The government-backed US International Development Finance Corporation (DFC) recently allocated USD 4 billion to a “Rapid Response Liquidity Facility,” through which it will provide additional funding to in-process DFC projects that have been impacted by COVID-19. This financing will go to a range of current DFC clients, including microfinance institutions (MFIs) that are struggling to collect retail loan repayments, infrastructure projects experiencing delays, and hospitality businesses that have experienced “precipitous revenue losses.” The intent is to help clients maintain operations despite the pandemic-related uncertainty, which is causing hesitation among for-profit investors.
As part of the “Rapid Response” element of the program, the CEO of DFC has the authority to approve funding requests and changes to the planned purposes of previous disbursements, both of which normally require the approval of the DFC board of directors.
The initiative is part of a wider response to the pandemic by DFC, including USD 2 billion for strengthening health resilience in developing countries.
DFC was launched in 2020 to “help businesses expand into emerging markets, foster growth and improve lives in the developing world while reinforcing US foreign policy and national security interests.” The organization has an investment cap of USD 60 billion to deploy in forms such as equity placements, insurance, technical assistance and research. DFC focuses its efforts on low-income and lower-middle-income countries in areas such as “energy, healthcare, critical infrastructure and technology.” Upon its founding, DFC took over the work of the Overseas Private Investment Corporation (OPIC) and the Development Credit Authority of the US Agency for International Development.
By Madigan Ruch, Research Associate
Sources and Additional Resources
DFC press release
https://www.dfc.gov/media/press-releases/dfc-announces-4-billion-covid-19-rapid-response-liquidity-facility
Previous MicroCapital news on DFC
https://www.microcapital.org/microcapital-brief-us-international-development-finance-corporation-dfc-loans-30m-to-sewas-sitara-for-housing-microfinance-for-women-in-india/
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