USAID’s Development Credit Authority seeks to mitigate market imperfections. DCA is USAID’s legal authority to issue partial credit guarantees to private financial institutions to share the risk on loans to underserved borrowers or sectors. USAID’s Development Credit Authority seeks to mitigate market imperfections. DCA is USAID’s legal authority to issue partial credit guarantees to private financial institutions to share the risk on loans to underserved borrowers or sectors.

Since FY99, DCA has signed 480 guarantees, leveraging $4.2 billion in private capital, achieving a 72% utilization rate for expired guarantees 214,

Partnership with USAID ▪ Alignment with USAID country or regional strategies ▪ Guarantees typically paired with USAID technical assistance ▪ Guarantee backed by the full faith and credit of the U.S. Treasury Risk-sharing with private capital ▪ Applies to non-sovereign debt only ▪ Typically a 50% pari passu guarantee on loan principal (not fees or interest) ▪ Guarantee is not revolving ▪ Origination and utilization fees to ensure partner commitment Responsive to market demand Flexibility to guarantee foreign and/or local currency Pre-approval not required for individual loans placed under loan portfolio guarantees Reporting online in a simple internet-based system No requirement for a U.S. connection What are the key features of DCA guarantees?

DCA can work with a variety of lenders supporting borrowers across a wide range of sectors Financial Institutions Private entities operating in the following sectors: -Agriculture -Energy -Environment -Health -Infrastructure -Trade/Commerce -Water/Sanitation Private entities operating in the following sectors: -Agriculture -Energy -Environment -Health -Infrastructure -Trade/Commerce -Water/Sanitation MSMEs Households Municipalities Rural Banks Institutional Investors Leasing Companies Non-Bank Financial Institutions Commercial Banks Investment Funds MFIs / Coops Credit Unions L L B B

DCA Offers Four Main Products

…that can be tailored for specific contexts, such as SME support

2 SMEs grow/expand operations & create jobs PBB, PSB, Security Bank, and BPIL lend/lease to SMEs in target sectors Philippines: Supporting SMEs as part of the Cities Development Initiative Project description: 4LPGs—3 with banks and 1 with a leasing company—to mobilize financing for SME projects in the Philippines except in the economically saturated areas of the National Capital Region (NCR), Cebu City, and Davao City. The LPGs are designated for support of SMEs in manufacturing, healthcare, energy, construction, tourism, post-harvest agricultural processing and agribusiness. Terms MCD $60M Partners ($32M to be distributed as utilization targets are met) PBB: $7M PSB: $7M Sec. Bank: $7M BPIL: $7M Coverage 50% Guarantee Ceiling $30M Length 10 yr coverage; 7 yr enrollment Currency Philippine Pesos Sub-loan Maturity 1-2 Working Capital 3-7 Investment Origination Fee.50% Utilization Fee.75% Qualifying Borrowers SME projects except in the NCR, Cebu City, and Davao City Targeted Sector SMEs Qualifying Projects Manufacturing, healthcare, energy, construction, tourism, agro- processing, agri- business DCA provides a LPG to PBB, PSB, Security Bank, and BPIL Unallocated $32M disbursed as banks meet targets 1 3 4

Mobilizing Credit for Cold Chain Development: Morocco Terms Facility Size$7.0M LenderTBD Total Coverage50% Contingent Liability $3.5M Guarantee Length 13 years CurrencyEuro Origination Fee 0.9% Utilization Fee1.0% Qualifying Borrower FrioPuerto Tanger SA for the construction and expansion of a cold storage facility at Tanger-Med. Project description: FrioPuerto Tanger SA, a Moroccan SME, is seeking a $7.0M (5.0M Euro) loan for the construction and subsequent expansion of a cold storage facility at the Tanger-Med port. This project previously received USAID assistance for the research phase. The FrioPuerto Tanger project will encourage broad-based agriculture-oriented economic growth, create 80 direct positions in the first two phases, and at least 300 jobs in the agriculture sector. The company aims to expand operations to other Moroccan ports and to West Africa, which has broader development implications for the region and beyond. A 50% Portable Guarantee will enable the company to “shop” for a lender and mobilize financing for this greenfield project, which would otherwise struggle to obtain a loan. *Note: with this guarantee, FPT was able to access an initial CAPEX loan at reasonable terms. 1 1 USAID/Morocco in conjunction with DCA establishes a 50% Portable Guarantee with FrioPuerto Tanger SA to help the company mobilize financing for construction and subsequent expansion of a greenfield cold storage facility If there is a default on the loan, the lender can call on the DCA loan guarantee and USAID will pay 50% of realized loss of principle. FrioPuerto Tanger SA uses the Portable Guarantee to shop for financing at local and regional banks. 4 4 Once FrioPuerto Tanger SA finds an acceptable lender, USAID signs a Guarantee Agreement with that lender to guarantee the loan to FrioPuerto Tanger SA % DCA Guarantee 50% DCA Guarantee 2 2 Lender TBD FrioPuerto Tanger SA USAID Portable Guarantee Commitment Agreement

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