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U.S. International Development Finance Corporation

MFAN is a strong proponent of development finance as a powerful and cost-effective tool to drive private investment and catalyze economic growth in the developing world.

We were an early leader in 2016 calling for the creation of the U.S. International Development Finance Corporation (DFC) and a strong supporter of the bipartisan legislation -- the Better Utilization of Investments Leading to Development Act (BUILD) Act of 2018 -- that created the new agency. 

In addition to merging the Overseas Private Investment Corporation (OPIC) with USAID’s Development Credit Authority, the BUILD Act gave the DFC several powerful new tools in order to live up to its mandate as the U.S. government’s premier international development finance agency and a critical partner in America’s foreign policy tool kit. These include the authority to make equity investments; increased flexibility in financing arrangements; a doubling of the exposure cap; and technical assistance capacities. The BUILD Act also provided the agency with a stronger mandate to prioritize developmentally impactful projects in low-income and lower-middle income countries, as well as significant new accountability and risk management requirements. 

Since the Development Finance Corporation opened its doors in December 2018, MFAN has worked to ensure that the new agency lives up to the promise of the BUILD Act. This includes maintaining a strong focus on investments that contribute to economic development in low-income and lower-middle-income economies and incorporating best practices in evaluation and transparency.

Equity Scoring

The DFC’s ability to carry out its mission and fully realize its investment potential is being restricted due to the way its equity financing is “scored” (accounted for, in budgetary terms). Currently, the agency’s equity financing is scored on a dollar-for-dollar basis -- as if every dollar invested is a grant, rather than a loan and investment that in most cases will eventually be paid back along with a financial return. This dollar-for-dollar scoring was not the intent of the authors of the BUILD Act and makes DFC’s equity costlier than it should be.  It greatly hampers the agency’s ability to make critical investments in low and lower-middle income countries where private finance is limited or not available. 

Changing the way DFC’s equity investments are scored so that their budgetary cost reflects the fair market value -- using a “net present value” model – is needed to correct this deficiency. MFAN continues to work with Congress and the executive branch to make this change and was pleased that the House of Representatives in 2021 adopted an amendment by Rep. Castro (D-TX) to correct the way DFC’s equity authority is scored. In addition to a permanent fix such as this, we also welcome an interim approach through new and creative financing options that would enable increasing DFC’s equity portfolio. Under such an approach, this additional financing authority must not affect the funding levels of other programs or agencies within the International Affairs budget. Additionally, any funds the DFC receives as a result of re-payment of DFC’s equity investments must be permitted to return to the DFC’s Corporate Capital Account at the U.S. Treasury so that the agency may continue to utilize the funds for future investment projects.

Development Mandate

As part of the DFC’s dual mandate to enable developmentally-beneficial private sector investment and advance U.S. foreign policy, the Build Act requires the DFC to prioritize projects in lower and lower-middle income countries in order to ensure that the agency focuses its projects in those countries that stand to gain the greatest economically from U.S. investment.

While the BUILD Act and related legislation allow for exemptions to this mandate in certain cases, it is critical that the use of such exemptions remain limited and that Congress monitor their use in order to ensure that the DFC maintains its focus on advancing development objectives in those countries where the need is greatest. 


Evaluation and transparency are key to foreign assistance effectiveness. The Foreign Aid Transparency and Accountability Act of 2016 requires all agencies implementing foreign assistance programs to publish “comprehensive, timely, and comparable” project level information on ForeignAssistance.gov on a quarterly basis.  It also requires agencies to monitor and evaluate their programs and to publicly report all evaluations. The DFC, per the BUILD Act, is also required to adhere to FATAA. The purpose of FATAA is to allow for the assessment of the effectiveness of U.S. foreign assistance programs and to make that information readily available to a range of stakeholders.

For the DFC (and its predecessor OPIC) project level information has not typically been published, making it challenging to assess the impact of U.S. investments. Information that should be disclosed includes data on development impact (including anticipated and actual development impact), mobilization of private resources, adherence to environmental, social, and governance (ES&G) standards, the impact of financial intermediary sub-investments, and all evaluations.  Disclosure of such information allows for better learning and coordination among development finance institutions and the private sector. It is also essential to understanding how DFC’s investments are – or are not – advancing the development mandate of the DFC.

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