On October 3, 2018 Congress passed the bipartisan Better Utilization of Investments Leading to Development (BUILD) Act of 2018 (H.R. 5105/S. 2463), authorizing a new International Development Finance Corporation (IDFC) and establishing a wider set of development finance tools.
MFAN has advocated for development finance reform and has engaged with Congress on this legislation to promote a consistent development mandate, transparency, strong linkages to USAID, and learning and evaluation systems. MFAN is pleased that these considerations were incorporated into the legislation. Across the community, organizations and individuals are sounding off to thank Congress and the administration for this success.
The MFAN Co-Chairs hailed final passage, thanking Congress and the administration and urging the President to sign the bill into law straightaway. MFAN is looking forward to working with Congress, the administration and the development community to implement this legislation. The full statement from the Co-Chairs can be found here.
George Ingram, MFAN Co-Chair and Senior Fellow at The Brookings Institution said: “Throughout the process, we called for a strong development mandate, transparency, and social and environmental safeguards in this bill. The BUILD Act expands U.S. development financing tools while carrying over important accountability and development standards.”
Lester Munson, MFAN Co-Chair and Principal at BGR Group said: “The U.S. government’s capability to mobilize private development finance has not been adequate to U.S. interests and values. The BUILD Act will update the financing tools the U.S. needs to support private sector activity and inclusive economic growth in developing countries.”
Tessie San Martin, MFAN Co-Chair and President & CEO of Plan International USA said: “Passing the BUILD Act is an important step in maximizing the effectiveness of U.S. development finance. Moving forward, the new IDFC will need to work hand-in-hand with USAID and Congress to help partner countries successfully address poverty, sustainability and inequality.”
Tom Hart, North America executive director at The ONE Campaign, said: “The best tool for fighting extreme poverty is a good job, but the investment of America’s private sector in the economic growth of developing countries is massively under-utilized. That’s why the BUILD Act is the most important piece of development legislation to come out of this Congress. The BUILD Act will help bring tens of billions of private-sector dollars into the fight against extreme poverty by helping American entrepreneurs and investors do business in Africa, create jobs and expand their reach in developing countries.”
Todd Moss and Erin Collinson at the Center for Global Development reflect on the importance of development finance and note that “It’s not too grand to say this is the biggest step forward in US development policy since at least the creation of the Millennium Challenge Corporation in 2004 and the launch of PEPFAR in 2003. While foreign assistance remains highly relevant to our development and national security goals, development finance is increasingly in demand. OPIC, a small high-performing agency, has been the United States’ chief vehicle for development finance. But it was created in 1971 and stuck with Nixon-era rules that made it tough to keep pace with its European peers and with the pace of activity by China and others.”
Oxfam’s statement of support noted that “since it was introduced, Congress has improved on previous versions of the bill by including gender disaggregated data and ensuring women and girls will also benefit. Congress also strengthened language around human rights, labor and environmental standards, and improved transparency by including project-level reporting.” Oxfam’s Aria Grabowski said that “the BUILD Act has the potential to showcase the best of US overseas lending: building up the economies of developing countries to create the trading partners of tomorrow for American companies and goods,” continued Grabowski. “We urge the President to sign this important piece of legislation.”
USGLC CEO Liz Schrayer said: “Today’s action in the U.S. Senate to pass the BUILD Act is yet another example of Congress putting aside partisan politics to prioritize the global development agenda, giving America another winning tool to advance our interests in the world.This strong bipartisan vote moves us closer to launching a new, more effective development finance institution to help ensure our nation can compete in the world’s fastest growing markets while fighting global poverty.”
Sam Worthington, CEO of InterAction, noted that “To reach our goals for development and sustainability, the private sector is an essential partner. This is true globally and at the community level, where sound economic growth efforts can provide critical opportunities and lift people out of poverty. A U.S. International Development Finance Corporation can serve as a win-win for smart development policies and the private sector.”
Across government, agencies and leaders have also voiced support for the final passage of BUILD:
BUILD Act sponsor Senator Bob Corker (R-Tenn.) said: “The BUILD Act will begin to move us away from providing direct assistance with mixed results and instead help countries become more self-reliant while saving taxpayers millions of dollars. This legislation will use the free-market to stimulate long-term economic growth in the developing world that will create new markets for American businesses and advance U.S. interests for stability abroad. Thanks to strong support from the administration, in both houses of Congress, and among businesses and nongovernmental organizations, this transformative effort is now on its way to becoming law.”
