This study is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this case study are the sole responsibility of INVEST implemented by DAI and do not necessarily reflect the views of USAID or the United States Government.
On their own, international development agencies cannot meet all of their goals for sustainable development. Despite the progress made, fulfilling the Journey to Self-Reliance and the goals of the 2030 Agenda for Sustainable Development will require both a better approach to financing and a more effective use of finance. Private sector engagement will increasingly become an essential component of effective development that sets countries on the path to self-sufficiency and creates positive, long-lasting impact on communities.
In 2018, USAID released both its Private Sector Engagement (PSE) Policy and its Acquisition and Assistance (A&A) Strategy. These policies create the framework for an institutional transformation whereby USAID will advance progress towards development goals through supporting and cocreating market-based solutions with the private sector, with an emphasis on working with new and underutilized partners.
In February 2017, USAID issued a Broad Agency Announcement (BAA) for catalyzing private investment. The BAA resulted in the co-creation of the USAID INVEST initiative, a mechanism designed to address the longstanding operational and technical challenges that USAID has faced in working with the investment community. As a laboratory for procurement reform and technical innovation, INVEST has streamlined the subcontracting process, developed a rapid procurement procedure that is more user-friendly for new firms, and built a growing body of knowledge on approaches to private sector engagement and blended finance (the strategic use of development funds to mobilize private capital to underdeveloped markets), which it shares with USAID and the rest of the development community.
At the core of INVEST’s work is a large and growing partner network of firms that have experience in investment and deploying private capital for development. This partner network enables USAID to access, on demand, the niche, technical experience it needs to take advantage of investment opportunities that will lead to positive development results.
Between February 2017 and September 2019, INVEST has grown its partner network from 26 to 195 members. Working with 23 USAID Missions, Bureaus, and Independent Offices (MBIOs), it has implemented activities in 14 countries. INVEST has engaged 23 firms to perform this work, issuing 35 subcontracts for technical services valued at $8.5 million. Fifty percent of these subcontracts’ total value was awarded to U.S.-based small businesses and 36 percent to local (non-U.S.) entities.
INVEST has supported 20 transactions to date. Closing four transactions so far, INVEST has mobilized $68 million of private capital for development. INVEST has identified or supported financial mobilization for an additional 12 transactions that have a total projected pipeline of $377 million in capital. It has also designed four transactions for USAID Missions that would mobilize additional private capital.
