New Bill Advances U.S. Development Finance but Needs to Ensure Strong Development Impact

February 28, 2018 (WASHINGTON) – This statement is delivered on behalf of the Modernizing Foreign Assistance Network (MFAN) by Co-Chairs George Ingram, Tessie San Martin, and Connie Veillette.

The Modernizing Foreign Assistance Network commends the bicameral, bipartisan effort behind new legislation to strengthen U.S. development finance tools and will be engaging closely to ensure it maximizes its contribution to development. The Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act) – introduced by Senators Bob Corker (R-TN) and Chris Coons (D-DE) in the Senate (S. 2463) and Reps. Ted Yoho (R-FL) and Adam Smith (D-WA) in the House (H.R. 5105) – follows the recent proposal in the President’s FY19 Budget Request and the 2017 architecture proposal of the MFAN Co-Chairs. MFAN applauds the sponsors’ leadership and looks forward to working together to strengthen the bill’s development mandate and tools in delivering long-overdue reforms.

Private investment is a key element in unlocking development progress, and joining assistance resources with private finance can expand the universe that advances inclusive economic development. Positive elements of the bill include catalyzing private sector resources for growth, harnessing innovation and ingenuity across sectors, and increasing the capacity for the United States to engage with the private sector in the developing world.

MFAN will provide input into the legislative process in the following areas:

1. Development objectives are consistently carried throughout the bill. The goal of achieving poverty-focused, sustainable, and inclusive development is the primary goal, including in the agency’s objectives, investment selection, evaluation, and Board composition.
2. Stronger linkages with USAID. The International Development Finance Corporation (IDFC) should be closely linked with USAID – the United States’ lead development agency –including delineation of clear roles and responsibilities for engaging with development agencies in Washington and in the field, an elevated role for the USAID Administrator on the IDFC Board, and alignment of the Corporation’s investments with sustainable and locally-owned development.
3. Greater consultation and transparency. The Board should make investment decisions and set policies transparently and with public, congressional, and partner country consultation. Transparency is important for project investments and how the Corporation tracks and manages competing policy pressures.
4. Evaluation and learning systems are established and prioritized. The Corporation should draw from the success of the Millennium Challenge Corporation and USAID by establishing and prioritizing strong systems of evaluation and learning in addition to performance measurement.

MFAN also encourages Congress to seek opportunities to reduce duplication between the Corporation and the U.S. Trade and Development Agency, such as in the conducting of feasibility studies for investments.

MFAN is pleased by the strong bipartisan spirit of this bill, and encourages continued consultation with the development community and refinement of the text. MFAN previously called for the creation of a DFC in 2016 and the MFAN Co-Chairs expanded upon that recommendation in 2017.

“The plans for a new IDFC have strong potential to harness greater resources for sustainable development, and we need to see strong links with U.S. aid agencies to make sure those resources advance U.S. development objectives,” said George Ingram, MFAN Co-Chair and Senior Fellow at the Brookings Institution.

“The International Development Finance Corporation can be a major step forward in tapping into the private sector for development, and modest changes in the legislation can make it even stronger,” said Connie Veillette, MFAN Co-Chair and Senior Fellow at The Lugar Center. “A greater emphasis on thorough evaluation, learning, and transparency will make sure this agency is delivering lasting development results for U.S. taxpayers and development partners.”

“USAID and the IDFC will need to work hand-in-hand to help partner countries successfully address poverty, inequality, and sustainability,” said Tessie San Martin, MFAN Co-Chair and President & CEO of Plan International USA. “To do so, USAID should maintain strong capacity to engage with the private sector.”

MFAN wishes to thank the bill sponsors for their dedication to effective and innovative development.  We look forward to working with Congress and the Administration to improve the development effectiveness focus of the legislation.