Read Report Online

Economic Tools Mapping: Development Credit Authority of USAID

State Function: Market Engagement
Insight & Analysis: Market Building
Topic: International Development Finance
Publication Type: Economic Tools

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.