“New deal” of USA for Ethiopia

Adam Boehler is CEO of the new U.S. International Development Finance Corporation.

In this interview he discussed his trip to Africa, the new agency he leads, and the Development Finance Corporation’s activities at the Africa Investment Forum.

From Johannesburg, South Africa he answered the questions of journalists drawn from various countries including The Ethiopian Herald posed via telephone conference.

He briefed to the journalists about the new International Development Finance Corporation and its activities during the 2019 Africa Investment Forum.

And he shows attention and interest to strengthen the bilateral relations between Ethiopia and USA in the respective of economic diplomacy.

Excerpts:

Question: Would say something regarding the activities of International Development Finance Corporation?

Boehler: So what I wanted to cover, generally, is one, a little bit about the International Development Finance Corporation, and then around our commitment to the continent. We were formed recently by something called the BUILD Act that the U.S. Congress passed. It is a new agency. It came from the root of the Overseas Private Investment Corporation, or OPIC, and Development Finance Corporation, as is the acronym, is really focused on investing in emerging countries.

And there are a number of big differences from before Congress gave us. One is that they doubled the amount of capital that we had to invest, and so we went from 30 billion USD to 60 billion USD to invest. The second thing was they expanded out our flexibility in terms of investments.

They added equity capability, so we have the ability to invest in equity. We have also the ability to invest in debts, and then we do insurance, reinsurance, political risk reinsurance. So, we have a whole spectrum of products that we didn’t have before.

The other thing is they really focused us on developing countries, so really, our mark, even though I noted the amount of dollars, the way we measure our success is by making development impact and that is what we will look at. And so in any kind of project we are looking at and thinking hard about how are we driving development and impact in frontier and emerging countries.

And one thing I would like to note about Development Finance Corporation (DFC) is that we believe that development is driven by empowering host countries. Our job is to honor a country’s sovereignty. It means that we are investing in local workforce. We are respecting their environment. We are respecting their standards, and we are ensuring that a country is not indebted.

And so what we’re doing now in Africa is we are sitting down, and obviously, in this event, there are plenty of folks from many different countries. In fact, I noted as: “Let us not just talk about one or two individual deals, but how can we make a sustained commitment that is going to drive development in a positive way?” So I’d note that.

The final thing I will note is that after South Africa, we headed to Ethiopia, and I will personally note that we have been very impressed by what the administration has been doing there. Obviously, it has been a model and very inspiring, perhaps in the same way that I was inspired by Nelson Mandela when I was younger.

There is some really inspiring things going on in Ethiopia, and so I will say I am personally very excited to visit Ethiopia as a country. I am personally excited about opportunities to partner. So I have high expectations. We met last times in Washington when the Egyptian delegation came and met with the President of the United States and others and had a great intro meeting. It was very exciting to follow up on that spot.

Question: How will the institution effectively distribute its funding into the countries? Will it have regional offices? If yes, then where in Africa?

Boehler: I think it’s a very good question. The reason is, in order to be successful; I think a local presence is very important. So let me talk a little bit about how we’re focusing there. One is we did get some funding to expand out our own local offices; we will clearly have staff here in Johannesburg. And then we are considering other countries as well to make sure we have a local presence.

The other thing that is very important and I want to think about when you

think about Development Finance Corporation (DFC). We are a tool among many within the U.S. government, and so I also want to be cognizant of all the fantastic embassy staff, mission directors from USAID, and so one of the key things here is partnering to get the benefit of all of U.S. government, and we’ll be working very closely with our other U.S. government allies to make sure that we have enough feet on the ground.

Question: What are the specific areas of your engagement? Maybe like is it on the agricultural sector, or in the, like, manufacturing. Could you explain more on that?

Boehler: we just signed memoranda of understanding with the African Development Bank. And I’ll bring this up, why I’m saying this, in a moment, but it’s a critical relationship for us because I want to recognize the ability to partner.

