PSC
Creating Economically Sound Models:
How International Development Companies Help Unlock Additional Capital Multiple US presidential administrations have instituted development policy and programming that increasingly reflect the belief that the commercial incentives of private enterprise can dramatically help drive development outcomes. Private capital is in fact necessary to fill the gap between capital necessary and capital available to achieve development objectives. The U.S. government initially used USAID Development Credit Authority as a credit guarantee mechanism to help raise capital. Its success now forms an integral part of the newly legislated U.S. International Development Finance Corporation.
Innovative Solutions International Development Companies have pioneered ground-breaking market-driven solutions, being at the forefront of private capital mobilization and investment for USAID, other donor, government, and private sector organizations for decades. Over these years, international development companies mobilized billions in investment to advance development objectives all over the world and continue to implement innovative USAID-funded projects such as CATALYZE. Just under this one contract design blended finance solutions and other mechanisms will be applied to mobilize $2B in private capital.
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From the 1980s through the mid to late 1990s, investments in microfinance and agricultural market systems had major roles in USG approaches to development. This accelerated with the fall of the Berlin Wall and disintegration of the Soviet Union and the concomitant decline of the intellectual and political influence of belief in state-centered and run economies and ushered in a long and expanding USG-led era of private, financial, and capital market development. As noted in an earlier piece, international development companies, such as those comprising the membership of CIDC, best steward and emulate the philosophy of foreign assistance as a hand up, not a handout.
