The launch of the U.S. Development Finance Corporation (USDFC) in October 2019 is an extraordinary opportunity to accelerate capital flows into emerging and frontier markets in support of U.S. national security, development, and commercial objectives. The new agency is inheriting a fundamentally solid foundation to build upon from the Overseas Private Investment Corporation (OPIC). However, it would represent a tremendous missed opportunity if the USDFC merely replicated OPIC’s activities at a higher volume. This is especially the case for infrastructure finance, the sector where USDFC has the greatest potential to have impact. To help ensure success at scale, we recommend the USDFC:
- Focus on fast-growing emerging market urban clusters by organizing investment opportunities around building Smart Cities.
- Respond to unmet power needs by investing aggressively in both hard and soft energy infrastructure and technology.
- Help close the digital divide with soft infrastructure investments
The Center for Strategic and International Studies (CSIS) and the Energy for Growth Hub, two independent organizations that have closely supported the creation of the USDFC, convened the Working Group on U.S. Development Finance for Infrastructure to consider the context and emerging opportunities and provide focused recommendations for the new USDFC to live up to its potential. The questions we asked included: What are the major global and market trends affecting the USDFC’s ecosystem? Where are the potential opportunities the greatest? How can the USDFC do more, in volume and quality, than OPIC in filling the infrastructure gaps to unleash the potential of the private sector and to create jobs? This memo is a report of the co-chairs and does not necessarily represent the views of all participants in the Working Group.
Read the full report here.