The U.S. Development Finance Corporation’s watchdog found that the agency is largely on track to implement the provisions it was tasked with when created, despite outside concerns about whether it is sticking to its intended mandate.
The Office of Inspector General reported that the DFC is meeting most of the requirements laid out in the legislation that established the agency, but there is still room for improvement.
An analysis by the OIG, which reviewed the agency’s compliance with the Better Utilization of Investments Leading to Development Act, the bill which created the DFC, found that it has met and implemented 116 of 118 subsections.
DFC has “made significant progress implementing provisions of the BUILD Act” despite organizational challenges, a change in administration, and budget process delays that hindered its spending and hiring, the report says.
The DFC still needs to clearly define the roles, responsibilities, and authorities of the chief development and chief risk officers, and publicly report performance metrics, including development impact on a country-by-country basis. The report included recommendations to address both of these issues.
The analysis also included recommendations on finalizing and communicating policies and standards, like how the agency categorizes income classifications for projects. That would help DFC consistently report on its goals for investing in low- and middle-income countries. The OIG also suggested solidifying the procedure for obtaining presidential approval for support to upper-middle-income countries.
The DFC was also directed to finalize and communicate its financial performance standards, develop procedures, and complete its annual report in a timely manner based on Congress’ expectations.
While likely not a factor with this report, the DFC watchdog is somewhat hampered in its ability to fully investigate the agency, but a provision in the National Defense Authorization Act of 2023, which is awaiting passage in the Senate, would give it law enforcement authority. Most other OIGs have that authority and it gives them subpoena powers, among other things.
More reading:
► What is DFC's mandate? Debate over a bill turns up many answers.
► US DFC looks to balance foreign policy and development mandates
► US DFC's inspector general sends new CEO a list of issues to address
About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
