The United States Agency for International Development (USAID) is a US government agency that provides international development assistance. USAID’s Development Credit Authority (DCA) advances these objectives by providing partial credit guarantees with a two-fold mission of reducing risk in underserved markets as well as proving the long-term and continued commercial viability of lending there. The Capstone team provided a landscape analysis of debt fund partners as well as recommended approaches for DCA to mobilize investments from them.
The team focused on 61 countries where USAID had foreign development objectives, concentrated across Africa, Asia, Latin America and the Caribbean, Europe, and the Middle East. The pitch deck first outlined USAID development priorities in each region, providing a foundation with which to examine debt fund partners. It then showcased the methodology developed by the Capstone team to assess the suitability of each debt fund. Following this, the pitch deck then provided a macro overview of the 75 funds analyzed, including recommended partnership approaches.
From this analysis, the team developed long-term recommendations to crowd-in private sector investment. DCA should partner with private debt funds that have a similar regional and sectoral focus, using innovative risk structures and leveraging risk splits to optimize pricing. Alongside, DCA could provide value-added services to contribute to the development of a sustainable lending ecosystem. Finally, the team provided four immediate tasks that the DCA can focus on, across the areas of outreach, analysis, distribution and business development.