OPIC/USAID Coordination Report shows promise for strong development ties, but will Congress deliver?

This week, David Bohigian, the Acting CEO of the Overseas Private Investment Corporation, which is set to be rolled into the new U.S. Development Finance Corporation (DFC), submitted a document alongside USAID Administrator Mark Green detailing how the two entities will collaborate. The BUILD Act required a joint coordination report laying out how the two agencies would work together once the DFC opens it doors.

Since the introduction of the BUILD Act in 2018, MFAN has advocated for strong DFC linkages with existing U.S. development policies and agencies – especially USAID – in order for the DFC to engage the private sector and help partner countries sustainably eliminate extreme poverty and become more prosperous, democratic, and stable.

The BUILD Act included strong provisions to ensure that the DFC could deliver on a strengthened development mandate. This included the position of Chief Development Officer, a development advisory committee, strong linkages between the DFC, USAID, and other U.S. development agencies, and an enhanced effort to measure the new agency’s impact through a new development impact framework. Throughout this process, MFAN advocated for these critical elements and The Coordination Report largely demonstrates a commitment to nearly all of these linkages.

The report outlines internal responsibilities for the Chief Development Officer (CDO) that align with MFAN recommendations, including the role of measuring and assessing development impact, ensuring the DFC prioritizes support for low-income and lower-middle-income economies, verifying the DFC’s development impact measurement system, and providing USG Departments and Agencies access to the DFC’s tools.

MFAN had recommended that the CDO be charged with external-facing development linkages like liaising with development stakeholders across government. The coordination document proposes the creation of an inter-agency task force – the Development Finance Coordination Group – that is responsible for coordinating development finance activities across the USG. The inter-agency group will share information on the DFC’s transactions and policies; identify priority countries, sectors, and initiatives for engagement; and identify ways that other USG agencies can enable or support the work of the DFC (e.g. enabling environment reforms).

MFAN is supportive of the creation of this body, which will be “the primary forum to capture expertise and equities on matters related to the DFC to ensure policy coherence across the entire USG on environment, labor standards, trade, development policy, and national security, to support and inform investment policy and decision-making,” according to the report.

The report also does a good job of laying out how the new DFC will integrate and collaborate with USAID policies, strategies and programs. MFAN has advocated for USAID staff training on DFC tools and staff secondment opportunities in order to encourage cross-agency utilization and promotion of DFC tools. The report commits to both staff training and staff exchanges and specifies collaborating with USAID missions, which will be an important factor in sourcing meaningful deals.

While the report mentions MFAN priorities like learning, monitoring & evaluation, and USAID’s Private Sector Engagement policy, we look forward to seeing more details on ways in which the DFC and USAID collaborate closely on these topics in order to further best practices at both agencies.

Lastly, when it comes to linkages with MCC, the report specifies that the Development Coordination Unit will directly interface with MCC, including consideration of its constraint’s analysis, and suggests that the MCC may play a role in the Development Finance Coordination Group. This is great to see, as the new DFC will benefit from learning from the development record of the MCC.

The Coordination Report is full of ‘wins’ for development when it comes to the new DFC. MFAN applauds these provisions, which should maximize impact and the ability of the new body to further American interests abroad through development. Sufficient staffing and funding, however, will be needed for these ambitious efforts. MFAN remains concerned that, without further Congressional action, the DFC will have insufficient resources to implement these plans. Only with the right level of funding will the DFC be able to achieve the laudable development objectives included in the BUILD Act. This report sets up the DFC to fulfill those goals, but will Congress and the administration work together to make this a reality?

 

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