March 14, 2019 (WASHINGTON) – This statement is delivered on behalf of the Modernizing Foreign Assistance Network (MFAN) by Co-Chairs George Ingram, Lester Munson, and Tessie San Martin.
The Modernizing Foreign Assistance Network is pleased that the Trump Administration’s plan for the new Development Finance Corporation prioritizes linkages with USAID, a strong Chief Development Officer role, and a commitment to accountability.
Last week, the Trump administration submitted a Reorganization Plan for the United States International Development Finance Corporation to Congress in accordance with the BUILD Act. Implemented effectively, the U.S. Development Finance Corporation (DFC) will be a powerful addition to the U.S. foreign policy toolkit.
To ensure that the agency’s form follows its function, the Modernizing Foreign Assistance Network endorses four recommendations for the agency’s reorganization plan: ensure accountability for achieving development impact; establish strong linkages with development policies and agencies; lead in transparency; and provide appropriate resources.
The Reorganization Plan includes a number of aspects that MFAN strongly endorses, including:
- Creation of an Office of the Chief Development Officer. MFAN has called for the creation of an Office of the Chief Development Officer that plays an early and lead role in shaping investment strategies, develops core metrics to measure development impact, oversees transparency, manages the integration of USAID’s DCA, and engages with USAID’s Missions.
- Establishment of an independent accountability mechanism to evaluate and report on the DFC’s compliance with environmental, social, labor, human rights, and transparency standards.
- Strong linkages between the DFC and USAID, including smooth staff transition from USAID’s Development Credit Authority; processes and procedures to make all of the DFC’s financing tools readily accessible to USAID Missions; a robust training program for interagency staff on the Corporation’s various financing tools; and opportunities for interagency secondments with the DFC.
- A collaborative relationship between the Chief Risk Officer and the Chief Development Officer to ensure the DFC is striking the right balance when evaluating risks in undertaking its developmental mission. MFAN recommends that the DFC develop an assessment tool to identify how expected impact in various contexts can be weighed in the investment decision-making process to balance potential trade-offs between greater impact and lower risk-adjusted financial return.
- Maintaining USAID’s Office of Private Capital and Microenterprise (PCM) at USAID. USAID is in the process of transforming its operations and standing up a Private Sector Engagement Hub with PCM at its core, which will serve as USAID’s primary organizational interface with the DFC.
MFAN looks forward to working with the administration and Congress to address additional aspects of the new Corporation, including:
- The establishment and publication of a robust framework for assessing the potential and actual development impact of its investments. Organizations such as the Global Innovation Fund have developed tools to draw from, measuring the breadth and depth of an investment’s development impact.
- The establishment of a robust system of monitoring, evaluation, and learning, including an evaluation framework that meets the Office of Management and Budget’s recent high standards as required by the Foreign Aid Transparency and Accountability Act and the BUILD Act itself.
- Standing up the external development advisory council, which should be composed of highly experienced development leaders charged with providing regular input to the DFC.
- The development of an agency transparency policy and the publication of project level data – already the norm through the Foreign Aid Transparency and Accountability Act and the International Aid Transparency Initiative (IATI).
- The creation of safeguards to ensure the independence of the accountability mechanism.
MFAN thanks the administration, particularly the leadership at OPIC, USAID, and OMB for their continued leadership in maximizing development impact. MFAN urges Congress to engage with this plan and looks forward to working with the administration and Congress to maximize the development potential of the new Development Finance Corporation.