- Количество слайдов: 17
1 Development Credit Authority (DCA) An Effective Catalyst for Economic Growth that Supports Private Investments in Developing Countries
2 Objectives for Successful Development § Investing in People DCA COMMITMENT § Facilitate access to credit that otherwise would not be feasible § Tapping Local Resources § Build partnerships with local financial institutions to share risk § Attracting Trade and Investment § Develop key sectors with demonstration effects that show financial viability § Attacking Poverty through Productivity § Widen economic growth opportunities to be shared with a more diverse base U. S. GOV’T APPROACH Successful Development: Models for the 21 st Century, USAID
3 Development Credit Authority (DCA) DCA is a dynamic tool: • Flexibly structured • Focused on risk-sharing • Fully supported by USAID resources
4 DCA - what it does • Encourages increased lending by local • banks to new areas and various “development” sectors. Covers debt denominated in local currency, so exchange rate risk is eliminated. • Enables financing of ‘bankable’ projects that otherwise lack access to credit from private financial markets. • Demonstrates the financial viability of lending to new areas to promote development or expansion of credit market. • Shares up to 50% of debt risk with private sector partner. • Allows for technical assistance to lenders and borrowers.
5 DCA Benefits – why it works DCA provides significant budget leverage Ø For every dollar (or local currency equivalent) loaned pursuant to a DCA guarantee, the cost to USAID is approximately 2 to 7 cents. DCA leverages the knowledge and resources of its partners Ø Since DCA partners’ money is at equal risk, the partners can be relied on to provide highly reliable information on due diligence and monitoring.
6 DCA Products – what it offers Loan Guarantee Portable Guarantee – Financial institution – A DCA letter of commitment receives up to 50% coverage allows borrower to seek best on principal amount of loan. terms from financial markets. Bond Guarantee Portfolio Guarantee – Protects investors on a – Financial institution receives up portion of a bond issuance. to 50% coverage on principal Used for municipal or amount of a portfolio of loans private sector financing. they provide to their customers.
7 DCA Process – how it works Identify and Design Develop Review of cost to US Gov’t Monitor § Overseas Missions identify and design projects with DCA Partners (e. g. , private banks, nonbank financial institutions, NGOs, and municipal governments). § Economic and financial viability analyses, monitoring plan, fees justification § Credit Risk Assessment – country, lender, borrower and transaction risk components § USAID/Washington reviews subsidy ‘cost’ estimate and financial viability analysis § Utilization and development impact reporting, fees collection and claim payments
8 DCA – steps in the process 1. Development Analysis How does the project support a Mission’s Strategic Objective? 2. Economic Viability Analysis Is USAID the “guarantor of last resort”? Is there a market imperfection in the sector and/or related to credit access? 3. Financial Viability Analysis Will the borrower(s) generate sufficient income to cover operating and debt costs? Will the lender(s) make profits? 4. Credit Risk Assessment USAID Office of Development Credit to calculate “subsidy” cost = ‘loan loss reserve’ or insurance premium to the Mission. 5. Fees Justification How were the origination and utilization fees established? 6. Monitoring Plan How will the Mission manage the project?
9 DCA Costs – things to think about 50% of Estimated Loan Defaults Cash Outflow Less Estimated Collected Fees Cash Inflow = Subsidy Cost to USAID Note: There are no initial USAID funds transferred to DCA partners; USAID funds are only paid after a borrower defaults on its loan/bond.
10 DCA Portfolio • 95 guarantees have been approved since FY 1999 for a potential $754 million of loans under coverage. • 78 projects with a total obligated amount of $601 million for guaranteed loans is currently in effect. • Current utilization is $66 million.
