Foreign assistance is an incredible US legacy, lifting millions of people out of poverty and giving them the resources they need to lead healthy, thriving lives – the lives ONE believes everyone, everywhere deserves a chance to live.
But foreign assistance isn’t the only tool in America’s arsenal to fight global extreme poverty. Private sector investment in developing countries can be a transformative influence, creating much needed economic growth and building on the support foreign assistance provides, eventually reducing the need for it!
So let’s talk about a little federal agency called the U.S. International Development Finance Corporation – or DFC.
What is the DFC?
In 2018, Congress passed (with help from ONE activists!) The Better Utilization of Investments Leading to Development Act (BUILD) Act. The BUILD Act created the DFC to help put private-sector dollars to work in developing countries building infrastructure, creating first-time access to electricity, starting businesses, creating jobs, and ultimately reducing the need for American foreign aid.
How does it work?
Let’s say you’re an American entrepreneur and you want to start a business in a developing country. You’ll need a loan from a bank — but they might not be willing to take on such a risky investment. The DFC can help provide a loan so you can expand your business to a developing country, thus creating more jobs and helping more people.
Okay, but does it *actually* work?
Sure does. Since it was created, the DFC has invested more than $10 billion in projects African countries, alone!
For example:
** Micro enterprises, Major Impact: Supporting Small Farmers in Malawi **
Did you know: the vast majority of Malawi’s adult population work as smallholder farmers, growing bananas, maize, sweet potatoes and other staples that nourish these farmers and their communities. This is important: millions of Malawians experience food insecurity and more than a third live in poverty.
Slight catch: A lot of these smallholder farms exist outside of the formal economy and struggle to secure loans to support their businesses or – like 1.1 million other micro, small, and medium enterprises (MSMEs) in Malawi – are restricted by limited credit.
Working with USAID, the DFC provided a $5 million dollar loan to NBS Bank, an award-winning, primarily women-led bank, to increase its lending to MSMEs. Half of this commitment is specifically designated for agriculture, clean cooking, fisheries, and sustainable forestry.
Status update: Since the loan was approved, 114 small businesses have received a loan. 70% of those businesses are first-time recipients, and nearly 25% are owned by women.
Okay, I think I get it. But what does this mean for us, here at home?
At ONE, we’re pretty big fans of foreign assistance (Maybe you’ve heard?)
But the end goal of foreign assistance is to put itself out of a job. By encouraging private sector investment in developing countries – and by making it less risky to do so – we’re hedging our bets, infusing the fight against poverty with billions of new dollars and creating healthy environments for new business and jobs to grow.
In our interconnected world, we know that what happens on one continent doesn’t always stay there. Disease outbreaks, economic crises, and national security threats don’t respect borders. Ensuring that people in other countries have access to the resources they need to live healthy lives and access economic opportunities isn’t just a reflection of American values abroad, it’s in our health and safety interests.
Why is this important *right now*?
The BUILD Act which, you’ll remember, created the DFC, is up for reauthorization in 2025. During its original passage in 2018, ONE activists across the United States sent more than 32,000 emails and more than 9,000 letters to Congress asking them to pass this bill. It’s now time to call on them again, to make sure they know their constituents care that this important program can continue its work.
How can I help?
We need strong US-Africa partnership to create investments that will tap into the booming potential of Africa’s youth, in turn creating growth, stability, and prosperity. If you agree, join our campaign!