DFID and DFAT Procurement and Assistance Applications for USAID

USAID and other donors recognize the unprecedented role the private sector is playing in providing opportunities to improve the lives of people and communities around the world. As the engine for job creation and growth, the private sector is a critical partner in providing a pathway for countries on the journey to self-reliance. It can take new innovations to scale, commit investments to build or expand new markets, and provide countries with the tools to finance their own development. Given the complexities of global challenges, donors are recognizing the need for more flexibility and maximizing available tools to mobilize financing, catalyze investment, and pay-for-results in innovative ways to fund development outcomes.

Donor support for innovative finance recognizes the need to mobilize private capital to support development impact. With the adoption of the Private Sector Engagement (PSE) policy, USAID codified collaboration with the private sector at all stages of development. In particular, it highlighted innovative finance structures developed as a means to achieving development results at scale and more effectively and sustainability. It also brings in the private sector as a key stakeholder in providing solutions to the development challenge. Innovative finance solutions often involve using traditional financial instruments to a new sector, country, or region, and/or applied to solve a development challenge. Thus, the driving force behind these new financial mechanisms is two-fold: to mobilize additional resources and to make those resources more effective and efficient in addressing global social and environmental challenges.