The BUILD Act – Ensuring U.S competitiveness in Africa
On Wednesday, October 3rd, the U.S. Senate passed the Better Utilization of Investment Leading to Development, or BUILD, Act, which now awaits the President’s signature to go into effect. This act combines the Overseas Private Investment Corporation (OPIC) and USAID’s Development Credit Authority (DCA) into a new agency – the International Development Finance Corporation (IDFC). BUILD significantly expands the ability of the United States to level the playing field and provide needed financing for major infrastructure and other projects overseas – especially in Africa where China, Europe and others are offering financing packages for development projects that exceed what the U.S. via both OPIC and USAID have been previously able to extend. By doubling OPIC’s financial resources (from $29 to $60 billion) and allowing the new IFDC to be more creative and flexible in its investments – including for the first-time equity financing – the net effect will be to combine some of the most creative parts of the U.S. Government into a more effective agency that will be better able to target and execute U.S. foreign policy goals.
IDFC will provide game-changing investments that can begin to close Africa’s infrastructure gap, which the African Development Bank estimates is a minimum of $13-170 billion per year, by focusing on investments in transportation, ICT, housing, health, and energy projects that will help integrate Africa into the global trading system.
U.S. companies – including many of CCA’s members – recognize the significant business opportunities in those key growth sectors in Africa and are eager to invest. And Africans often express their desire for more U.S. investment and partnerships as well as a preference for high quality and technologically advanced U.S. products and services. However, both sides they face a range of challenges, including accessing financing and better coordination of U.S. government initiatives.
IDFC will mobilize private investments into Africa on market-friendly terms and facilitate U.S. companies’ investments in roads, ports and airports; housing, hospitals and water treatment plants; ICT; manufacturing and energy generation. All this while supporting long-term economic growth, creating jobs, promoting two-way U.S.-Africa trade and investment, and more closely aligning our investment and business goals with U.S. foreign policy and development. The new agency won’t simply be ‘just another’ foreign government agency doling out cheap cash, or helping African countries take on debt they cannot sustain. It will continue to work with local partners and U.S. companies to find the right niche where its financing can have that market-making impact that will grow critical sectors and open new ones in Africa. In this way, the IDFC will continue to play to one of America’s greatest strengths, namely its focus on supporting innovation and inclusive growth. This, in turn, will also significantly help U.S. companies up their game across the dynamic and rapidly growing African continent by playing to their strengths, including offering the best combination of value and innovation.
The new agency will still have to sort out all the technical details of the merger, including submitting an inter-agency implementation plan to Congress within 120 days after the President’s signature. There will be some inevitable growing pains as missions are merged into a new, more coherent mission and set of targets. Nevertheless, the good news for U.S. companies is that help is very much on the way. The Corporate Council on Africa looks forward to working closely with the new agency to help explain and promote its new mandate and goals to our members and the broader business community. We also stand ready to help companies engage the new agency to offer constructive suggestions for how they can meet those targets. At CCA’s U.S.-Africa Infrastructure Conference in Johannesburg, South Africa on November 5-6, the theme will be “Innovation: the Key to New Platforms and Technologies for Africa’s 21st Century Infrastructure” – a perfect opportunity to (hopefully) announce that the BUILD Act passed by Congress has been signed into law and to celebrate its passage among many who will be both the partners and beneficiaries of its implementation.