In February, U.S. Representative Ted Yoho (R-FL). proposed an overhaul to foreign aid. This April, with the support of U.S. Representative Adam Smith (D-WA), and Senators Bob Corker (R-TN) and Chris Coons (D-DE), the Better Utilization of Investments Leading to Development Act (BUILD Act) has gained significant momentum.
The International Development Finance Corporation
The BUILD Act, also known as S.2463, aims to consolidate the disparate U.S. agencies currently providing foreign aid into a single, new agency, to be called the International Development Finance Corporation (IDFC). More specifically, there would be a consolidation of the Overseas Private Investment Corporation (OPIC), USAID’s Credit Authority, USAID’s Office of Private Capital and Microenterprise, and USAID’s Enterprise Funds. According to U.S. Representative Yoho, this consolidation would increase efficiency of foreign spending, and promote U.S. security, economic and diplomatic interests abroad.
The proposed agency will also benefit recipients of U.S. foreign aid. More streamlined and efficient spending in the U.S. government will allow for other countries to become stronger trading partners; in doing so, this change would also open new markets, and encourage self-sufficient economic development in communities worldwide. Supporters of the BUILD Act argue that it will help combat humanitarian concerns that plague many developing nations, including poverty, hunger and disease.
In recent weeks the BUILD Act has been publically supported by the Chairman of the House Foreign Affairs Committee, U.S. Representative Ed Royce (R-CA), the committee saying that older agencies such as OPIC need to be modernized, and as Americans, not as Democrats or Republicans, will strengthen American foreign aid and make the U.S. competitive.
What is the BUILD Act?
So what exactly does the BUILD Act propose? It gives the new agency, the IDFC, grantmaking capability, the ability to make equity investments, and an increased spending cap. These capabilities increase U.S. foreign aid spending, and encourage the participation of private sector capital to complement development assistance objectives. It is important to note however, that there is a regulation on how much of foreign aid spending can be used to make equity investments.
The text of the bill describes the purpose of the BUILD Act in Section 101 of the bill as, “to mobilize private capital in support of sustainable, broad-based economic growth, poverty reduction, and development through demand-driven partnerships with the private sector that further the foreign policy interests of the United States,” highlighting the benefits of the BUILD Act going both to the U.S. and international aid recipients.
While some are concerned about how the organization will actually take over USAID’s and OPIC’s duties, many are excited by the fact that the creation of the IDFC will create further accountability and cost no money, making it an increasingly appealing bill. While more work needs to be done concerning the transition, oversight on the IDFC will fall to Congress, and external auditors, who will preform regular audits of the organization.
Allied For a Cause
U.S. Representative Adam Smith, a co-sponsor on the initial proposal, announced a press release that reads: “Through our partnerships with friends and allies, we work to raise up local communities – strengthening institutions, combating hunger and disease, and ensuring that development projects have sustainable, long lasting impacts.” Representative Smith identifies how this increased spending on development improves the lives of individuals abroad.
The BUILD Act is gaining momentum in Washington, and purports to improve efficiency and effectiveness of U.S. foreign aid deployment.
– Katherine Kirker