Economic Tools Mapping: Development Credit Authority of USAID
Borrowers in developing countries often have restricted access to capital because risk-averse financial institutions refuse to look beyond their overall country risk profiles. The Development Credit Authority (DCA) developed by USAID presents an innovative solution. This note describes how the DCA has deployed partial credit guarantees to reduce risk and collateral requirements and thereby stimulate lending. It examines how this process has enabled it to leverage disproportionate private sector funds from initial US government spending.