Six Ways DFC’s Support for Financial Inclusion is Helping People in Developing Countries

Second in a series of blogs on U.S. International Development Finance Corporation’s new Development Strategy, the Roadmap for Impact

By Merryl Burpoe, Senior Advisor, U.S. International Development Finance Corporation

Here are six ways DFC is promoting financial inclusion through its new Roadmap for Impact:

1. Direct Equity Investments

One of DFC’s new tools is the ability to invest direct equity in innovative businesses at a critical stage in their development. Equity investments can have a strong impact by supporting innovative early and growth-stage businesses that would not be able to take on debt.

2. Local Currency Lending

While loans can help businesses grow, those that do not earn hard currency fear the devaluation risks associated with dollar-denominated loans. DFC is now able to offer local currency loans where appropriate to help companies access credit without taking on foreign exchange risk.

3. Technical Development

Small businesses often do not have the resources to conduct the market research or other work needed to identify new markets or reach marginalized customers. DFC can fund studies or provide technical assistance including market research, product adaptation, permitting and licensing guidance, skills training, and other support needed to increase the commercial viability or development impact of its clients.

4. Financing Underrepresented Populations

DFC often provides direct loans and loan guarantees to micro-finance institutions, which then on-lend to small borrowers. They are able to focus on the hardest-to-reach and most marginalized groups such as women and people living in rural areas. Using innovative financial technology, more people are able to access funds even when they are far from a physical bank.

5. Working with Local Businesses

In addition to its traditional work with U.S. businesses, DFC is helping developing countries become more self-reliant through local business development. DFC is focusing on projects led by local businesses in emerging markets. Enterprises across the globe have the potential to create jobs and inject cash into their communities while transforming lives.

6. Investing in Financial Technology

Financial technology including digital payments systems can help entrepreneurs better understand their own operations while increasing their access to new suppliers and markets. DFC is proactively identifying and supporting new technology-focused companies in emerging markets. For example, it will work with USAID’s Global Development Lab to help find and scale up the “next” M-Pesa, a successful Kenyan firm, so that more people can get access to financial tools.

U.S. International Development Finance Corporation. Investing in development and advancing U.S. foreign policy. Twitter: @DFCgov

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