America cannot afford to be left behind on global development

It is happening all over the developing world, from Asia to Africa to Latin America. Railways, highways, pipelines and bridges are springing up from Kenya to Kazakhstan as part of an infrastructure initiative that is estimated to be seven times the size of the Marshall Plan. Last year alone, new investments in seaports were estimated at more than $20 billion, twice as much as the year before. Who is the economic powerhouse leading the way? It is not the United States, but rather China.

It does not take a seasoned traveler to observe this phenomenon when arriving in Addis Ababa or Accra, or most other African countries. The continent is the home to six of the 10 fastest growing economies in the world. Just last week, China announced a new aid agency to coordinate its growing global programs and influence. It is not just the Chinese who are investing. It is Japan, France, Germany, Britain and more. This begs the obvious question: Is America getting left behind?

{mosads}While the United States is never going to mirror the Chinese state investment model, nor should it, we have an opportunity to play to our strengths and win big in this area. America has a wide range of tools that advance our economic and national security interests around the globe, and it is time to rev them up. Key players in that toolkit, which has been modernized and reformed over the past decade, are our global development and foreign assistance programs.

From President George W. Bush’s drive to establish the Millennium Challenge Corporation to the USAID’s efforts to leverage the private sector on food security and energy, we have seen a smart shift towards results-driven programs that are not only fighting global poverty and advancing our national security, but are also creating more access, customers, and a level playing field for U.S. businesses.

But America has another economic tool, which is development finance. This has been underutilized and is an absolute winner for the United States and for the developing world. In developing countries, particularly in conflict and fragile states, there are often opportunities that cannot get commercial lending because they are seen as too “risky.”

To help unleash private sector growth and opportunity, a small U.S. government agency that was created in 1971, known as the Overseas Private Investment Corporation (OPIC), helps reduce the risk through loan guarantees and political risk insurance. These investments help catalyze sustainable economic development and enables American companies to seize these opportunities where there is no commercial market, advancing our economic and security interests.

As companies turn a profit and pay back their loans with interest, it is a tool that also makes money for the U.S. taxpayer and has returned nearly $4 billion back to the Treasury in deficit reduction over the last 10 years. Every dollar that OPIC invested leveraged another $2.55 in additional financing for critical economic development initiatives last year. Make no mistake, development finance is certainly not a replacement for foreign assistance investments. Both provide critical sources of leverage, but our current efforts are simply far too small and underutilized to help fully advance our national security interests, fight global poverty, and ensure American businesses can compete in the world.

The fact is that from Scandinavia to South Korea, America is getting outcompeted on this critical part of our economic development toolkit. Across the pond, where the economy of the United Kingdom is seven times smaller than ours, the British proposed quadrupling its development finance portfolio last year to $60 billion, which would be double that of the current OPIC limit. If you compare us to the Netherlands, our economy is 24 times bigger, but the Dutch have 50 percent more staff at their development finance agency than we do at ours.

Fortunately, both ends of Pennsylvania Avenue agree that it is time we up our game and put our development finance tools on steroids. Sens. Bob Corker (R-Tenn.) and Chris Coons (D-Del.) alongside Reps. Ted Yoho (R-Fla.) and Adam Smith (D-Wash.) recently introduced the Better Utilization of Investments Leading to Development Act of 2018. This legislation builds on the smart effort by the administration, spearheaded by OPIC president Ray Washburne, that has been picking up steam since the national security strategy called for America to “modernize its development finance tools so that U.S. companies have incentives to capitalize on opportunities in developing countries.”

While Congress and the administration still have to fine tune all the details, the bill would create a new U.S. development finance agency, streamline our current programs, and double the size of our development finance portfolio to $60 billion. This would vastly help the developing world. Whether we want to help a key ally like Jordan increase its power generation, empower sheep herders in western Afghanistan get their wool to markets, or transform the Rwandan coffee sector, development finance is central to how we lift communities out of poverty and promote stability.

With nearly 90 percent of financial flows to the developing world now coming from private sources, the key for the United States is how we use government dollars to unleash the private sector not only through compacts with the Millenium Challenge Corporation, partnerships with USAID, volunteers for the Peace Corps, and investments in our multilateral institutions, but also through robust development finance.

In this tumultuous political season, what is remarkable is that everyone seems to agree on this, from President Trump to Democrats and Republicans in Congress. As of late, they are not agreeing on much. Given the stakes and the opportunity, America now has a significant plan to strengthen our development finance toolkit. It is time we have an issue that everyone can get behind, so that America is not left behind.

Liz Schrayer is president and CEO of the U.S. Global Leadership Coalition, an alliance of more than 500 businesses and organizations that advocates for American diplomatic and developmental efforts around the world.