development credit authority

How to Put $2 Billion in the Hands of Entrepreneurs Around the World by Morgana Wingard

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. 

+ Click here to see photos from Abe's farm