‘We are open for business’
THE United States International Development Finance Corporation (DFC) said it is ‘open for business’ in the Caribbean and will open an office in the region to mobilise capital to the private sector while advancing the “strategic interests of the United States”. It said Jamaica will be a big focus of its activities.
Scott Nathan, CEO of the DFC, was in the island earlier this week for a quick stop, meeting with private sector and Government officials to outline that it can be considered for funding for various projects.
“I am here in Jamaica because [the] US-Jamaica relationship is so important and so close that we want to make sure that we are focusing on this country, and this economy to help support the development of private business, economic growth, financial inclusion, increasing incomes that help everyone [and] that promotes stability, that promotes opportunity, that’s really important,” Nathan told the Jamaica Observer in an exclusive interview on Wednesday.
He said while the DFC is keen to finance any viable project, whether they be from small businesses or large corporations, infrastructure (including telecoms) and energy are proving to be more promising for financing in the Jamaica at the moment.
“So there is obviously a push globally to deploy renewable energy. We would love to see it in this region and here in Jamaica, and I know there is a process underway with the Government to issue tenders to increase [the] potential of independent power producers on the current energy system. It would be great to see solar, wind and other renewable sources included,” Nathan said and outlined that his visit must be seen as a serious intent by the DFC to onlend money for investments in Jamaica.
“We are not just gauging interest. We are trying to make [it] clear to business people, that we are open for business, that we are interested in financing their projects. That if they have projects that they can’t otherwise get financing for…that’s what we are looking for and we want to make clear to people to apply with us, that they should meet us.”
Despite the pitch, Nathan said the DFC is “not interested in crowding out commercial capital”. The DFC website said its guaranty and loan sizes range from US$1 million to US$1 billion. The entity also works with co-lenders and co-guarantors in lending to large projects. Last year, it set a record with commitments totalling more than US$7.4 billion across 183 transactions, according to its 2022 annual report, up from US$6.7 billion the year before. It concentrates its activities in areas of southern Asia, Africa and Latin America and the Caribbean, areas in which China’s Belt and Road Initiative finances similar projects, but Nathan said the US effort is not to counter the activities of their Asian rival.
“Well, I won’t [say our activity is] counter to anything. It’s about having high standard offerings that are good for people in the countries where we operate. That’s really what we’re trying to do – add value, help economic growth, and help with economic empowerment throughout the countries where we work.”
Nathan was visiting Jamaica fresh from a visit to the Dominican Republic where he announced a US$200-million loan to Banco Popular Dominicano to support the financing of loans to small businesses as well as plans to open a regional office in Santo Domingo “that will be focused on expanding our activity, building relationships and sourcing transactions here in the region and Jamaica is going to be a big focus of that office.”
He did not announce any similar loans to Jamaican businesses and added that he did not have any idea how much the DFC would be willing to invest in Jamaican businesses.
“We don’t think about it from a top-down perspective. If there are worthy projects, we will do a series of them, and it would add up, and it could add up to hundreds of millions or billions [of dollars], but it depends on there being projects that are worth funding,” Nathan pointed out.
Apart from infrastructure and energy, Nathan added that, “It would be great to do some infrastructure [project], in manufacturing, in agriculture. There’s huge opportunities here, great engine of employment.”
He pointed out that in Ecuador, the DFC ‘s activities barely registered on the radar, but now that country’s private sector is the second biggest recipient of loans, receiving “way over a billion dollars” that financed various projects including a solar energy farm, a new hospital, a debt-for-nature swap, and financing for small businesses.
Funding from the DFC can either be accessed directly from the entity for large projects or from financial intermediaries for small businesses.
The Development Finance Corporation is the modernised development finance institution of the United States. It was created and launched a little over four years ago to do two things: make development impact around the world in countries that need financing, and to advance the strategic interests of the United States by mobilising capital to the private sector. Its full suite of tools include direct loans, loan guarantees, political risk insurance, technical assistance grants, and equity investments.