By Jerry Haar and Gary Goldfarb
Recognisably, development banks’ programmes and operations can be extremely bureaucratic, cumbersome, unimaginative and uninspiring — which is why the development community, governments, the private sector and the public at large should cheer a new, groundbreaking initiative of the Inter-American Development Bank (IDB) — BID for the Americas. This entrepreneurial endeavour aims to help US businesses unlock billions of dollars in untapped economic opportunities in the Latin America and Caribbean region. To do so, the programme focuses on three pillars to engage the US private sector — public procurement, trade and investment, and financing — leveraging innovative technologies and financial tools for US businesses to participate in the tremendous economic opportunities that the region presents.
There is no love lost between the public and development banks. While these multilateral institutions with a global scope such as the World Bank or regional ones like the Asian Development Bank, play a vitally important role, providing financing and technical assistance to enhance development, they are incessantly criticised across the board.
Development banks are faulted for their lack of transparency and accountability, particularly regarding their decision-making processes along with their failure to adequately engage with civil societies and other stakeholders in their operations. Borrowers from developing nations accuse these banks of coercive conditions required for loans, and civil society blames the multilateral banks for exacerbating existing social and economic inequalities in recipient countries. At the other extreme are nationalists and isolationists who believe funding multilateral banks is equivalent to throwing money down a rathole and/or spending money that could better be spent at home.
Regardless of where one comes out on the issues of development banks, the fact is that these multilateral institutions lend billions of dollars to developing nations for projects aimed at accelerating growth and social development, improving health and education, and advancing infrastructure development and good governance. And one should not forget that at a time when few institutions were lending during the global financial crisis, multilateral banks provided $222 billion in financing, which was critical to global stabilisation efforts.
Recognisably, development banks’ programmes and operations can be extremely bureaucratic, cumbersome, unimaginative and uninspiring — which is why the development community, governments, the private sector and the public at large should cheer a new, groundbreaking initiative of the Inter-American Development Bank (IDB) — BID for the Americas. This entrepreneurial endeavour aims to help US businesses unlock billions of dollars in untapped economic opportunities in the Latin America and Caribbean region. To do so, the programme focuses on three pillars to engage the US private sector — public procurement, trade and investment, and financing — leveraging innovative technologies and financial tools for US businesses to participate in the tremendous economic opportunities that the region presents.
The IDB is the largest source of multilateral financing in the region, having approved $12.2 billion in new projects in 2022. In total, the US exports over $720 billion in goods and services to the region annually.
The BID for the Americas programme’s initiatives include strategic partnerships, roadshows, policy advocacy efforts, and new digital connection platforms and resources. The aim is to help increase the participation of US firms in over $4 billion of contracts financed by IDB every year, with a focus on health, water, energy, transport, agriculture, and digital infrastructure sectors. In addition to organising state-level IDB roadshows to facilitate connections between US and LAC firms, BID for the Americas intends to partner with the US Chamber of Commerce and other business organisations to raise awareness. Finally, the IDB will develop a dedicated section within ConnectAmericas.com, the IDB’s business B2B social network, where US firms can access information about all IDB-funded procurements.
As for the trade and investment pillars, the programme will leverage the IDB’s expertise and network to facilitate business connections and partnerships between US and regional firms.
Regarding the financing pillar, the IDB will mobilise resources from its public and private windows to support projects that involve US companies. The programme will expand outreach to US companies and US-based entrepreneurs through IDB Invest, the private sector arm of IDB which finances over $10 billion of private sector programmes per year, and through IDB LAB, which supports early-stage entrepreneurial innovations. The IDB will also organise networking activities with co-financing partners, investors, and US government institutions to promote participation in future bond issuances and other innovative investment opportunities.
To illustrate the potential of BID for the Americas for US small and medium-size firms, one needs to look no further than Interport Logistics, a Miami-headquartered supply chain, warehousing and distribution company. According to their chief strategy officer, Gary M. Goldfarb: “The BID for the Americas programme will definitely encourage participation by our customer base of small and medium-sized firms — and for Interport as well. It will help level the playing field with SME competitors from other nations; and the platform will allow our customers to easily tap into ConnectAmericas, IDB Invest, and IDB LAB — other business facilitation sources.”
While US firms win over 61% of all IDB-financed contracts they bid for — the highest success rate of all non-borrowing member countries — they are less likely to bid for large contracts. BID for the Americas aims to change that by providing private firms and institutions with a platform to expand in the Americas, to grow their companies while helping to grow and develop the region.
BID for the Americas can be a harbinger of a broader — more entrepreneurial — approach to private sector-focused economic development, foster greater SME involvement of US firms in business in the Americas, and show the way for other multilateral development banks to advance the economic goals and objectives of their constituents.
About the Authors
Jerry Haar is a visiting scholar at the University of Oxford and a professor of business at Florida International University. He is also a global fellow of the Woodrow Wilson International Center in Washington, D.C.
Gary Goldfarb is Chief Strategy Officer at Interport Logistics and vice chairman of the World Trade Center Miami.
