Flag

An official website of the United States government

USAID Deploys Investment Officers to Seven Countries
3 MINUTE READ
April 4, 2012

By Kathryn McConnell
IIP Staff Writer
Washington

A man in a blue tie
Loan officer Edmond Mugarura of Centenary Bank in Mbarara, Uganda, is able to approve loans for small-business entrepreneurs thanks to USAID.

 

The U.S. Agency for International Development has sent field investment officers to work in its regional offices in seven countries to help build links between lenders and local entrepreneurs involved in economic development.

The USAID offices in Kenya, Nigeria, South Africa, Thailand, Egypt, Peru and Ukraine were chosen to host the financial specialists because they serve more than one country, according to the agency.

“Development agencies have not traditionally recruited staff with capital markets experience. And the expertise that does exist is often underutilized,” said USAID administrator Rajiv Shah.

USAID said a major factor limiting economic growth in developing countries has been the inability of entrepreneurs to obtain financing for their businesses. In 1999, Congress gave the agency development credit authority (DCA) to fill the financing gap with local, private capital through loan guarantees.

“With a renewed emphasis on private-sector–led economic growth, DCA is designing alternatives to traditional assistance and putting more local wealth to work for development,” said Ben Hubbard, USAID’s development credit authority director.

By involving local capital markets in development, USAID looks to make financing for development sustainable beyond donor funds, according to an agency press release.

Initially, the investment officers will reach out to commercial banks, microfinance institutions and creditworthy but underserved entrepreneurs running businesses in health, education, energy and agriculture. They will maintain close relationships with regulatory bodies, investment and pension funds, insurance companies and other donors. The officers will not give out loans.

In addition, USAID will not work with an institution if it is more than 49 percent state-owned to ensure that local decisions are made purely for economic reasons and not political reasons, the agency said.

The officers will use USAID’s development credit authority, which since 1999 has provided up to $2.3 billion in partial credit guarantees involving more than 200 local financial institutions and 100,000 borrowers, according to the agency.

“DCA is extracting additional value from our increasingly scarce development dollars,” Hubbard said.