Press Release: DFC Approves Over $2.1 Billion in New Investments for Global Development
The U.S. International Development Finance Corporation (DFC) has approved investments this quarter totaling more than $2.1 billion to advance development in emerging markets in Africa, Eastern Europe, Indo-Pacific, Latin America, and the Middle East. DFC’s Board of Directors has approved $1.6 billion in investments across six projects. An additional 16 investments totaling $587 million were approved by the agency since its Board meeting in September.
“The financing approved by DFC will be critical in facilitating private sector investment to increase economic growth in developing countries, especially in continuing to respond to the economic and health impacts from the pandemic,” said U.S. International Development Finance Corporation Chief Executive Officer Adam Boehler. “These important investments will strengthen small businesses, support female entrepreneurs, expand telecommunications and increase development in emerging markets.”
Today’s Board meeting included the approval of significant projects to strengthen development while advancing U.S. foreign policy goals. DFC’s $300 million investment in the Three Seas Initiative Investment Fund aims to help central and eastern European countries bolster their energy security. Additionally, DFC will stand behind the effort to build a trusted telecommunications network in East Africa and enhance internet connectivity across the continent.
Over the past quarter, DFC continued to utilize its investment tools to tackle complex development challenges, including the impact from COVID-19. DFC recently approved a project to facilitate insurance policies for shipments of vaccines and medical products to developing countries, including vaccines and treatments for COVID-19.
To help developing countries withstand the economic impacts of the pandemic, DFC approved a $50 million loan to establish the DFC-MASSIF COVID-19 Response Co-Financing Facility. This first of its kind facility – established in partnership with the Dutch development finance institution FMO – will provide loans for micro, small, and medium-sized enterprises (MSMEs) in some of the toughest markets facing COVID-19 related liquidity constraints, with a focus on businesses in lower income countries. DFC also approved two new transactions under DFC’s Rapid Response Liquidity Facility, a $93.8 million loan to Sudameris Bank and a $150 million loan to SA Taxi Impact Fund.
Many of the investments approved this quarter advance DFC’s 2X Women’s Initiative, Portfolio for Impact and Innovation (PI2), Health and Prosperity Initiative, and Connect Africa initiative as well as the Administration’s Prosper Africa and América Crece initiatives.
More than 65 percent of DFC’s capital approved this quarter will be deployed to low and lower-middle income countries, and fragile states.
Investments approved by the Board this quarter include:
- Supporting development of data centers across Africa: $300 million will support Africa Data Centres’ acquisition and expansion of existing data center assets in South Africa and Kenya. This financing will also enable entry into new markets through the development, construction and operation of data centers in DFC-eligible African countries, increasing connectivity and supporting economic development.
- Advancing women borrowers and SME loans in Ecuador: An up to $150 million loan to Banco de la Produccion will expand its lending to women borrowers and SMEs. Of the loan proceeds, at least 30% will support DFC’s 2X Women’s Initiative, at least 20% will support “green lending,” and the remaining 50% will support other SME loans, which are especially important due to the COVID-19 pandemic.
- Expanding natural gas processing capacity in Iraq: An up to $250 million loan to Pearl Petroleum Company Limited will finance the development, construction and operation of a 250 million standard cubic feet per day natural gas processing facility and associated infrastructure in the Khor Mor gas field. All processed gas will be provided to underutilized gas power plants in the Kurdistan Region of Iraq. The project will strengthen Iraq’s energy security and demonstrates DFC’s commitment to expanding its investments across Iraq following the MOU signed between the Government of Iraq and DFC in August.
- Developing energy infrastructure within the Three Seas Countries: $300 million in funding for the Three Seas Initiative Investment Fund will advance investment in sectors such as energy, transportation and digital infrastructure in Eastern Europe. The fund aims to overcome existing market challenges to raise capital for critical infrastructure projects. The United States has been an active supporter of the Three Seas Initiative.
- Providing capital for small businesses in Central America: An up to $100 million loan to the Central American Bank for Economic Integration (CABEI) will support lending by financial institutions to micro, small and medium-sized enterprises (MSMEs), including rural SMSEs, in El Salvador, Honduras and Guatemala in response to the COVID-19 pandemic. Many countries in the region already experience an MSME financing gap, that has been exacerbated by the pandemic. DFC’s financing will support working capital, business improvements and new businesses focused on responding to the pandemic while helping leverage additional funding.
- Strengthening telecommunications in East Africa: An up to $500 million loan to the Vodafone-led Global Partnership for Ethiopia that will finance the design, development, and operation of a new private mobile network provider and the acquisition of a mobile network provider license. The project is expected to have a highly developmental impact through the creation of a new private telecommunications network that will increase connectivity in Ethiopia while utilizing trusted technology.
Additional projects approved by DFC since its last quarterly Board meeting include:
- Mitigating COVID-19 related liquidity constraints worldwide: A $50 million loan will help create the DFC-MASSIF COVID-19 Response Co-Financing Facility, in partnership with the Dutch development finance institution FMO. The facility will lend to financial intermediaries facing COVID-19 related liquidity constraints, with a focus on those on-lending MSMEs in lower income countries. The facility will also prioritize reaching women-owned and women-led MSME’s, making this a DFC 2X Women’s Initiative transaction.
- Delivering vaccines and medical products to developing countries: A loan for up to $26.7 million to Parsyl will facilitate cost-effective insurance policies for shipments of vaccines and medical products to developing countries, including vaccines and treatments for Covid-19. Parsyl utilizes data analysis to ensure robust supply chains.
- Expanding access to financing for SMEs in Liberia: A $20 million loan to International Bank of Liberia Limited will provide a credit line for longer-term SME lending in Liberia, offering needed support in a challenging market. In addition, the bank prioritizes women in their senior management team and in their workforce, qualifying for DFC’s 2X Women’s Initiative.
- Promoting financial inclusion in Sri Lanka: A $40 million loan to Sanasa Development Bank will help support SMEs and 2X eligible women-owned SMEs.
- Bolstering women’s economic empowerment in India: A $24.5 million loan portfolio guaranty with Kotak Bank will support lending to 2X qualifying borrowers, supporting women’s economic empowerment and DFC’s 2X Women’s Initiative. DFC’s guaranty will leverage a total of $50 million in lending.
- Supporting solar investments in low and lower-middle income countries: A $10 million loan portfolio guaranty to Trine AB will help support off-grid solar lending across the globe, including to companies in low and lower-middle income countries in Africa as well as Latin America and the Caribbean. DFC’s guaranty will leverage a total of $20 million in lending.
- Providing essential goods throughout Indonesia: A $28 million loan portfolio guaranty to ICS Indonesia Resilience Fund will support on-lending to healthcare facilities and SMEs providing essential goods in the food value-chain, which will leverage a total of $40 million through the fund. ICS has also committed to employing women in their workforce and developing a gender lens investing strategy, meeting the criteria for DFC’s 2X Women’s Initiative.
- Promoting financial inclusion in Afghanistan: $475,000 in political risk insurance to Capital Sisters International will help provide insurance for loans to FINCA Afghanistan, a microfinance institution that supports underserved populations. Capital Sisters is women-founded, women-led, and funds only microloans for women.
- Financing for small businesses in Paraguay: A $93.8 million loan to Sudameris Bank S.A.E.C.A will support SMEs in Paraguay whose businesses have been impacted by COVID-19. This financing was provided under DFC’s Rapid Response Liquidity Facility and focuses on women-owned and women-led SME’s, qualifying for DFC’s 2X Women’s Initiative.
- Advancing loan opportunities for entrepreneurs in South Africa: A $150 million loan to SA Taxi Impact Fund (RF) Proprietary Limited will help expand the company’s lending portfolio to entrepreneurs operating minibuses. This financing was provided under DFC’s Rapid Response Liquidity Facility and qualifies for DFC’s 2X Women’s Initiative.
- Supporting COVID-19 recovery in India: A $75 million loan will help provide critical liquidity for ReNew Solar Power Private Limited to mitigate the effects of limited funding from local banks due to COVID-19.
- Increasing economic growth in Colombia: $25 million in political risk insurance for Touchstone Colombia will help support the development of a gold mine in Segovia, Colombia to increase economic growth.
- Empowering small retail businesses in South America: A $5 million loan to Tienda Pago Holdings Ltd will provide working capital finance to underserved small retail merchants in Peru and Mexico. With women-led and women-owned businesses comprising over half of the beneficiaries, meeting the criteria for DFC’s 2X Women’s Initiative.
- Serving lower middle- and middle-income households in Mexico: A $14.6 million loan to WBC – ION Financiera will help expand its existing home mortgage and SME loans to lower- middle and middle income households in Mexico.
- Supporting low-income communities in Mexico: A $19.8 million loan to Imperative Investment I will finance construction and buyer financing for low income housing and community services in Mexico. Imperative is majority women-owned and prioritizes women in both senior management and their board, qualifying for DFC’s 2X Women’s Initiative.
- Expanding Access to Home Finance in Cambodia: A $5 million loan to First Finance Plc will be used for the expansion of its lending portfolio for affordable home financing in Cambodia. The loan will support increased access to home ownership for underserved populations.
Many of these investments are subject to Congressional Notification.
Photo courtesy of DIVatUSAID.