The US International Development Finance Corporation, Africa and China

The Center for Strategic and International Studies (CSIS) published on 12 October 2018 a useful discussion of the new US International Development Finance Corporation (USIDFC) titled "The BUILD Act Has Passed: What's Next?" by Daniel F. Runde and Romina Bandura.

While it is generally acknowledged that the USIDFC is a response to China's increased financing of projects globally, some accounts suggest this new agency can match what China is offering. Thi CSIS study makes clear that the USIDFC is a significant new tool for the United States but not equivalent to what China has been doing and continues to do. USIDFC merges the Overseas Private Investment Investment Corporation (OPIC) and several pieces of USAID. It raises the spending cap of the former OPIC from $29 billion to $60 billion for USIDFC, which can make loans or loan guarantees, acquire equity or financial interests in entities as a minority investor, provide insurance or reinsurance to private sector entities, and provide technical assistance.

Like OPIC, USIDFC has a global reach. Between 2000 and 2014, only 18 percent of OPIC's total commitments went to Sub-Saharan Africa according to a study by the Center for Global Development. In 2017, 27 percent of OPIC's portfolio was devoted to Sub-Saharan Africa. As of the beginning of 2018, just over $7 billion of OPIC's cumulative portfolio supported projects in Sub-Saharan Africa. This contribution to African development has been important and is destined to increase under the more generously funded USIDFC, but it has a long way to go before it competes with Chinese funding. China announced a $60 billion, three-year financial package for all of Africa in 2015 and another $60 billion, three-year package in 2018. While the funding by China and the USIDFC is not entirely comparable, the difference in amounts is stark. One way the United States can help address this gap is to revive and increase funding for the US Export-Import Bank.