The Future of International Development: Mixing Public and Private Capital for Social Good

Events

The Future of International Development: Mixing Public and Private Capital for Social Good

On December 8, 2020, GPI and Bay Atlantic University (BAU) held an online event for an informative discussion featuring well known practitioners working to mobilize private capital for better development outcomes. They covered blended finance lessons learned, models for replication, and viable responses to the global pandemic.

Full Video:

Event Summary:

It is possible now to create a true multiplier effect combining financing from traditional donors with the considerable resources from the private sector in order to boost economic growth in emerging markets. In order to achieve results at scale it is important to understand the role that the private sector is playing in international development. Donors are providing transaction support to facilitate new private sector investment as part of a growing international development approach that will help deliver more jobs and innovation in emerging markets. There are already important success stories of facilitating private sector investment in agriculture, health, and women-owned enterprises in Africa, Asia, and Latin America.

Ragan explained the meaning of blended finance. She added that donor funding aimed at mobilizing private investments is not just the new passing fad in international development. It is here to stay, simply because Official Development Assistance, while not negligible, will never be enough to fund the trillions of dollars of investments necessary to achieve the Sustainable development Goals. Hence the need to engage productively the private sector. One of the key efforts in this new space is a large USAID project called INVEST. Under the label of USAID INVEST, US Government funds are utilized to pay for services offered by companies that will identify business opportunities and then bring private sector investors to the table. She added that lack of knowledge of these new instruments is one of the key challenges that have kept donors from mobilizing private investment in the past.

Danao-Schroeder explained the meaning of gender lens investing. This is about prioritizing investment projects led by women. It is about providing tools that will enable women-led enterprises to launch/grow their projects, even when the conventional guarantees normally requested by commercial credit institutions are lacking. Donor money is being used to drive more investment into women owned and managed companies. She also illustrated an unconventional intervention in Italy, a country not normally covered by foreign aid programs. USAID is currently working with Italian private sector partners to fashion a response to Covid, by adding capacity in the production of medical equipment needed by the Italian health sector. The project is about enabling these Italian companies, some of them small and not well funded, to grow following best practices, so that they will be able to meet the demands of this project. Gray described the Africa-based company she works for, called CrossBoundary. Its mission is to work all across Africa on mobilizing investments. They work with potential investors as well as with companies seeking investors, so that ideas are soon transformed into bankable or investor-ready projects. CrossBoundary is involved in a number of economic sectors, including small size solar projects in Kenya. While there are major challenges in getting projects going in countries in which the overall climate is often not business friendly, CrossBoundary can help the various players deal with the legal and administrative challenges.

Ragan pointed out why donor funding is important to help on transaction support. In many cases, even a modest capital commitment pledged by USAID can help mobilize much bigger amounts of private capital. From this perspective, USAID’s role has a true “force multiplier” effect, giving credibility and visibility to projects and therefore creating the opportunity for obtaining additional funding. Danao-Schroeder explained how the model adopted in setting up and executing the covid related project in Italy could be adopted as a template for other projects, involving different sectors, in other countries. Gray pointed out that there is considerable pent-up demand for energy related projects in Africa. Solutions based on renewable energy technology offer great opportunities for international investors.

PANELISTS

Kristi Ragan, DAI Chief of Party for USAID INVEST

Kristi Ragan has spent decades building and leading exceptional teams to push the practice of international development beyond its zone of comfort. She has worked the last 17 years at DAI, a global international development firm, where she has focused on leading USAID initiatives that design and implement new approaches for engaging the private sector. She is currently leading USAID’s $167 million INVEST initiative that is mobilizing private investment in emerging markets. Before that she supported USAID’s Global Development Lab to bring technology, innovation and partnerships into mainstream development programs. She began her career living and working in rural villages in Asia and Africa as a Peace Corps Volunteer. After getting her Master’s degree from Georgetown she headed to the United Nations where she spent over a decade with UNDP in New York and the field. Kristi is an accomplished communicator and trainer and has served as an Adjunct Professor at Georgetown University, American University and Bay Atlantic University where she teaches graduate classes in development, partnerships and innovation.

Tunuka Gray, Associate Principal & Deputy Head, CrossBoundary’s East Africa investment Advisory Team

Tunuka Gray is an Associate Principal and serves as Deputy Head of CrossBoundary’s East Africa investment advisory team. She is based in the Nairobi office. Tunuka has an MBA from INSEAD and a Bachelor of Arts from the University of Pennsylvania. Prior to joining CrossBoundary, she worked at The Boston Consulting Group. CrossBoundary is a frontier market investment firm. The firm’s Advisory arm provides a range of due diligence and transaction services. It has advised on over US$800 million of closed transactions, across a range of sectors in Sub-Saharan Africa and in underserved markets globally. Our advisory clients include governments, development finance institutions, private equity firms, Fortune 100 companies, and research institutions. CrossBoundary Group is a global firm that has over 90 professional staff with offices in Accra, Bamako, Bangkok, Dakar, Dubai, Johannesburg, Lagos, London, Nairobi, Tunis, New York City and Washington D.C.

Noemi Danao-Schroeder, Senior Investment Advisor on USAID INVEST

Noemi Danao-Schroeder is a Senior Investment Advisor on USAID INVEST, a global project to mobilize capital for development goals, implemented by DAI Global, LLC. She is responsible for a $60 million portfolio that covers 24 countries and over 30 different activities that include transaction advisory services, market analyses, fund structuring and development, and capital mobilization for renewable energy, health, agriculture, infrastructure, education, WASH, and gender-lens investing. Prior to INVEST, Ms. Danao-Schroeder was Chief of Party for the USAID-funded Justice, Human Rights, and Security project in Honduras; Director of DAI’s Governance Portfolio; and Chief of Party for SERVIR, a global initiative of NASA and USAID to advance the use of geospatial information and technology for environmental decision-making. Currently residing in the Washington, D.C. area, Ms. Danao-Schroeder spent 20 years living and working in Latin America for various non-governmental organizations. She is a graduate of the University of California, Berkeley, and holds an MS in Community Development and an MBA from the University of California, Davis.

Moderator:

Paolo von Schirach, GPI President, and Chair of Political Science and International Relations at Bay Atlantic University