The BUILD Act modernised, amplified and expanded OPIC’s mission with many additional resources including a higher investment cap. DFC has a total investment limit of $60bn, which is more than double OPIC’s threshold. 

In addition to debt financing, DFC has the authority to make equity investments. Another feature is that DFC is able to provide targeted support to evaluate and advance potential projects in early stages. Another new exciting feature is the DCA, which provides partial credit guarantees to mobilise local financing in developing countries and was incorporated into the new DFC, providing an additional tool for advancing development.  

What are the DFC’s main priority areas in the months ahead?  

There are a number of priorities. One of the priorities for the administration and DFC is the 2X Women’s Initiative. DFC is committed to addressing the very unique challenges women face globally and to unlocking the multi-trillion dollar investment opportunity they represent. 

We recently announced that we will mobilise at least $12bn by 2025, an average of $2.5bn a year over the next five years, as part of our new commitment to invest in businesses that help to advance gender equity in emerging markets. We’re also going to establish a 2X technical assistance programme to help support clients who aspire to have a strong impact on gender equality. 

Another priority area is healthcare, specifically confronting the global pandemic. Covid-19 has presented an unprecedented health and liquidity crisis that has left developing countries in a particularly vulnerable situation. We’ve moved quickly to inject critical liquidity for existing clients through our Covid-19 rapid response facility. 

We provided political risk insurance to the Gavi vaccine alliance and signed a $50m finance agreement with Biological E Ltd, a major vaccine manufacturer in India, to help ramp up its capacity to make over 1bn doses of Covid-19 vaccines by the end of 2022. 

Climate financing is a third priority area and DFC is a key component of the US government strategy to confront the climate crisis. We’ve extended our internal climate financing team and recently announced a commitment to focus at least 33% of new investments on climate related projects. 

In April [2021] we announced our plan to achieve net zero emissions by 2040, the earliest net zero target for any DFI from a G7 or G20 country. Another priority area is maximising impact. Last year we hired our first ever chief development officer, who helped to outline DFC’s first development strategy through a roadmap for impact and implemented a new impact measurement tool for our investments. 

Another key area is increasing our focus on low-income communities.  

What projects were particularly impactful in 2021? 

The major headline is that we committed over $6.7bn over 2021 fiscal year – this represented the largest financial commitment in a single year in 25 years. DFC also grew its staff by 15% and we’ve been strengthening our institutional capacity in order to meet and deliver goals. 

We’ve spent almost $600m in Covid vaccine-related commitments including three transactions supporting vaccine manufacturers. We’re supporting over 2bn doses of Covid vaccine capacity by the end of 2022. With this work we’re saving lives, which is huge. 

Working on vaccine manufacturing transactions has probably been the most significant and important work I’ve ever done throughout my career. There’s so many highly impactful and development projects that we’ve committed to and financed that its truly a challenge to relay all of them! 

How are you continuing work to build on OPIC’s offering in Africa? 

The BUILD Act focuses on lower income countries. Africa is a top priority for DFC in fulfilling our development mandate and accounts for over half of DFC’s investments. Last year we launched the Africa Investment Advisory (AIA) programme with third-party implementing partner CrossBoundary. 

AIA’s staff are experienced financial and investment professionals with extensive transaction experience in sub-Saharan Africa. They’ve helped to enhance our deal teams at US embassies across the continent and create more opportunities for US and African companies. 

When sourcing deals they’re interested in a variety of sectors, but most specifically critical infrastructure including ICT, healthcare, food security, agriculture and financial services. 

We’re also actively collaborating with other DFIs to further our support in sub-Saharan Africa.   

Listen to the full interview on the African Business podcast.