DFC has record year following reorganization, but needs reauthorization
$12 billion in investment commitments in FY2024 is nearly triple the investment level at DFC's founding nearly five years ago. But can it keep growing at this pace?
By Adva Saldinger // 29 October 2024The U.S. International Development Finance Corporation had a record year, committing $12 billion across 181 deals in 44 countries and showcasing the growth of an agency whose mandate is awaiting congressional renewal. This year’s allocation reflects a nearly 30% increase over fiscal year 2023, and is more than double the agency’s investment level compared to five years ago when it was founded. It also comes on the heels of a major reorganization at DFC and rapid hiring efforts that have expanded the agency to almost 700 employees, nearly double its original size. The rapid growth and reorganization around five key sectors — infrastructure and minerals, energy, health and agriculture, small business support, and funds — have created some bumps in the road. “It being a different mission, different way of doing business, different funding, plus the growth in employees, with the mission that Congress has given us, means there's just a lot of cultural adjustment. I mean, just a huge amount,” DFC CEO Scott Nathan told Devex. “That’s a huge challenge for everybody to gel as a new culture, to figure out ways of working with bigger scale and all the new people, doing it with remote work, the transition from the pandemic to being back in person, that's a huge challenge.” Although this shift created a “real sense of disruption” for some, Nathan highlighted the agency’s investment growth as proof of delivering results despite navigating such issues. DFC estimates last year's financing commitments will support 450,000 smallholder farmers, generate 4,600 gigawatt hours of renewable energy, improve health care for more than 11 million patients, and fuel growth for 380,000 micro, small, and medium-sized businesses. Nathan emphasized that more than 70% of the 181 deals signed are in low- and lower-middle-income countries, aligning with DFC’s mission to support projects in some of the world’s “poorest” regions. Although these deals are typically smaller, they require substantial time, personnel, and resources, underscoring the agency's commitment to development in high-need areas. “That is part of our mission,” he said, adding that he is proud of how many investments are in such countries. But to sustain growth, DFC needs congressional support. While the agency might manage this investment pace this year, it is about $10 billion away from the $60 billion portfolio cap. Expanding DFC is one of several proposed changes in the bill approved by the House Foreign Affairs Committee to reauthorize the agency, with a similar bill underway in the Senate. The agency and advocates are pushing for the changes to materialize this year. “If we're not reauthorized, the damage to the business we're doing here, to our reputation, to our ability to keep pushing forward transactions, would be severe,” Nathan said, adding that reliability is essential in finance, and business uncertainty is detrimental. In addition to a renewed mandate, several tweaks — doubling its size, clarifying its authorities, changing the accounting on its equity investments, and expanding the number of countries where it works — would optimize the agency’s performance, while maintaining focus on development, he said. DFC has strong bipartisan support, as reflected by Congress’ consistent funding increases, Nathan said at Devex World 2024. “It's enabled us to build the team and build the scale we need to keep that going. It's enabled us to increase our level of activity. But if we don't get reauthorized, if we don't get the kind of optimization in our structure and authorities that the reauthorization process would afford us, that would be a really squandered opportunity,” he said. As DFC awaits reauthorization, it can continue sourcing deals and pushing them forward, and working to expand its overseas team to identify more potential transactions, he said. And there’s more work to do internally too, he added. “Can things be better, go to the next level? Of course, that's always the case, and I think it's part of the work to come, which is to figure out how to gel as a team and a culture even better, to be as efficient and effective as possible, to continue to integrate new people and source the best talent that we possibly can,” Nathan said.
The U.S. International Development Finance Corporation had a record year, committing $12 billion across 181 deals in 44 countries and showcasing the growth of an agency whose mandate is awaiting congressional renewal.
This year’s allocation reflects a nearly 30% increase over fiscal year 2023, and is more than double the agency’s investment level compared to five years ago when it was founded. It also comes on the heels of a major reorganization at DFC and rapid hiring efforts that have expanded the agency to almost 700 employees, nearly double its original size.
The rapid growth and reorganization around five key sectors — infrastructure and minerals, energy, health and agriculture, small business support, and funds — have created some bumps in the road.
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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.