BUILD Act sponsor Senator Chris Coons (D-Del.) said: “Passage of the BUILD Act shows what we can accomplish when we set politics aside and work together. The BUILD Act creates a 21st century development finance institution that will double the U.S. lending capacity, bringing U.S. private sector investment to low income countries around the world. This investment will allow us to reduce poverty in areas that are critical to our national security, compete with Chinese influence in the developing world, and help U.S. businesses grow and succeed. I am thrilled this bill is headed to the President’s desk and I am grateful for the hard work and support of Senator Corker, the administration, and our partners on both sides of the aisle who worked tirelessly to get the BUILD Act across the finish line.”
BUILD Act sponsor Representative Ted Yoho (R-Fla.) said: “Today is a historic day for how America will implement foreign aid around the world. I applaud the Senate for passing the BUILD Act and sending it to the President’s desk to be signed into law. House and Senate Republicans and Democrats, under the leadership of the Administration, came together and did what was best for the country. For the countries receiving development finance, the goal is to transition them from aid recipients to trading partners. When the BUILD Act is signed into law, we will begin to reform an outdated development finance system into one that is more suited for the 21st Century. A modernized development finance system that focuses on efficiency, oversight, emerging markets, and benefits our national security is a win for every American.”
The White House released a statement saying that “the BUILD Act codifies the proposal in the President’s Fiscal Year 2019 Budget Request and government reorganization and reform plan to create a consolidated, reformed Development Finance Institution with strong linkages to the Department of State and the United States Agency for International Development. The legislation furthers the Administration’s goals to align United States Government development finance with broader foreign policy and development goals, minimize risk to the United States taxpayer, ensure development finance catalyzes (rather than replaces) private-sector resources, and increase efficiency in development finance programs.”
The Overseas Private Investment Corporation, which will be brought into the new U.S. International Development Finance Corporation, released a statement from CEO Ray Washburne noting that “this is a major milestone that will advance United States’ engagement in the developing world. The BUILD Act recognizes that private sector-led investment is essential to economic growth and development and offers a financially-sound alternative to the state-directed initiatives pursued by China that have left many developing countries deep in debt. Thanks to wide bipartisan support in Congress, the Administration’s plan to create a reformed, modern U.S. development finance institution– with 21st century tools – is set to be signed into law. This is a remarkable achievement that promises lasting impact for decades to come.”
Secretary of State Mike Pompeo, who will sit on the board of the new USIDFC, said: “I welcome passage of the Better Utilization of Investments Leading to Development (BUILD) Act of 2018 by Congress with strong bipartisan support today. The BUILD Act implements President Trump’s vision for our development finance institutions. We are enabling them to mobilize private sector investment to accelerate development and move societies forward. The Act provides opportunities for American companies to compete overseas and create jobs here at home, a critical component of the President’s national economic strategy. BUILD strengthens the U.S. government’s development finance capacity, offering a better alternative to state-directed investments and advancing our foreign policy goals. I look forward to chairing the board of the new U.S. International Development Finance Corporation created by the BUILD Act and to working with allies and partners to advance its goals.”
USAID Administrator Mark Green released a statement saying: “I welcome the passage of the Better Utilization of Investments Leading to Development (BUILD) Act of 2018. The provisions of the BUILD Act fully aligns with the President’s National Security Strategy and the Reshaping American Government in the 21st Century reorganization and reform plan…. I expect USAID will work closely with the new USIDFC, both in Washington and in the field, including through staffing, strategic planning, research and development, and due diligence on transactions and investments. The creation of the USIDFC, creates a unique opportunity for USAID to scale up its use of financing tools for development significantly. USAID Missions will be able to take advantage of an expanded toolbox of financing options beyond guarantees (including loans, political-risk insurance and equity) and a broader range of private-sector expertise to support and reorient ongoing programs towards enterprise-led development.”
Millennium Challenge Corporation Vice President Karen Sessions said: “Passage of this important legislation will make the U.S. more competitive within the international development landscape. The new IDFC will help to promote economic growth around the world by further incentivizing private sector investment in developing economies. MCC is pleased to see key principles of our model – such as the constraints analysis – integrated in the BUILD Act. MCC’s expertise in basing investment decisions on evidence and economic analysis, leveraging private sector investment, and incentivizing policy and institutional reforms stands to make a significant contribution to the overall impact of this legislation.”
