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

When a disaster strikes, whether it’s a pandemic, a natural disaster, or political violence, the world’s low-income and underrepresented communities tend to suffer the most.

Lacking typical safety nets including access to credit, many smallholder farmers, small business owners, and laborers struggle to support themselves and their families. Over 1.7 billion people worldwide have never had a bank account, making it challenging to access loans and other financial services even in ordinary times. In a period of crisis, such as the COVID-19 pandemic, there are additional challenges to accessing the financial services needed to keep their businesses operating, their children in school, and food on the table.

U.S. International Development Finance Corporation (DFC) provides debt and equity financing to businesses and entrepreneurs who need it most. As America’s development bank, DFC recognizes that access to financial services is essential to addressing inequities and making an impact, particularly during times of crisis. Unlike grants, DFC loans are designed to be repaid with interest making careful evaluation of risks imperative. But DFC is able to support underrepresented borrowers in ways that traditional banks may not be able to do. Particularly in a crisis, loans that address urgent needs and that rebuild, refresh, and reinvent impacted businesses create the most rapid development.

For these reasons, financial inclusion is a main pillar of DFC’s new development strategy Roadmap for Impact. Virtually all segments of the economy, from agriculture to healthcare, energy to infrastructure, require access to capital. Yet, the World Economic Forum estimates that just 35 percent of people in the world’s low-income countries have access to a bank account. Micro and small enterprises in these regions, especially those owned by women and other underrepresented individuals, are particularly challenged in accessing finance.

Entrepreneurs, micro-enterprises, and small business owners often operate outside of the formal economy. They may not have maintained bank accounts, tallied up balance sheets, or kept the sort of payroll records that banks typically require before approving loans. Women are often denied property rights and rural farmers may not have clear title to their land, leaving them with no way to offer the collateral that banks traditionally require.

DFC has the tools to overcome these obstacles.

As part of its Roadmap for Impact, DFC aims to reach more than 30 million people over the next five years by investing $25 billion and leveraging another $50 billion in other capital. Expanding access to financial services is one of the core pillars of the Roadmap, which outlines specific goals to expand financial inclusion. These goals include catalyzing $6 billion for projects that economically empower women, investing $100 million in projects that include innovations in financial technology, and bringing at least 100 companies into the formal financial sector.

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.

In DFC’s first direct equity investment, it invested $1 million in Freshtohome Foods Ltd., a five-year-old Bangalore e-commerce business that sells fresh food in India. Freshtohome uses technology to connect more than 1,500 fishermen and farmers to its delivery network, while transparent pricing helps food producers earn higher prices than they typically receive at auction.

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.

A DFC local currency guaranty allows mortgage lender Aviom to provide additional local currency loans to female borrowers in India, where over two million people are homeless or live in substandard housing

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.

DFC technical support is helping Sanergy develop revenue-earning sanitation projects and explore ways to expand its operations beyond Kenya. In Nairobi, Sanergy is providing modern toilets that process waste to eliminate pathogens. Sanergy then processes that waste into revenue-producing fertilizer to improve agricultural outputs. With DFC’s support, Sanergy is exploring expansion into other parts of Kenya and Africa.

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.

DFC loans will expand access to financial services in Cambodia. They support leasing of motorbikes, the primary mode of transportation in the country, and are expanding financing to women and small rural businesses.

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.

In Mongolia, a DFC loan is supporting the expansion of Goyol Cashmere, a local producer and exporter of wool and cashmere knitwear. The company sources 50 percent of its raw cashmere materials from rural herders which bolsters Mongolia’s economy.

DFC has set a goal of having at least 30 percent of its clients based in developing countries by 2025. To achieve this goal, DFC is holding virtual workshops in emerging markets to educate eligible local businesses about DFC programs.

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.

DFC now has the tools and the strategy needed to create powerful developmental impacts in emerging markets. The opportunities exist. DFC will play a key role in advancing financial inclusion globally with the objective of driving innovation and mitigating the financial impact of the COVID-19 pandemic and future crises.


Merryl Burpoe is a Senior Advisor at DFC, America’s development bank. She was previously President of Aria Strategies, an international management consulting firm with a focus on global business development, strategic planning, government and stakeholder relations, and crisis management. She also was CEO of Hittite Green Solutions, Inc., where she managed a U.S. corporation that introduced disruptive technologies in the areas of desalination and CSP solar.

Learn more about DFC’s work in financial inclusion.



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