Podcast Summary: Bringing US Development Finance into the 21st Century – Ben Leo

Podcast: The CGD Podcast
Host: Rajesh Merchandani (A)
Guest: Ben Leo, Senior Fellow and Director, Rethinking US Development Policy Initiative (B)
Date: March 24, 2015

Episode Overview

This episode explores whether the United States is losing influence in the developing world and discusses possible strategies for the US to regain its leadership role. Ben Leo outlines the changing landscape of global development finance, emphasizing the rise of new players such as China, and presents a bold proposal: consolidating US development finance tools into a single, modern Development Finance Corporation. The discussion is framed by recent events, such as the emergence of the Chinese-led Asian Infrastructure Investment Bank (AIIB) and the BRICS bank, and examines how US institutions must adapt for the 21st century.

Key Discussion Points & Insights

1. Shifts in the Global Development Finance Order

[00:23–02:02]

• The entry of China (AIIB, BRICS bank, China Development Bank) and others is rapidly altering global development financing.
• Ben Leo:
  “There are major changes underway globally as well as domestically. Within the US there's a couple of factors that I would single out. First, there is a growing emphasis... that jobs, economic opportunities and related issues are at the very top of their agenda. And you're seeing Chinese and other emerging market nations move to align their tools and activities with these priorities... The U.S. in contrast, has been much slower to the game... We are now very far behind the curve...” [00:47]

2. The Relevance Problem: Stale Tools and Slow Adaptation

[02:02–02:48]

• US influence is waning as it fails to align with the priorities and practical needs (e.g., jobs, economic opportunities) of partner countries.

• Quote:
  “If we are not focusing on what our partners core priorities are and their needs... then we are less relevant, less, less influential in our engagement.” [02:03]

• Existing US tools are “outdated in their nature”—they’re inefficient and not up to the new challenges.

3. The Shift Toward Public-Private Approaches

[02:48–03:50]

• Recent Obama administration initiatives (e.g., Power Africa, New Alliance for Food Security and Nutrition) represent a shift from traditional aid toward leveraging public-private partnerships to unlock private investment.
• Ben Leo:
  “They have shifted towards a more public, private type of approach... focusing on the things that are blocking or restricting private investment and enterprise.” [03:02]

4. A Bold Proposal: US Development Finance Corporation

[03:50–05:35]

• Leo and Todd Moss recommend creating a US Development Finance Corporation by consolidating existing US tools for private sector development (OPIC, USAID development credits, Enterprise Funds, etc.).
• The aim: greater scale, rigor, efficiency, and accountability.
• Quote:
  “It boils down to a proposal for a U.S. Development Finance Corporation that brings together, consolidates all these existing tools that focus on private sector based development and would bring some additional scale, rigor and accountability to them.” [04:09]

5. Why Consolidate?

[05:35–08:30]

• The US Export Import Bank (Ex Im) is not a development agency and is excluded from the proposal.

• Other peer countries already have unified development finance institutions, giving them integrated approaches and clearer accountability.

• Ben Leo:
  “Putting under one house means that there will be one person, the head of this institution, who is responsible for driving U.S. efforts in this area and for being held accountable by the US President, by Congress and the general public at large.” [06:30]

• The proposal is not about creating a new agency but about making existing efforts more effective (“OPIC plus” model).

6. Cost to Taxpayers and Financial Sustainability

[08:30–10:03]

• The revamped entity would be revenue-neutral or positive, not a burden on taxpayers.

• Quote:
  “It actually not only doesn't cost us taxpayers anything, this is revenue positive... OPIC has for nearly four consecutive decades provided a net transfer to the U.S. treasury.” [08:37]

• Profits from lending could subsidize grant-making operations for technical assistance.

7. Addressing Skepticism and Ensuring Accountability

[10:03–14:29]

• Responding to “corporate welfare” concerns: OPIC’s “additionality” rule ensures it only supports deals not otherwise funded privately.
• OPIC uses market-based risk pricing and maintains a diversified and prudent portfolio.
• Calls for more transparency:
  Ben Leo:
  “A lot of that information is locked up partly for good reasons or some good reasons about commercial confidentiality. But one thing that would improve public accountability... is opening its books a little bit more. Let's hear more about project level outcomes. Let's hear more about financial risks.” [13:29]
• Tightening approval criteria and increasing data availability would help address critics with facts.

8. Roadmap to Reality – How to Move Forward

[14:29–16:55]

• The administration should work with Congress to pursue the proposal, but piecemeal reforms (e.g., transparency, shifting tools under OPIC, more staffing) could happen now.
• Both immediate and longer-term routes are available—some changes can be made before the next administration, others can be part of the next president’s agenda.

9. CGD’s Broader White House and the World Project

[16:55–18:27]

• The proposal is part of CGD’s broader initiative to present actionable ideas for the next administration (“White House in the World Project”).
• Ben Leo:
  “This is a broader project that I'm very excited about... to lay out a whole series of very practical, targeted proposals that will make U.S. development efforts more effective in the future and reflect some of the rapidly changing dynamics we've talked about.” [17:18]

Notable Quotes & Memorable Moments

• “We are now very far behind the curve, particularly compared to where we were 10 years ago.” — Ben Leo [00:47]
• “If we are not focusing on what our partners core priorities are... then we are less relevant, less, less influential in our engagement.” — Ben Leo [02:03]
• “It boils down to a proposal for a U.S. Development Finance Corporation that brings together, consolidates all these existing tools...” — Ben Leo [04:09]
• “Putting under one house means that there will be one person... responsible for driving U.S. efforts in this area and for being held accountable...” — Ben Leo [06:30]
• “It actually not only doesn't cost us taxpayers anything, this is revenue positive.” — Ben Leo [08:37]
• “But one thing that would improve public accountability... is opening its books a little bit more. Let's hear more about project level outcomes.” — Ben Leo [13:29]
• “This is a broader project that I'm very excited about. It's called the White House in the World Project...” — Ben Leo [17:18]

Important Segment Timestamps

• Rise of China & Changing Global Order: [00:23–02:02]
• US falling behind, Outdated tools: [02:02–02:48]
• Shift toward public-private development: [02:48–03:50]
• Proposal: US Development Finance Corporation: [03:50–05:35]
• Why consolidate agencies/tools?: [05:35–08:30]
• Financial sustainability explained: [08:30–10:03]
• Addressing corporate welfare/skeptics: [10:03–14:29]
• Roadmap to implementation: [14:29–16:55]
• White House and the World Project: [16:55–18:27]

Overall Tone

The conversation is urgent but constructive, highlighting both risks of inaction and the practical steps available. Ben Leo uses a matter-of-fact, policy-wonk approach, focused on actionable insights and accountability, and dispels fears about new bureaucracy and taxpayer costs.

For Further Information

Listeners are directed to CGD's website for Ben Leo and Todd Moss’s detailed paper on the U.S. Development Finance Corporation proposal, as well as forthcoming materials from the White House and the World Project.
More at: www.cgdev.org