The U.S. Development Finance Corporation (DFC) was established to supposedly finance solutions to the most critical challenges facing the developing world, with priority given to low- and middle-income countries. Its Roadmap for Global Impact outlines specific goals for pursuing the most impactful projects in the underserved communities worldwide.
What’s the real priority?
A top DFC priority is health resilience: to advance solutions that bolster health services and inject liquidity into developing countries. Why is the head U.S. international development aid agency leveraging its financial tools to finance U.S. companies for projects in the U.S?
The DFC’s Health and Prosperity Initiative was launched in May 2020 to catalyze $5 billion of investment to build greater health resilience in developing countries, investing between $5 million and $500 million per eligible project in DFC-eligible countries. An open and indefinite call for proposals was launched on May 11 for projects in all countries in which the agency is authorized to invest, with a focus on countries in Africa that are particularly vulnerable to health challenges.
The DFC has already directly approved loans for a total of almost $2 billion for projects, but in the U.S. The goal is to re-shore strategic resources in the U.S. and strengthen related domestic supply chains in response to COVID-19. How does financing U.S. companies like Apiject Systems Corporation or Gingko Bioworks Inc., to the tune of $590 million and $1.1 billion respectively, benefit the health resilience of developing countries?
The U.S. is not a DFC-eligible country
It may be refreshing that a U.S. government agency implicitly recognizes that America has some of the most underserved communities in the world and that the domestic health system is not addressing or serving their health and safety needs and issues. But the U.S. is not listed as a DFC eligible country.
Financing expansion of American commercial biosecurity businesses may aid America’s response to and recovery from the COVID-19 pandemic. But how does financing American companies, who otherwise have a panoply of options to access pandemic-related financial aid and grants through SBA and private-sector organizations, help developing countries in their response and recovery from the COVID-19 pandemic?
Reducing U.S. dependence on global supply chains and ensuring domestic production of supplies needed at home may provide Americans with needed testing capacity and vaccine supplies. But how does it contribute to the readiness of DFC-eligible nations to surge production of medical countermeasures, save lives and defeat the virus?
The “America First” Mirage for International Development Aid
DFC’s global response to both the health-related impacts and economic impacts of COVID-19 are commendable and much needed. But it seems those efforts are merely a complement to financing solutions in and for the U.S.
Indeed, the DFC’s approach to international development is a clear example of how the “America First” policy translates into half-assed aid hidden behind a well-preened curtain stitched with hundreds of small project appliqués. These make for a nice stage dressing, but they also create a mirage of “effective aid”.
The DFC seems more focused on abetting Great Power competition in the developing world, particularly Africa, and is leveraging international development tools by giving short shrift to the rationality and values of foreign aid. The agency’s mandate is to support the legitimate interests of aid-recipient countries in their own development, not provide assistance to help ourselves first rather than help them.
Foreign aid is by no means altruistic in nature. It is part of America’s long-term interests and serves as a “soft power” tool to further America’s long-term national interest in building a peaceful, stable world. But it is hard to support that effort if the stated rationale for aid is ditched in favor of diverting funds to advance American domestic economic and political interests. Even a thousand small projects for women and youth will not serve to cover up ineffective or improper use of government funds in key sectors, such as health.