Instead of reauthorizing OPIC without comment, in 2018 under the Better Utilization of Investments Leading to Development, or BUILD Act, Congress merged the old OPIC with a small, but commercially minded piece of USAID to create DFC. As Congress contemplated a new development finance agency, the Trump Administration had seriously considered shuttering OPIC. OPIC, always at risk of failing to achieve reauthorization, was driven to maximizing profits for the taxpayer, seeing this as a winning strategy to inoculate itself from sun setting. However, as a self-sustaining entity that relied on returns on its investments instead of an annual appropriation, OPIC fashioned a strident independence that rendered it an orphan in the age of foreign policy by economic intervention. government’s development finance institution, fostering development and by doing so, furthering U.S. What came before was the Overseas Private Investment Corporation (OPIC), created in 1971 to be the U.S. DFC’s Predecessor and Its Pathologiesĭespite being new, DFC carries baggage from its predecessor agency and the politics that accompany the birth of any new effort. The agency needs to embrace its role as a development finance institution and focus on a clear agenda driving investments in priority sectors and that mobilize private capital in order to provide foreign policy and development impacts sought by its stakeholders. The tangible impacts of DFC’s projects and the high environmental and governance standards it encourages are compelling, but the agency’s failure to articulate a strategic vision for itself and prioritize accordingly means a default to focus on volume and return, not impact in emerging markets. The agency is failing to find its boldness. government and to international partners, its priorities nor what risks it is willing to take, smartly, in order to have the most impact. foreign and development policy, it has not made clear to others in the U.S. has supported progress in their country while also upholding high environmental and governance standards often lacking in BRI projects. These investments matter as locals feel the U.S. They have provided $2 billion to support COVID-19 response efforts and build greater health resilience in frontier markets, and supported small farmers to stabilize agriculture markets in remote areas throughout Kenya, Rwanda, and Tanzania. government an interest in critical minerals mining and processing as well as telecom infrastructure upgrades and development, toll roads, and other areas that displaced Chinese funding. In the three years since DFC’s launch, the agency has committed $18.6 billion in financing that increases American influence around the world while also supporting some of the lowest income communities. DFC’s investments build businesses, create jobs, generate tax dollars, drive local capital markets, and have the potential to cover their costs over the long term. While these markets often lack regular access to capital, they are at the same time flooded by well-intentioned, mostly western, grant and aid dollars that cannot do enough to address long term infrastructure and economic development challenges. DFC functions as a bank, originating, executing, and managing investments in geographies that are often overlooked and deemed too difficult by the private sector, mainly in Africa, Asia, and Latin America. government’s newest foreign policy agency (full disclosure, we both worked at DFC, Rebecca as the Chief of Staff, Lauren as the first Vice President of the Office of Equity and Investment Funds, the newly minted equity business at DFC). Effectively leveraging development finance institutions (DFIs) must be a central component of that strategy, but there is work to do to ensure America’s DFI, the Development Finance Corporation (DFC), can meet the moment. policymakers are rightly increasingly focused on commercial diplomacy and improved partnership with the private sector in support of high standards investing. attempts to reshape its engagement with the African continent, the question is with what tools? U.S. The array of complementary and user-friendly resources behind China’s Belt and Road Initiative (BRI) show that influence requires more than traditional diplomacy. Jill Biden arrived in Windhoek, she passed another expressway project, in part funded by a grant from the Chinese government. When Kamala Harris landed in Zambia at Kenneth Kuanda International Airport in Lusaka, she was shepherded through a $360 million terminal funded by the Exim Bank of China, and when First Lady Dr. Secretary of State Tony Blinken landed in Kenya in November 2022 and was whisked downtown along the $668 million Nairobi Expressway funded by the China Road and Bridge Corp.
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