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Fulfilling the US International Development Finance Corporation’s (DFC) promise of becoming a full-fledged development finance institution will in large part hinge on leveraging the expertise and resources of other US government development agencies. The need for interagency coordination is also enshrined in the BUILD Act, which includes reporting requirements and other provisions designed to promote interagency coordination.

In a new paper, we explore several channels for successful DFC interagency coordination—both in Washington and in the field. Each agency can help advance specific objectives related to DFC’s development mandate:

  • the United States Agency for International Development (USAID) can be a powerful collaborator on generating deals and building monitoring and evaluation systems;
  • the Millennium Challenge Corporation (MCC) can provide best practices on impact analysis, and, in some cases, pave the way for DFC projects through blended finance or spurring regulatory reform;
  • the US Treasury can help promote collaboration with the private sector arms of the multilateral development banks (MDBs); and
  • the State Department can help DFC strengthen client relationships by leveraging the global footprint of US Embassies.

But interagency coordination can be a tough sell. Agencies may see coordination as burdensome, slowing things down, or creating potential roadblocks. Collaboration can be undermined by interagency sparring over resources and recognition, perhaps even more so with a White House keen to cut foreign aid budgets.

Even as DFC is focused on ramping up operations in an attempt to quickly demonstrate its value, it’s critical that coordination remain a first-order priority. Coordination will require dedicated, proactive effort. As we describe in our paper, uniting agencies towards a common goal requires high-level administration officials to provide political direction and agency leadership to champion coordination and provide incentives for working-level staff to make it happen. Coordination will also require getting DFC’s own internal architecture right, including staffing and communication linkages with other agencies, as well as establishing clear external processes through the Development Finance Coordination Group.

Disclaimer

CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.

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