Worldwide: How Will New U.S. International Development Finance Corporation Help American Companies?

Last Updated: October 24 2018
Article by Javade Chaudhri, Michael P. Gurdak, Stuart Kerr and Grant H. Willis
Most Read Contributor in United States, September 2019

In Short

The Situation: The U.S. government historically has lagged behind other countries in providing support to investors in developing and emerging markets.

The Development: The Better Utilization of Investments Leading to Development ("BUILD") Act, signed into law by the President on October 5, 2018, as part of the Federal Aviation Administration Reauthorization Act of 2018, creates a new agency, the U.S. International Development Finance Corporation ("IDFC"), to support private investment in developing countries.  It will replace the Overseas Private Investment Corporation ("OPIC").

Looking Ahead: IDFC is "OPIC on steroids" and means much more funding and new kinds of support for American companies working in developing markets.

The U.S. government has lagged far behind China, Japan, and other countries in providing support to its investors in developing markets, particularly in Africa. Indeed, even European countries have been more proactive in providing loans and other means of support to their companies that invest in Africa.

In part to counter this challenge, the U.S. Congress established a new agency, the IDFC, to support private investment in developing countries. The IDFC will have authority to make loans, support investment funds, take equity positions in investments abroad, and provide guaranties up to a ceiling of $60 billion.

The IDFC will replace OPIC, but at twice the size and with enhanced powers—including certain authority transferred from the U.S. Agency for International Development ("USAID"). It is hoped that the IDFC—in coordination with USAID, the Millennium Challenge Corporation ("MCC"), the multi-agency "Power Africa" project, and other U.S. government entities—will be able to leverage far more than this initial $60 billion funding. Competing with China, particularly in Africa, will require hundreds of billions of dollars from the U.S. public and private sectors.

How did an agency (OPIC) seemingly on the chopping block in the early months of the Trump Administration wind up with a $60 billion budget (up from $30 billion), the ability to take equity positions alongside private investors, and authority previously granted to USAID? And how can U.S. companies maximize the opportunities provided by this new agency?

In early 2017, the White House looked critically at small, specialized U.S. government agencies with a global orientation—such as OPIC and the Trade and Development Agency ("TDA"). The U.S. Export-Import Bank ("ExIm") had long been a target of some Members of Congress. Many assumed that the "landing teams" imbedded in these internationally-focused agencies by the new administration would be tasked with shutting them down. This feeling began to shift after businessman and investor Ray Washburn was appointed president and chief executive officer of OPIC. He believed that ideas to enlarge and improve OPIC, which had been percolating in Washington policy and think tank circles for years, had merit and were worth promoting. With support from former OPIC head Robert Mosbacher, Jr. as well as leadership on Capitol Hill from Senators Bob Corker and Chris Coons, Representatives Ted Yoho and Adam Smith, the BUILD Act was born.

The BUILD Act creates the IDFC as a successor to OPIC—and quite visibly as a development agency—with a goal of promoting economic and development outcomes for eligible countries, a high level of public accountability and transparency, and strong social and environmental safeguards. Washburn has noted that unlike, for example, China's vast and more mercantilist Belt and Road Initiative, "We're more interested in creating jobs in those economies to stabilize those economies." The list of currently-eligible countries, which prioritizes less-developed countries, is available on the OPIC website.

How will the BUILD Act work for American companies? As with OPIC, a major focus of the IDFC will be to support American businesses by providing medium- to long-term debt financing through loans and guaranties for eligible investments in developing countries and emerging markets. The IDFC will continue to offer political risk insurance and provide financial support for the creation of privately-owned and managed investment funds. The agency is also authorized to take up to a 10 percent equity position in ventures in eligible countries. Unlike OPIC, the IDFC will be able to offer guaranties and invest in local currency. Other bilateral and multilateral donors, including the EU's External Investment Plan (adopted in 2017), have long had these tools at their disposal.

Bill Delphos, a former OPIC senior vice president, has spent decades helping American companies finance their work in emerging markets.  He notes: "Particularly in Africa, a region full of opportunities but not in the growth plans for many American companies, the IDFC can be a game changer. It will mitigate risk and make U.S. companies more competitive."

OPIC is, and the IDFC will be, involved in a wide variety of sectors, including agriculture, telecoms, mining, and health care. There has, however, been a trend at OPIC towards greater investment in renewable energy projects around the world. Considering current U.S. government development priorities such as Power Africa (rolled out in 2013) and the 2015 Electrify Africa Act, we can expect this trend to continue. Current and proposed OPIC projects are listed online. American companies involved in the renewable energy sector should look carefully at the new opportunities the IDFC will provide. Any U.S. company considering new investments in Africa or in developing economies elsewhere should consider looking to the IDFC for support.

How else will the IDFC be different from OPIC? The IDFC will be more development-oriented, coordinating more with other development agencies, and utilizing their data—such as MCC's time-tested Constraints Analysis on binding constraints to economic growth—to better focus U.S. investments on sectors showing the greatest potential for impact. One change that has been viewed with ambivalence by the international development community is moving USAID's Development Credit Authority ("DCA") into the IDFC. This significant private sector engagement tool allows USAID to partner with local banks in developing countries to help channel local private capital toward U.S. development objectives. Rather than granting funds directly to agricultural enterprises, for example, USAID uses DCA to share risks with local lenders and develop a sustainable source of local commercial capital.

Three Key Takeaways

  1. The IDFC is the most significant new U.S. government initiative in international development in a number of years, at least since the establishment of the MCC in 2004.
  2. Many U.S. companies will find that the IDFC can enhance opportunities for investments in developing countries—by providing a new source for financing, loan guaranties, insurance, and accompanying equity investments. This is intended to—and should—promote greater American participation in developing economies in Africa and elsewhere.
  3. Related tools provided by other U.S. government agencies are often underutilized by American companies. Agencies such as the Trade and Development Agency (that provides project preparation grants and more), the U.S. Department of Commerce's trade promotion arm, the Commercial Service, ExIm, and many other agencies can facilitate the entry and activities of U.S. companies in foreign markets.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions