Development finance institution (DFI), the US International Development Finance Corporation (DFC) is doubling down on investments in Africa amid the global Covid-19 pandemic, as it believes this is an essential time to drive investments and to bring liquidity facilities quickly to the continent to ensure people do not lose their jobs and that companies do not go out of business, CEO Adam Boehler said during a briefing on July 14.
The agency has recently approved several investments in Africa and is undertaking other initiatives to mobilise private sector investment in support of global health resilience on the continent, he noted.
DFC is a new DFI that brings together the capabilities of the Overseas Private Investment Corporation (Opic) and US Agency for International Development's Development Credit Authority, while introducing financial products to bring private capital to the developing world.
In its efforts to bring liquidity to the continent, the agency’s new Rapid Response Liquidity Facility was approved in May. The facility is slated to provide up to $4-billion in additional financing for existing DFC projects that have been particularly impacted on by the challenges brought about as a result of the pandemic.
DFC has been working closely with clients to monitor and mitigate the impacts of Covid-19 so their projects can continue to deliver the intended development outcomes.
These impacts have ranged from microfinance institutions struggling to collect payments and infrastructure projects experiencing major delays to businesses in the hospitality sector suffering precipitous revenue declines.
DFC’s Rapid Response Liquidity Facility is posited to enable the agency to respond quickly to client needs by delegating authority to the agency’s CEO to approve follow-on support for existing projects that would have ordinarily required board approval.
It also authorises the CEO to approve changes to the use of proceeds for previously approved projects to address important working capital needs. The board will be regularly updated on the use of delegated authorities.
DFC will provide up to $4-billion in support under the facility.
Moreover, in May, the agency also announced a new Health and Prosperity Initiative, which includes a call for proposals from private sector entities seeking DFC support for health-related investments in developing countries.
Through the initiative, DFC aims to mobilise private sector investment in support of global health resilience.
DFC will focus attention on projects that support the global Covid-19 pandemic response, especially through investment in health system capacity, including supply chains that expand the distribution of diagnostics, therapeutics, vaccines, and other medical supplies, products and equipment.
Through the initiative, DFC seeks to commit up to an aggregate $2-billion across eligible projects and mobilise an additional $3-billion in private sector capital alongside its investments.
Boehler indicated that this area of healthcare is of particular focus for the agency in Africa, given that developing countries are not weighed down by some of the challenges of fixed infrastructure in healthcare and, therefore, novel approaches, innovative projects and technologies, such as telemedicine, can be pursued.
Boehler also emphasised that DFC is prioritising the agency’s 2X Women’s Initiative by empowering women, who are often disproportionately impacted by crises like Covid-19.
With a lot of women confined to their homes to look after children and unable to get to work during the pandemic, the agency is pursuing projects such as coding at home, and other empowerment initiatives that benefit women, even while working from home, he said.
Boehler indicated that, through its work with collaborators in other counties, DFC had surpassed its goal of raising $3-billion of investments for 2X, raising $4-billion.
Further to these, Boehler indicated that the agency is looking to host an investment summit on Africa but based in the US.
He said that, should the situation around the pandemic allow, this would hopefully be held in September, and would convene heads of State from Africa. He enthused that this summit would enable a number of deals to be made and for investment to be spurred.
During the briefing, it was also mentioned that DFC would have new regional staff based on the continent later this year. This regional team is expected to enable DFC to more proactively source investment opportunities in Africa, be more accessible to local clients and provide real-time country context and guidance.
“The US is heavily committed to Africa and you will continue to see us making more and more deals. We look forward to welcoming African heads of State in September, if this can be done safety,” Boehler said.