Gender-lens investing will be a major focus for the new U.S. International Development Finance Corporation, says Frank Dunlevy, who leads its investment funds department.
Earlier this year, President Trump signed the Better Utilization of Investments Leading to Development Act (the BUILD Act) into law. It sees the creation of the IDFC that will take over the work of the Overseas Private Investment Corporation (OPIC) and combine with the credit development authority of the U.S. Agency for International Development (USAID).
The IDFC’s annual financing budget will be $60bn, almost double that of OPIC’s $29.5bn. Though the US spends less than 1% of its federal budget on foreign aid, it is expected that the new structure of IDFC will put it on par with other development finance institutions.
Unlike OPIC, which can only make loans, the IDFC will have the ability to make equity investments or investments denominated in local currencies.
Speaking to RI in London at the EMPEA Sustainable Investing in Emerging Markets Summit, Dunlevy says it all amounts to the largest changes in US policy on development finance in the last 50 years.
A Vietnam veteran and long-time investment banker, Dunlevy is the Counselor to the President and CEO of the OPIC and serves on its Investment Committee.
He says: “This is a major statement by the Administration about its commitment to development finance primarily in Latin America, Central America, Africa and the Indo-Pacific [region].“It gives us equity capability, which we haven’t had before, like all of the other 14 DFIs. So we will now be able to partner with them on an equity basis that we’ve not been able to do previously.
“So it will make working with them more seamless. We’ve done plenty of transactions with them with our debt product but it is a little awkward structurally. So the new structure will make things easier structurally and allow us to increase our commitment in the space.”
A large part of its commitment will relate to women’s empowerment – an area championed by Ivanka Trump, daughter and advisor to the US president. On behalf of her father, she held a press conference introducing the BUILD Act where she focused on IDFC’s planned activities around women.
This includes the 2X initiative that will directly invest $350m and mobilise over $1bn in capital supporting women-owned companies providing a product or service intentionally empowering women.
Dunlevy says it will start in Latin America, and it has ambitions to start something similar in Africa. And OPIC (which becomes IDFC next year) has added a gender lens to its wider existing investment strategy where it factors in how the project addresses the specific concerns of women.
Another focus of the new IDFC, highlighted by Ivanka Trump, will be a broader role in catalysing private sector investment. A recent deal demonstrating this saw OPIC and Liberty Mutual Insurance launch a $1bn risk-sharing agreement to catalyse private sector investment in the developing world.