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Multilateral Development Banks: Opportunities for U.S. Agriculture
By Steve Huete
* A Russian animal feed
producer is about to expand its business after receiving
multimillion-dollar loan. This is expected to result in direct
employment of 500 people.
* Nicaragua will embark upon a program to reactivate its agricultural sector by stimulating rural production and strengthening government institutions. This program aims to increase rural income and mitigate the effects of the civil war.
* A man in Burkina Faso recalls how, in years past, river blindness was common. Now, thanks to an integrated program to eradicate the causative parasite and its vector, river blindness is a rarity in his village.
What do these vignettes have in common? All were financed in whole or in part by a multilateral development bank (MDB), and each project represents an overseas business opportunity for U.S. agriculture.
An MDB is an international lending institution, owned by member countries, which makes loans or grants with the objective of promoting economic and social development in its member countries. These projects have a variety of objectives, such as increasing productive ability, improving the infrastructure of the recipient country, bettering the lives of rural populations and preserving natural resources and ecosystems. Examples include delivery systems for safe, clean water to rural communities; development of effective marketing and price discovery systems; and the creation of cooperative businesses.
Probably the best-known MDB is the International Bank for Reconstruction and Development, more commonly known as the World Bank. The World Bank and its sister agency, the International Monetary Fund, were established in 1944 at the Bretton Woods Conference to place the international economy on a sound footing after World War II. The Bank’s purpose is to promote long-term economic growth, which reduces poverty. Its first loan, in the amount of $250 million, was to France in 1947; this loan remains the largest in real terms that the Bank has ever made. The next year, it made its first loan to a developing country, Chile, for a hydroelectric power project.
In the years that followed,
regional MDBs were established--the Inter-American Development
Bank (1959), the African Development Bank (1966), the Asian
Development Bank (1966) and the European Development Bank (1991).
While each focuses on a specific geographic region, all share the
common objective of fostering development of their member
countries through well-designed projects.
How do the MDBs benefit the U.S. agricultural economy? History has shown that as countries develop economically and they move from low- to middle-income status, their food needs change. They import more and better quality, high-value foods. Economic progress, therefore, is a vital link to long-term market development, a prime goal of the U.S. agricultural community. U.S. cooperation with the development institutions builds markets for products and fosters world food security.
More directly, the work of the MDBs provides business opportunities in the borrowing countries for U.S. companies and universities. MDBs do not have the staff or resources to perform all the project development and analysis required, so they rely heavily on outside consultants and technical specialists to aid project development and design.
Once a project is approved, a government or private agency in the borrowing country carries it out, not the MDB. The agency purchases goods and services and often hires contractors to carry out much of the work. Because these goods and services often are not available in the borrowing country, they need to be procured from other countries, including the United States.
The amount of MDB lending is immense. In 1997, the World Bank made loan commitments of $19 billion, the Inter-American Development Bank approved $6.1 billion worth of financing, and the African Development Bank approved loans close to $2.5 billion. Although the agricultural sector is only one part of total lending, the amount allocated to agricultural projects is significant.
Help From the Commerce Department
The U.S. and Foreign Commercial Service (FCS) of the U.S. Department of Commerce has the lead in helping U.S. businesses gain access to export opportunities available through the MDBs. FCS assigns two foreign service officers to each MDB to promote U.S. access to these business opportunities. The Office of Multilateral Development Bank Operations (MDBO) in the FCS operates the Multilateral Development Bank Counseling Center, a "one-stop shop" with consolidated responsibility for commercial assistance on MDBs. The Commerce Department also publishes solicitations for overseas business opportunities through its Trade Opportunity Program. Contact the Multilateral Development Bank Counseling Center: Tel.: (202) 482-3399; Fax: (202) 273-0927. Its Internet site is www.ita.doc.gov/mdbo
The Role USDA Can Play
The Foreign Agricultural Service (FAS) is working to strengthen linkages between the U.S. agricultural community and the MDBs to assist developing nations while also serving U.S. agricultural interests.
FAS is USDA’s strategic center for coordinating, supporting and delivering a diversified program of international agricultural technical assistance, research and training. It thus has a unique opportunity to bring the vast range of U.S. agricultural community experience in production agriculture, sanitary and phytosanitary systems, rural cooperatives and other areas to bear against the problems of economic development abroad. MDBs and other development institutions can use FAS as a conduit to these U.S. agricultural resources, helping them obtain the assistance they need.
When appropriate, USDA may also make its expertise available to U.S. companies seeking bank project implementation contracts. In some cases, USDA technical expertise could add the deciding leverage that wins the bid for a U.S. firm.
To learn more about FAS contacts with business opportunities involving MBDs, contact David Winkelmann. Tel.: (202) 690-1801; E-mail: Winkelmann@fas.usda.gov
Links to Development Institutions
Check out the home pages of selected multilateral development institutions:
* African Development Bank www.afdb.org
* Asian Development Bank www.asiandevbank.org
* European Bank for Reconstruction and Development www.ebrd.org
* Food and Agriculture Organization of the UN www.fao.org
* Inter-American Development Bank www.iadb.org
* International Bank for Reconstruction and Development --the World Bank Group www.worldbank.org
* International Fund for Agricultural Development www.unicc.org/ifad/home.html
* U.S. Department of Commerce, Multilateral Development Bank Operations Office www.ita.doc.gov/mdbo/
* U.S. Trade and Development Agency www.tda.gov
* World Food Program www.unicc.org/wfp/
___________________________
The author is a FAS foreign service officer on detail at
the Inter-American Development Bank. Tel.: (202) 623-2545; Fax:
(202) 623-1786; E-mail: steveh@iadb.org
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