It’s a key area, and I think African Development Bank has done a great job on the ground, and so I think you’ll see us moving very closely, and the president of African Development Bank. And I have developed a very strong personal relationship, and I think that we have a lot of the same mission and values as an organization.

One of the conversations we had, though, was the importance of balance in investing. And what I mean by that it is very key and very critical. Everybody knows that there is a need for infrastructure investment in Africa; whether that’s in ports, whether that’s in other facilities.

However, it’s also critical that we need to get dollars direct to entrepreneurs as well. And so we want to pursue a balanced investment strategy, and let me give you a specific example of the deals. We did a deal in Uganda where we are getting dollars direct to taxi drivers and tuk-tuk drivers there, because they were on a constant stream of indebtedness and couldn’t get out of that, and there was no one that would bank them. So we did a financial services deal, and the goal was to create sustainability for drivers direct.

We’ve done a lot of deals where our goal is to get dollars directly to women entrepreneurs. We have fantastic women’s 2X initiative that we will continue to expand. And I think those aspects are just as important as the big port, the big pipeline. Those are equally important; luckily, I have the resources to pursue them both, but I think a balanced strategy, because some of those things are going to pay off in the medium- to long-term, but some of those things are going to pay off tomorrow, and I want to see both of those pursued as we go forward. So that’s critical.

And then from a sector perspective, there you are going to see focus on agriculture, on renewable energy, on infrastructure, on healthcare, so those are kind of key sectors that we’re going to focus on.

Question: How will you ensure that the Development Finance Corporation meets its congressionally-mandated limits on the greenhouse gas emissions of its portfolio?

Boehler: So anytime the Development Finance Corporation looks at any deal, it goes through a whole bunch of requirements. And that includes from a greenhouse gas perspective as well as human capital, and a number of other issues, and so what I will say is if we are looking at a development deal that has a negative impact on the environment, the bar is going to be a lot higher.

Question: Will the Development Finance Corporation be an alternative to China’s debt diplomacy in Africa and elsewhere? And how?

Boehler: Okay. Well, I’ll take the question because I don’t mind it, but generally I prefer to know from whom my question is coming from, but that’s okay.

So here’s what we’re focused on: I’m not so focused on China. I’m going to let China play China’s game. We’re here to play our own game, and so we’re going to be out there, and I will tell you that it is important, and I’ll tell you where people should partner with us.

Those countries that are interested in rule of law, in someone that is going to empower their local workforce, that cares about their local environment, that is not focused on significant debt loads.

We do not want countries to be in indentured servitude because of high debt loads and to have a country that’s focused on quality infrastructure. And my view on this stuff is we may not always be the quickest in the world, but I guarantee you we will be the best, and you get what you pay for.

And so what you will see, and I will tell you, as we’ve gone out and we’ve spoken to leaders of African countries, what they’ve said is, “Adam, we want an alternative here. We need an alternative here,” and that is what Congress did in BUILD Act. They created a very significant alternative, and now my job, as Congress has asked me to do and as the president has asked me to do, is go out there and strike these strategic deals to fulfill our mission.

You will see a view that empowers the sovereignty of a country. Our view is we are supporters, we are partners; it is not my place to tell somebody what to do, that is a country’s place, and you’ll see us behind them, supporting, but that’s where we’re going to win out vis-à-vis anybody.

You’ll also see a lot of partnership from us. As I mentioned, we just partnered with the Africa Development Bank (AFDB). We’ve got a great partnership with the Japanese. We’re going to partner with the British. So you’re going to see a combination of allies out there that have similar ideals, and for those countries that share those ideals, we’re there for you. And it’s time for us to step up our game.

Question: What’s the next strategy as you’ve been talking about the engagement so far?

Boehler: phenomenal leaders are people that inspire hope but also take action and make changes. By the same token, Ethiopia has an administration that has obviously and you know this better than me that gotten off to the right start, and so my next step and my next action is to have strong relations with Ethiopia and make sure that we are supportive and see how we can work together.

The Ethiopian Herald Sunday edition December 22/2019

BY MEHARI BEYENE