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Ben Hubbard

Director, Development Credit Authority

Dear Friends,
There's a lot happening at USAID's Development Credit Authority (DCA). As the sun
sets on 2011, I want to share some highlights from the exciting year we've had.

Working directly with our partners and USAID field missions, DCA completed 37 transactions
in 21 countries that will leverage up to $200 million in private capital for critical
investments in agriculture, health, municipal infrastructure, and other sectors.
We also put into action a second-generation strategy that is more focused, flexible
and connected to USAID's top development priorities.

We are excited about these achievements and believe DCA has more to contribute today
than ever before. With a renewed emphasis on private-sector led economic growth,
DCA is helping USAID design alternatives to traditional assistance and putting more
local wealth to work for development. In an increasingly constrained budget environment,
DCA is extracting additional value from our increasingly scarce development dollars.
And with an Agency-wide modernization effort underway, DCA has become a model for
the speed, flexibility, and service orientation that USAID aspires to as a modern
development enterprise.
But we've only begun to see what DCA can do. I want to share a few highlights of
what you can expect from us moving forward.
First, in line with the new Presidential policy on development, USAID is significantly
increasing its private sector leverage across the Agency. As a critical component
of that strategy, DCA is aiming to more than double the amount of commercial capital
we mobilize, putting to work up to $2 billion in commercial capital by the end of
2016. In unlocking this financing, we can impact more than 1.5 million people and
achieve 15-30x leverage for every tax dollar we spend.
Second, we are focusing and concentrating our work in the highest priority places
and sectors. The local private sector is critical to the success of the Administration's
flagship development programs, Feed the Future and the Global Health Initiative,
and we are adjusting our portfolio accordingly. We hope to commit up to two-thirds
of our resources to the health and agriculture sectors and to sub Saharan Africa.
In other regions, we will support countries graduating away from USAID assistance
by expanding the successful sub-sovereign financing models DCA pioneered in Asia
and Eastern Europe. [http://mobile.bloomberg.com/news/2011-10-20/usaid-to-guarantee-serbia-s-first-municipal-bond-issue]

Third, we are expanding our presence to the field and boosting our relevance beyond
guarantees. Next summer we will deploy the first-ever cadre of Field Investment
Officers to regional platforms in Kenya, Nigeria, South Africa, Thailand, Egypt,
Peru and Ukraine. This field presence will allow us to inject capital markets expertise
into mission strategies and ensure financing becomes a critical component of USAID
programming from design to execution. We intend for these officers to be a resource
to our partners, originating transactions, leveraging grant assistance from USAID,
and serving as an easy access point for investors and the local private sector.
Finally, we are pursuing more high-impact deals at scale. We've created a Strategic
Transactions Group within DCA that will develop unconventional guarantee products
and work with investment funds, corporations, donors, and other private sector actors
to structure and execute deals with paradigm shifting potential. This fall we finalized
such a deal with JP Morgan Chase [http://www.usaid.gov/press/releases/2011/pr110927.html]
and a syndicate of impact investors that will provide $25 million to the African
Agricultural Capital Fund to fuel economic growth and raise incomes in East Africa
through long-term SME financing. We have several exciting transactions in development,
including a pre-harvest financing partnership with the World Food Program in East
Africa, a sustainable forestry project with major lumber certifiers and purchasers
in Latin America, and a bridge fund for life saving health commodities.

We're excited to be heading into 2012 with such strong support for expanding our
impact [http://www.usaid.gov/press/speeches/2011/sp111020.html] and I hope these
changes will make it even easier to collaborate with USAID. Our team stands ready
to find creative ways to work together and put the DCA to work for you.
Best wishes for a fun, happy and impactful New Year.

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Click here [http://visitor.r20.constantcontact.com/manage/optin/ea?v=001TYH5ba1NOYWlDJKCiQA3gA==]
to subscribe to USAID's Development Credit Authority newsletter and stay on top
of what is happening with development finance at USAID and elsewhere.

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