# Development Credit Authority

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The '''Development Credit Authority''' ('''DCA''') was a programme within the [United States Agency for International Development](/source/United_States_Agency_for_International_Development) (USAID) that used to issue [loan guarantee](/source/loan_guarantee)s which would act as collateral for private [loan](/source/loan)s. The DCA could issue guarantees up to 50% of the loan. As the credits were backed by the full faith and credit of the U.S. government, private lenders could be assured particularly for loans made in local currency.<ref>{{Cite web|url=https://www.usaid.gov/dca|archive-url=https://web.archive.org/web/20120921182434/http://www.usaid.gov/dca|url-status=dead|archive-date=September 21, 2012|title = Development Credit Authority|date = 11 January 2021}}</ref><ref>{{cite news |url=https://www.csis.org/analysis/20-years-development-credit-authority |title=20 Years of the Development Credit Authority |date=July 26, 2017 |publisher=[Center for Strategic and International Studies](/source/Center_for_Strategic_and_International_Studies)}}</ref> 

It merged with the [Overseas Private Investment Corporation](/source/Overseas_Private_Investment_Corporation) (OPIC) to form the [U.S. International Development Finance Corporation](/source/U.S._International_Development_Finance_Corporation) (DFC) on December 20, 2019.

== History ==
USAID's Development Credit Authority was created in 1999 to mobilize local private capital through the establishment of risk sharing relationships with private financial institutions in countries covered by USAID.<ref>{{cite web |url=https://seguraconsulting.net/dca |title=Development Credit Authority Evaluations |access-date=May 8, 2024 |publisher=Segura Consulting}}</ref>

The partial loan guarantees extended by USAID, through the DFC, allowed the U.S. Government to use credit to pursue the development purposes specified under the [Foreign Assistance Act](/source/Foreign_Assistance_Act) (FAA) of 1961, as amended. These guarantees typically cover up to 50% of the principal of loans to entrepreneurs, [Small and medium-sized enterprises](/source/Small_and_medium-sized_enterprises), and other projects that advance the U.S. Government's [international development](/source/international_development) objectives. Credit assistance's been used in areas such as [microenterprise](/source/microenterprise) and small enterprise, [privatization](/source/privatization) of public services, infrastructure, efficient and [renewable energy](/source/renewable_energy), and [climate change](/source/climate_change). 

DCAs do not cover interest income lost: In a country that has, for example, a 30% interest rate, the interest income would represent almost 50% of the total loan value and is not insured via the DCA. In this case, the DCA covers 50% of the principal, but only 25% of the total loan exposure. 

==References==
{{reflist}}

==External links==
* [https://web.archive.org/web/20161224133748/https://www.usaid.gov/sites/default/files/documents/1865/DCA_One-Pager_48.pdf USAID]

Category:United States Agency for International Development
Category:Development finance institutions

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