Off to a Good Start: How the Biden-Harris Administration Can Strengthen DFC’s 2X Initiative

In March, the US International Development Finance Corporation (DFC) held its first board meeting of the Biden-Harris administration. At that meeting board members voted to approve just one project—a $300 million loan to expand a Brazilian bank’s lending portfolio to small and medium enterprises (SMEs). The loan is notably focused on increasing lending to women borrowers, as well as those in underdeveloped regions of the country, making the new administration’s first board-approved DFC investment a 2X Initiative project—a promising starting point.

Back in 2018, DFC’s predecessor agency (OPIC) announced the launch of the “2X Women’s Initiative,” a commitment (initially) to mobilize $1 billion to promote women’s economic empowerment and broader gender equality. When DFC opened its doors over a year ago, it continued to focus on women’s economic empowerment, increasing its 2X mobilization target to $9 billion. Continued commitment to this agenda under the Biden-Harris administration is critical; evidence suggests that sectors where women predominate as wage workers and entrepreneurs have been hit harder by COVID-19 lockdown measures, with women-run businesses experiencing higher rates of revenue loss and closure during the pandemic. Early signs are good too; the new administration has committed to double down on the international response—including the virus’ secondary impacts on women and girls—and has launched a new White House Gender Policy Council that will lead broader efforts to promote gender equality across domestic and foreign policy.

Amidst an economic crisis that disproportionately impacts women in low- and middle-income countries, the DFC can build on its legacy of leadership in promoting gender equality through its portfolio and policies, and increase its reach and ambition in doing so. One year into DFC’s tenure as the flagship US development finance agency, our new policy paper reviews the agency’s commitment to mobilize finance for women’s economic empowerment and assesses the institution’s broader approach to gender integration.

Keep reading to preview our main recommendations for DFC leadership and read the paper here.

DFC can ramp up ambition on gender lens investing under the Biden-Harris administration.

By our count, close to half of DFC’s financing in 2020 was in 2X eligible projects—increasing both in absolute and relative terms over the initiative's brief history. This uptick in DFC financing dedicated to 2X projects is promising in its reflection of the institution’s prioritization of ensuring women are targeted by, and benefiting from, DFC investments. That said, it is still unclear whether these topline financing volumes count full project budgets. Where projects may address gender inequities only in part, counting the full investment towards 2X targets would overestimate the extent to which funds are reaching women. For example, DFC announced plans to finance a $150 million loan to Banco de la Produccion in Ecuador, but only 30 percent of loan proceeds are committed to support DFC’s 2X Women’s Initiative, so has the full $150 million been counted towards 2X targets?

To build on DFC’s momentum while increasing transparency around gender-related investments and their and results, the agency should:

  • Set targets at the portfolio level for both the volume and share of investments that specifically target and benefit women (2X projects are still less than 15 percent of DFC’s portfolio);
  • Make 2X investment criteria itself more ambitious over time. Currently, an investment can qualify if just 20 percent of a firm or fund’s board is composed of women, or if a firm employs 30 percent women. DFC and its 2X Challenge partners have met and surpassed previous 2X targets, demonstrating viability for gender lens investors. As such, criteria requiring 20 to 30 percent women in leadership, or 30 to 50 percent in employment, should over time be moved to 40 to 60 percent, and targets around gender equality policies and products and services benefitting women and girls should also be made more ambitious.
  • Prioritize transparency, including by publishing information detailing how each 2X project meets qualifying criteria and reporting sex-disaggregated and gender-focused results data;
  • Undertake gender-informed monitoring and evaluation, including rigorous impact evaluations of select investments;
  • Increase capacity to promote gender equality at DFC by institutionalizing the Managing Director of Global Women’s Issues, expanding the 2X team and consistently providing training on gender lens investing;
  • Beyond external lending, establish targets and timetables for closing internal gender gaps in pay, board representation, management, and sourcing.

DFC has an opportunity to “meet women where they are” by increasing its 2X investments in sectors where women are concentrated.

2X commitments are heavily concentrated in financial services (including SME, MFI and spending in investment funds). While financial services, as a sector, have often featured prominently in US development finance—accounting for an average of 45 percent of OPIC’s investments from 2015-2019 and 36 percent of DFC’s 2020 lending by our count—more than 80 percent of the institution's 2X spending is concentrated in financial services (largely through intermediaries).

In light of women’s concentration in small-scale agriculture and the health workforce, and their disproportionate care work burdens, DFC has an opportunity to “meet women where they are” by increasing 2X investments in these areas. Increased gender-responsive investment in water, sanitation and hygiene (WASH) and energy can reduce domestic responsibilities contributing to women’s time poverty and limiting their opportunities to seek full-time, quality employment, or dedicate time to growing their businesses. Similarly, projects that aim to strengthen the care economy through investments in child and elder care will help to reduce and redistribute the unpaid care work that acts as a binding constraint to women’s economic equality and empowerment. Through broadening the sectors of 2X projects and the populations they reach, DFC would work towards a more intersectional approach to gender lens investing. Rather than concentrating on providing finance to comparatively higher-income women entrepreneurs, diversifying 2X investments could help them better reach currently under-reached demographics of women and girls, including those living in poverty.

DFC can also “meet the moment” by expanding 2X’s reach and diversifying its response to the pandemic’s impact on women.

To rise to the challenge that COVID-19 and the ensuing economic crisis poses to women and girls, DFC will also need to increase investments in lower-income settings and diversify the mix of clients, partners, and instruments used. Currently, 30 percent percent of 2X projects (and over 54 percent of spending) are in upper-middle income countries.

And while DFC has a variety of financial tools at its disposal (including use of political risk insurance, unique among bilateral DFIs), technical assistance, and direct equity (first made possible through the BUILD Act), most of the institution's commitments are made through finance. DFC’s 2X portfolio consists of primarily debt investments, but to an even greater degree than the institution’s portfolio at-large. Finance regularly comprises more than 99 percent of DFC’s 2X investments, with loans specifically coming in at over 90 percent of annual 2X spend.

DFC 2X Initiative Percentage of Annual Spend by Financial Instrument Type

Fiscal year 2X Commitments (% of annual 2X commitments) Total OPIC/DFC Annual Commitments (% of commitments)
Finance 96.97% 79%
Insurance* 3.03% 21%
Finance 99.84% 75%
Insurance 0.16% 25%
Equity** 0.21% 2.12%
Finance 99.17% 73.29%
Insurance 0.62% 24.57%
2021(Estimate for Q1)
Finance 99.91% 98.84%
Insurance 0.08% 1.16%

* OPIC/DFC reports insurance spending as the face value of the amount covered, not value of the insurance amount.

** The BUILD Act, which established DFC, authorized the institution to conduct direct equity investments. OPIC had no equity tool.

DFC's 2X Initiative is clearly aligned with the new administration’s commitment to lead on gender equality and inclusion, both at home and abroad. Building on the momentum of the 2X Initiative in the ways we outline would contribute to global gender equality and transparency and accountability, setting an example for other development finance institutions committed to supporting women during a time of global economic crisis.


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.