Getnet is a political refugee from Ethiopia who moved to Australia, but then decided he wanted to move back to start a labor intensive business in order to benefit people from his mother country. He now grows vegetables and sells milk from his cows to Addis Ababa and surrounding towns and communities. The DCA Diaspora guarantee enabled him to access the financing needed to get this farm off the ground.
USAID's Development Credit Authority (DCA) unlocks existing local wealth and puts it to work for development. In their 12 year history of issuing credit guarantees, DCA has worked directly with more than 200 local private financial institutions, reaching more than 100,000 credit-worthy, but underserved borrowers. In 2011 they established 37 guarantees that will mobilize an additional $200 million in commercial capital in 21 countries.
I recently traveled to Uganda and Ethiopia to meet several of DCA's borrowers who are using their new access to capitol to expand business, hire more employees, and build new facilities among other things. They are building their local economies, increasing food security, and providing local needs like clean water and jobs. This brief is one of the 8 communication products we've created from that 9 day trip. It's amazing what you can do with the materials from only a week on the ground!
I love infographics and the beautiful madness of communicating a complicated story through simple graphics and charts. I just finished one developed with the combined brainpower of USAID’s brilliant Development Credit Authority (DCA) team. The best thing about this one is that it’s not just an allegory about how their program works. It’s a true story and I got to meet all the characters.
In short, Development Credit Authority (DCA) mobilizes local financing to support development through partial credit guarantees. In other words, they approach local banks and say, “Hey, if you lend to Abe, who owns a small business, we’ll back the loan. If he doesn’t pay you back, we’ll split the cost with you.” Now that the bank’s risk is decreased, they’re willing to lend to new sectors. In 2011, DCA established 37 new guarantees in 21 countries resulting in nearly $200 million in private local capital for small businesses, health clinics, schools, and infrastructure in developing countries.
What’s incredible about this program is that more than 98% of loans have been paid back in full.. After participating in USAID’s guarantee program, banks often realize the profitability of lending to people like Abe. As a result, lending has been opened for tens of thousands of borrowers around the world without a guarantee. Since USAID started using the Development Credit Authority just 12 years ago, $2 billion in private, local financing has been opened up for more than 100,000 entrepreneurs in 67 countries around the world.