For Immediate Release
WASHINGTON, D.C. – USAID’s Development Credit Authority (DCA) worked with 45 financial institutions in 23 countries in 2012 to unlock up to $525 million in private capital for underserved entrepreneurs in developing countries. The financing, made available through 34 partial credit guarantees, is the most USAID has mobilized in a single year.
Guarantees are a cost-effective way to get local, private financing into the hands of creditworthy borrowers. From low-income Haitians seeking to rebuild in Port-au-Prince, to women-owned small businesses in Kabul, to solar companies in Uganda, USAID is enabling private markets in the developing world to provide financing to the people who need it most.
Reflecting Obama Administration priorities in food security and clean energy, these guarantees will open $219 million in bank financing for food security, $77 million for renewable energy, and $215 million for small enterprises. More than half of the $525 million of approved credit guarantees are in sub-Saharan Africa.
An additional 39,000 small businesses will soon be able to access local financing because of USAID credit guarantees, reflecting the Agency’s drive to leverage private sector resources for international development. Thanks to increased employment and other benefits for the families of these small business owners and their workers, these loans will translate into more than a million people whose lives have been improved by increased access to finance.
With the security of USAID’s guarantees, up to $2.7 billion in credit has been made available to entrepreneurs in 70 developing countries since 1999. With historically low default rates, USAID has paid out only $9.1 million in claims across the entire portfolio while collecting $11 million from banks in fees.
Highlights from DCA’s FY12 portfolio include:
- USAID partnered with Acumen Fund, a nonprofit global venture fund, to facilitate the flow of up to $15 million in debt capital to social enterprises working to provide critical goods and services in Africa and South Asia.
- USAID will partially back private loans made to smallholder farmer organizations, including those with contracts from the World Food Programme-Purchase for Progress initiative.
- New guarantees will unlock $30 million in Haiti for private lending toward housing, construction, and small businesses impacted by the 2010 earthquake.
- A new credit guarantee will allow Root Capital to disburse more than $50 million in loans, reaching more than one million small-scale farmers over the next five years.
USAID is a U.S. Government agency that provides economic, development, and humanitarian assistance around the world in support of the foreign policy goals of the United States. USAID’s Development Credit Authority (DCA) works with investors, local financial institutions, and development organizations to design and deliver investment alternatives that unlock financing for entrepreneurs in the developing world.
Click here to view the infographic of USAID’s Development Credit Authority 2012 Portfolio:
Last updated: December 18, 2012