DFC’s Inaugural Development Strategy
A Comprehensive $75 Billion Investment Strategy directly benefitting People in Less-Developed Countries
By Andrew Herscowitz, Chief Development Officer, U.S. International Development Finance Corporation
During our first year in operation, U.S. International Development Finance Corporation (DFC) has supported projects that will unlock billions of dollars that advance development in emerging markets across the world. More than 60 percent of projects approved this year located in low-income and lower-middle income countries and in fragile states. This month we are formalizing our commitment to support investment in the regions of the world most in need with the launch of the Roadmap for Impact, our first-ever Development Strategy, which outlines our plans for maximizing our impact by expanding our investment portfolio, diversifying our client base, and deploying new technologies in developing countries.
DFC consulted with more than 100 stakeholders from business, government, and the nonprofit sectors to assemble a strategy that would address the myriad needs of people in urban and rural areas from Latin America to Sub-Saharan Africa and Southeast Asia. As we launch this development strategy in the midst of a global pandemic, we are reminded how the strategy must not only be comprehensive but also flexible, so that we can respond quickly to new challenges that arise.
The Roadmap for Impact outlines DFC’s plan to commit over $25 billion and mobilize an additional $50 billion of private capital to expand access to energy, healthcare, financial services, food security, technology, and the WASH (water, sanitation, and hygiene) category, while reaching at least 30 million people.
As America’s development bank, it is critical that DFC support countries that struggle to attract investments or where our support can serve as a stabilizing force. Whether due to limited capital, high risk, weak governance, or instability, the low and lower-middle income countries that most urgently need investment often the same countries where it is difficult to attract private capital. DFC’s finance tools — including debt and equity authority, political risk insurance and technical assistance — can play a key role in mobilizing that investment to foster inclusive economic growth.
Most important, DFC will evaluate its investments, not only in terms of the inputs, or the amount of capital deployed, but also the outputs, that is, the number of people we reach, and the ways they and their communities benefit. We will track how many people get first-time financing, access to clean water, access to electricity, access to the internet and other services that will improve their quality of life and create economic opportunity.
To that end, a key component of the Roadmap for Impact is accountability. DFC will measure the impact and monitor the progress of our investments with Impact Quotient, a tool that will evaluate projects from the time they are first evaluated, over the life of the project. By tracking progress, we’ll be able to adjust our strategy as needed, and the lessons learned we collect will serve as a feedback loop to inform our future investments.
We expect this development strategy to be a living document — one that we can change as we learn from our experiences. We all have learned from the COVID pandemic that we must be flexible and that priorities change. As a development institution, the DFC team is committed to adjusting and moving with that change.