ImpactAlpha, May 18 – The U.S. Development Finance Corp., which typically provides loans to companies in developing countries, has been tasked by President Trump with financing domestic production of commodities deemed critical to the effort to stem the coronavirus pandemic.
The effort is intended to “re-shore” domestic production of personal protective equipment, injectable pharmaceuticals and other products, the DFC’s Adam Boehler told ImpactAlpha. The Development Finance Corp., the successor to the Overseas Private Investment Corp., is a government agency that serves as the country’s global development bank.
“You need to identify critical areas where either the U.S. needs to own some or all” of such capacities, Boehler said in an interview. “Just like we provide in the developing world, we can provide loans and investments in order to support some of those brought to the U.S. or to our allies or both.”
Such domestic financing “could support manufacturing of vaccines or materials needed for vaccines,” a spokeswoman for the DFC confirmed. She said the agency would need to review and approve proposals from private companies. (Note: this article has been updated.)
President Trump’s executive order gives the DFC authority under the Defense Production Act “to make loans, make provision for purchases and commitments to purchase, and take additional actions to create, maintain, protect, expand, and restore the domestic industrial base capabilities, including supply chains within the United States and its territories.”
Boehler said the DFC would target sectors, such as generic drug production, in which domestic production has withered. He said the agency would seek to be additive, providing financing only when banks and other commercial lenders are not available. “If the economics don’t make sense, then you would not be competing with private markets,” he said.
The domestic expansion of the DFC’s mandate surprised some of the agency’s supporters, who worry it could distract from the mission of promoting economic development in emerging markets. Boehler said the agency would stand up a new team with a separate investment budget and a two-year time limit.
“Our commitment to the developing world is unwavering,” he said. At its meeting next month, the agency’s board is expected to approve a robust slate of deals, primarily in low- and lower-middle income countries, he added.
Boehler said Jared Kushner, a senior advisor to Trump, recruited him to the White House Coronavirus Task Force, where he helped source domestic production of ventilators. Previously, Boehler led the innovation center at the Department of Health and Human Services.