USAID administrator shares view on development finance legislation

WASHINGTON — With senators continuing to discuss legislation that would create a new United States development finance institution, U.S. Agency for International Development Administrator Mark Green has weighed in for the first time.

Green told Devex that he has long believed in the importance of a development finance institution, but that “our focus continues to be making sure that it's not simply about the money, that it is about sound development outcomes. There are tremendous development needs and opportunities in the world. So the most important thing is figuring out how we apply resources that are available to meet those outcomes.”

Others in the development community have also expressed concerns about the need for a stronger development focus in the Better Utilization of Investment Leading to Development, or BUILD Act, which would create a new agency that would combine the Overseas Private Investment Corporation and USAID’s Development Credit Authority, as well as expand U.S. development finance capabilities.

“It's not simply how much money you put into a country,” Green said. “In fact, in some cases that can be counterproductive. It is how you do it, where you do it, what does it reinforce, what are the development outcomes. And so that's been our focus in this process, is to do everything we can to ensure that whatever the final product is, that development and finance are closely linked so that we're all reaching the potential that's there.”

In the reform plan and reorganization recommendations the White House released last week, it talks about the new DFI as a “way to leverage more private-sector investment, provide strong alternatives to state-directed initiatives, create more innovative vehicles to open and expand markets for U.S. firms, and enhance protections for U.S. taxpayers.” While it does mention development and development impact, most of the language is focused on the role the new DFI will have on national security and foreign policy objectives.  

Indeed, despite reports to the contrary, USAID hasn’t played much of a part in discussions about the new DFI. While Ray Washburne, OPIC’s chief executive officer, testified in Congress that he had met several times with Green to discuss the new development finance corporation, Green told Devex earlier this month that, “I haven’t actually had many conversations with Ray about it.”

What Green has been wanting to reinforce, he told Devex, is that the new DFI is careful in how it works, and that it should use its expanded tools in a way that furthers a country’s progression to economic development without creating indebtedness — as the Chinese model does. USAID needs to be closely linked to the DFI, he added.

“When I look at other DFIs in the world, that's clearly where they've arrived. They view that as important. The British model — DFID [the Department for International Development] owns their DFI, the way it's structured. We're not proposing that. But again I think the key is the linkages.”

He reiterated that point in a Senate hearing last week, saying that whether the linkages are in the legislation or in the implementation rules, it is key that those linkages exist “as far out into the field” as they can.

“We want to make sure that our professionals in the field that right now own DCA, from our perspective, continue to have that ability to be the pipeline for projects, good, sound development projects,” Green said at the hearing.

Having a chief development officer at the agency, as has been proposed in the updated legislation, would be positive, he said, but he encouraged that it be filled by a USAID employee who would be both directly linked to help create the DCA pipeline and would be able to bring his or her development knowledge to bear.

Senator Chris Coons, a Democrat from Delaware, and one of the bill’s cosponsors, said that he valued the questions and concerns of both Sen. Bob Menendez, a Democrat from New Jersey, and Green about the connection to USAID and the new DFI’s development mandate. He hinted at a few changes that might be proposed when the U.S. Senate Committee on Foreign Relations meets to discuss amendments to the legislation on Tuesday. According to comments he made in a hearing last week, it appears that the bill will be updated to add language that would transfer OPIC’s human rights policies to the new institution, and to bolster its ties with USAID and its development focus.