MFAN Urges Congress to Preserve DFC Development Mandate

With the House and Senate both drafting legislation to reauthorize the DFC in advance of the lapse of its 7-year authorization in October, MFAN is urging leaders on the House Foreign Affairs Committee and Senate Foreign Relations Committee to preserve the DFC’s core development mandate as part of legislation to reauthorize the BUILD Act of 2018.

Signed by Tod Preston, MFAN’s Executive Director, the letter noted that the DFC has always been a critical tool of U.S. development and foreign policy, leveraging private capital to advance development outcomes in the world’s most challenging markets. As part of its foundational purpose, the BUILD Act prioritizes investment in low- and lower-middle- income countries where limited access to capital remains a barrier to economic growth. In these countries, the letter states, “DFC’s marginal dollar can have an outsized impact by crowding in private financing and helping to deliver meaningful development benefits.”

Now, this focus is in question – in part due to recommendations from the Trump Administration to make it easier for the DFC to invest in high-income countries.

In the letter, it notes that the BUILD Act already provides flexibility for investments in upper-middle-income countries (UMICs) if certified to further U.S. economic or foreign policy interests and deliver significant development impact or benefits to the country’s poorest. However, MFAN believes the certification process would be more effectively managed by the DFC CEO or Board — which already includes senior Administration officials such as the Secretaries of State, Treasury, and Commerce — rather than requiring separate action from the State Department.

In the letter, MFAN also recommends:

• Adding a third certification criterion: that UMIC projects be structured to maximize private capital mobilization.
• Directing DFC’s Board to develop clear guidance for UMIC investments, emphasizing the continued presence of poverty in these countries and the need to avoid crowding out private capital. Guidance should focus on ensuring these investments deliver strong development returns and align with the agency’s original mission.
• Requiring DFC to report to the relevant committees if more than one-third of its annual project commitments are in UMICs or high-income countries. This would help preserve appropriate balance and accountability while maintaining flexibility to manage risk.

Read the full text of the letter here.

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