11 DCA Portfolio – Global Scope Europe & Eurasia (23) Armenia (4) Kazakhstan Bosnia (4) Romania Bulgaria (6) Russia Croatia Ukraine Moldova (4) Latin America & Caribbean (17) Ecuador Guatemala (2) Honduras (3) Jamaica Mexico (2) Nicaragua Peru (5) Regional (2) Africa (18) Ghana (2) Kenya (3) Mali (2) South Africa (4) Uganda (7) Asia & Near East (20) Bangladesh (2) Egypt (2) India (2) Morocco (9) Philippines (2) Vietnam (3)
12 DCA Portfolio – Sectoral Distribution Housing: Develop housing mortgage lending and secondary mortgage markets SME: Promote productive investment in small and medium sized enterprises Agriculture: Promote lending for agribusiness Water: Support investment in water supply initiatives Infrastructure: Support infrastructure investments for municipal service delivery Environment: Facilitate credit toward environmental conservation and protection initiatives Micro: Encourage private lending to micro enterprises Health: Encourage investments in health and medicine Education: Develop private sector credit mechanisms to support education projects
13 DCA example - Morocco Type: Portable Loan Guarantee Amount: $1, 000 (Moroccan Dirham equivalent) Guarantee Ceiling: $500, 000 Purpose: Increase Al Amana’s capital and thereby enable it to provide additional financing to micro-enterprises in Morocco. The USG guarantee commitment letter allows Al Amana to secure more favorable financing terms from local banks that have been reluctant to lend to the microfinance industry. Leverage Ratio: 50 to 1. The estimated cost to the USG for issuing the Guarantee on the $1, 000 loan is approximately $20, 000. Banks USAID 50% Guarantee Loan Al Amana Loans Micro-enterprises
14 DCA example - Mali Type: Loan Portfolio Guarantee Amount: $3, 700, 000 (equivalent in Mali CFA Francs) Guarantee Ceiling: $1, 850, 000 Purpose: To expand medium-term lending opportunities for agribusinesses to support fixed asset investment lending. Leverage Ratio: 37 to 1. The estimated cost to USAID is approximately $99, 000. Role of Technical Assistance: Chemonics International, through its Agro-Enterprise Center (AEC), has assisted numerous agribusinesses since the late 1990 s. AEC continues to emphasize the development of business plans, which identify fixed asset investment opportunities and the capacity of these enterprises to repay the external financing required for the debt portion of the investment. USAID/Mali and AEC view DCA as a means to provide access to financing for these investments. Bank of Africa BICIM DCA 50% Guarantee Portfolio of Loans Agribusinesses
15 DCA example - Uganda Managing Institution Type: Loan Portfolio Guarantees Loan: $30, 000 (equivalent in Ugandan shilling) Guarantee Ceiling: $15, 000 Purpose: To increase credit access to small and medium enterprises (SMEs) and agribusinesses, and to expand commercial bank lending to trade finance deals involving the export of grains and lending to MFIs. Leverage Ratio: 31 to 1. The estimated cost to USAID is approximately $975, 000. Technical Assistance Uganda Banks DCA 50% Guarantee Role of Technical Assistance: To provide significant technical assistance in conjunction with these guarantees, including as the “Managing Institution” identified in the diagram at right, through a variety of ongoing contracts. Portfolio of Loans Target Sector SMEs Monitoring & Reporting Target Sector MFIs MFI = Micro. Finance Institution
16 DCA example - Guatemala Type: Loan Portfolio Guarantee Loan: $5, 000 (equivalent in Guatemalan Quetzale) Guarantee Ceiling: $2, 500, 000 Purpose: To promote public and private sector investments in rural market towns to provide agribusinesses with expanded opportunities for processing and selling their products. Banco del Café Loans USAID 50% guarantee Targeted Sectors NGOs Leverage Ratio: 23 to 1. The estimated cost on $5, 000 loan portfolio is approximately $220, 000. Micro. Enterprises Targeted Sectors
17 Development Credit Authority US Agency for International Development Ronald Reagan Building 1300 Pennsylvania Ave NW Washington, DC 20523 -3800 Phone: +1. 202. 712. 1380 Fax: +1. 202. 216. 3593 Email: [email protected] gov