Financing Developing Market Growth

The USAID Development Credit Authority (DCA) is an innovative model for development assistance that provides financial services and opportunities for underserved but creditworthy populations. By using private sector wealth to stimulate sustainable economic growth, DCA supports USAID's poverty reduction goals in base of the pyramid markets while supporting growth in developing economies. Since DCA was established in late 1999, more than 267 partial credit guarantees have facilitated over $2.3 billion of private capital debt financing in more than 64 countries. Through the DCA guarantee mechanism, Claims on the DCA portfolio are approximately 1 percent, demonstrating that the targeted borrowers are both a creditworthy and profitable source of business. After the 2004 and 2005 tsunamis in Indonesia, for example, DCA stepped up to provide loan guarantees for small- and micro-enterprises (SMEs). With a total of 4,805 loans in Aceh, North Sumatra, and Yogyakarta ($8.4 million, 51.4% of the total $16.3 million in guaranteed loans), the program inspired growth in SME-lending and agricultural lending of the implementing bank of 231%, doubling the number of local units, and increasing nationwide outstanding loan value from $332 million to $1.1 billion.