Looking Forward: The United States International Development Finance Corporation Should Adopt Robust Information Disclosure Practices and Policies
At the end of 2019, a new US development bank, the United States International Development Finance Corporation (DFC) was created, merging the Overseas Private Investment Corporation (OPIC) with the United States Agency for International Development’s (USAID) Development Credit Authority. The new institution more than doubles OPIC’s previous investment limits, allowing for equity investments and expanding lending to non-American companies. With this expansion, the DFC is poised to have an increased footprint on the development finance landscape worldwide, and a corresponding impact on communities who may be affected by their projects globally.
The United States has long positioned itself as an advocate for greater transparency and community participation in development finance. Most recently, the United States passed a series of reforms to improve transparency in financial intermediary lending at the International Finance Corporation. However, when it comes to the DFC, access to information falls far short of international norms and best practice, including in relation to other institutions where the United States — as a leading shareholder — continues to advocate for more robust policies and practices.
As the International Accountability Project (IAP) and our partners have repeatedly witnessed, the profound impact of development projects warrants that the policies and operations of development banks be robust and reflect international best practice and international human rights standards. In the context of today’s development climate, communities face numerous restrictions on their ability to freely speak about their concerns about projects, or even request information, particularly in the regions where the DFC currently operates and hopes to increase investment. This makes the need to safeguard transparency and the right to access information more urgent, and accordingly, the institution’s information disclosure practices and policies even more critical.
In our analysis of OPIC’s — and now the DFC’s — disclosure practices, we found numerous areas where the institution falls short of best practice. A few examples:
- Despite investing heavily in non-English speaking countries, the DFC does not proactively share translations of any project documents.
- Unlike similar institutions, the DFC does not disclose or update project status, date of approval, or proactively share pending projects.
- Only 38% of projects disclosed project-specific environmental and social impacts, and only 54% specified which environmental and social safeguards were triggered.
- Only 5% of project disclosed plans for stakeholder engagement and only 8% of projects disclosed the full text of the environmental and social impact assessments.
Community access to information is further hampered by the absence of an institutional policy for proactive information disclosure, a practice that is implemented by most development finance institutions. While the United States Freedom of Information Act (FOIA) is critical for increasing government transparency, the pursuit of this avenue is often inaccessible, if not also procedurally burdensome and cost-prohibitive, for most project-affected communities. As such, the DFC should create an access to information system that will provide a first point-of-access to complement FOIA and make information more readily available.
IAP welcomes the mandate set out in the DFC’s enacting legislation, which directs the new institution to “use high standards of transparency and environmental and social safeguards.” A commitment to transparency and access to information will ensure those who need the information most are able to receive and understand it.
For more details on IAP’s recommendations for strengthening the DFC’s access to information practices and policies, see our full analysis.
Ishita Petkar is the Policy and Community Engagement Coordinator at the International Accountability Project (IAP) and is based in Washington D.C.